Arizona Settlement Would Allow Some Large Customers to Purchase Alternative Generation Supply January 11, 2012 Email This Story Copyright 2010-12 Energy Choice Matters
A settlement in Arizona Public Service Company's rate case would allow a capped number of large power users to elect alternative generation supply under a "buy through" mechanism (Docket E-01345A-11-0224).
The settlement was signed by APS, Arizona Corporation Commission Utilities Division Staff, the Residential Utility Consumer Office, Noble Americas Energy Solutions LLC, Constellation NewEnergy, Inc., Direct Energy, LLC, Shell Energy North America (US), L.P., AARP, Kroger, Wal-Mart, and other parties.
The stipulation would adopt Experimental Rate Schedule AG-1, a buy through rate for large commercial and industrial customers, for a period of four years, with participation capped at 200 MW. Under this rate, a third party Generation Service Provider selected by the customer would provide wholesale power to the APS on behalf of the customer. APS would serve and bill the customer, and remit payment for generation to the Generation Service Provider.
The settlement explicitly provides that, "Proposed Experimental Rate Schedule AG-1 does not address the subject of retail electric competition."
Rate Schedule AG-1 would be available to customers who have an aggregated peak load of 10 MW or more and are served under Rate Schedules E-34, E-35, E32-L, or E-32 TOU L. An aggregated group may also include metered accounts that are served under Rate Schedules E-32 M or E-32 TOU M, if the accounts are located on the same premises and served under the same name as an otherwise eligible customer.
Eligible customers may be aggregated if they have the same corporate name, ownership, and identity. In addition, (1) an eligible franchisor customer may be aggregated with eligible franchisees or associated corporate accounts, and (2) eligible affiliate customers may be aggregated if they are under the same corporate ownership, even if they are operating under multiple trade names.
Of the 200 MW load cap, 100 MW shall initially be reserved for customers served under Rate Schedule E-32 L.
Customers taking service under Rate Schedule AG-1 would be subject to all provisions, charges and adjustments in the customer's applicable retail rate schedule except as follows:
1. The generation charges will not apply;
2. Adjustment Schedule PSA-1 (Power Supply Adjustment) will not apply, except that the Historical Component will apply for the first twelve months of service under Rate Schedule AG-1;
3. Adjustment Schedule EIS (Environmental Improvement Surcharge) will not apply; and
4. The applicable proportionate part of any taxes or governmental impositions which are or may in the future be assessed on the basis of gross revenues of the Company and/or the price or revenue from the electric energy or service sold and/or the volume of energy generated or purchased for sale and/or sold hereunder shall be applied to the customer's bill.
Furthermore, Schedule AG-1 charges determined and billed by APS include:
1. A monthly management fee of $0.00060 per kWh applied to the customer's metered kWh;
2. A monthly reserve capacity charge applied to 15% of the customer's billed kW (on-peak for Rate Schedules E-35 and E-32 TOU L) at APS' applicable cost-based rate filed at the Federal Energy Regulatory Commission and revised from time to time, which is currently $6.985 per kW month;
3. An initial charge or credit for fuel hedging costs. The customer will pay for the hedge cost associated with the customer's Standard Generation Service at the time the customer takes service under Schedule AG-1. For the purpose of this rate rider schedule, APS will determine the applicable pro rata hedge cost based on the market price for hedge costs at the time the customer takes service under Schedule AG-1.
4. A Returning Customer charge, where applicable
5. A Generation Service Provider Default charge, where applicable.
Additionally, Schedule AG-1 Generation Service and Imbalance Service charges billed by APS to the customer include:
1. Generation Service charges shall be charged at a rate within the minimum and maximum limits as follows:
a. When the contract provides for pricing that reflects a specific index price, the minimum price will be the specified index minus 35% and the maximum price will be the specified index plus 35%. The determination that a contract is consistent with this provision will be based on the specified index price applicable on the date the contract is executed.
b. When the contract provides for a fixed price supply for the term of the contract, the minimum price will be the generation rate of the Customer's applicable retail rate schedule minus 35%, and the maximum price shall be the generation rate of the Customers applicable retail schedule plus 35%. If the Customer has more than one otherwise applicable retail rate schedule, the highest applicable retail rate schedule will be used for purposes of the consistency determination. The determination that a contract is consistent with this provision will be based on the Customer's otherwise applicable retail rate schedule in effect on the date the contract is executed.
c. Losses from the delivery point to the Customer's meters and any charges assessed by the Company on the Customer, including charges for transmission and distribution, Capacity Reservation Charge, the Management Fee, Imbalance Service charges, PSA balance and hedging costs, and Returning Customer Charges, shall not be included in the Generation Service charge for purposes of determining whether the contract is consistent with the minimum and maximum price provisions of Schedule AG-1.
2. Imbalance Service charges shall be charged at a rate greater than $0.00 per kWh and less than or equal to the rate that APS charges the Generation Service Provider for Imbalance Service as specified herein.
Customers must have interval metering, Advanced Metering Infrastructure, or an alternative in place at all times of service under Schedule AG-1. If the customer does not have such metering, APS will install the metering equipment at no additional charge. However, the customer will be responsible for providing and paying for any communication requirements associated with the meter, such as a phone line.
An initial enrollment period will be established for service under Schedule AG-1. If the applications for service are greater than the program maximum amount, then customers shall be selected for enrollment through a lottery process as detailed in the program guidelines.
Under Schedule AG-1, APS shall enter into a contract with the Generation Service Provider to receive delivery and title to the power on the customer's behalf.
The Generation Service Provider shall provide to APS on behalf of the customer firm power sufficient to meet the customer's Total Load Requirements for each of the specified metered accounts. Power provided must be delivered to APS at the Palo Verde network delivery point, or other point of delivery as agreed to by APS. The Generation Service Provider is responsible for the cost of transmission service to deliver the power to the APS delivery point.
APS shall provide transmission, delivery and network services to the customer according to normal retail electric service.
APS will settle with the Generation Service Provider for Imbalance Service and other relevant costs on a monthly basis according to the program guidelines.
APS will provide Imbalance Service according to the terms and provisions in its Open Access Transmission Tariff, Schedule 4. Imbalance Energy will be based on the Generation Service Provider's portfolio of customer loads.
The Generation Service Provider shall bill APS the monthly billed amounts for each customer for Generation Service and Imbalance Service according to the program guidelines.
APS shall bill the customer for the Generation Service Provider's charged amounts and remit the amounts to the Generation Service provider.
The customer will be responsible for paying for the cost of the power provided by the Generation Service Provider, as specified in the contract and Rate Schedule AG-1.