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Conn. DPUC Provides Confirmation Requested by UI on Default Service Procurement Issues
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October 27, 2010
The Connecticut DPUC has granted three clarifications
or affirmations requested by United Illuminating relating to the procurement of Last
Resort Service (LRS) and Standard Service (06-
As only noted by Matters (10/5), UI asked the DPUC to adopt UI's recommended approach
in cases where there are no competitive Last Resort Service bids. In such cases,
UI said that it would establish the Last Resort Service rate for the applicable quarter
in an amount that it estimates will recover the Last Resort Service costs. A true-
"A 'supplier of last resort' must take whatever steps are necessary to serve its eligible population. Whether it serves its eligible population by purchasing full requirements service or by purchasing constituent parts in the market, it must serve that population," the DPUC said.
Accordingly, consistent with statute and its own orders, "the Department believes that, in the event no competitive bids are received in an LRS procurement, an electric distribution company may serve as the Load Serving Entity."
UI had further sought confirmation through an interim order that the DPUC's basic goal in Standard Service procurements is obtaining a competitive price, rather than ensuring that the various quantities needed for laddering are procured.
UI noted that bids for various tranches of Standard Service can be very close to the proxy prices established by UI and the procurement monitors, or can deviate substantially. "When bids exceed proxy prices by a substantial amount, it is difficult to balance the laddering objectives that are embedded in current power procurement methodology with the goal of selecting only competitive bids (those within a certain range of the proxy prices)," UI said.
The DPUC noted that it had previously found that, with respect to Standard Service procurements, "rather than establishing a rigid format for these solicitations, the Department believes it is important to provide the Discos some flexibility in designing their respective RFPs and in negotiating the final agreements, in order to maximize the potential customer benefit from these contracts."
"If continuing its current process of rejecting bids that are substantially above proxy maximizes potential customer benefit, then continuing use of the process is not inconsistent with the approved plan," the DPUC affirmed.
The Department also approved UI's request to streamline the paperwork required when seeking approval of default service procurement results.
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