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Connecticut Procurement Manager Proposes Changes in Default Service Procurement
Connecticut's power procurement manager has proposed further changes to the procurement of Standard Service electricity supply.
In a 2012 procurement plan, Connecticut approved a transition away from a laddered three-year Standard Service portfolio. Instead, the plan limited procurements to 12 months prior to the beginning of a delivery period. Diversity was to be achieved by using two procurement events for each 12-month delivery term, with overlapping terms resulting in three to four procurement events for any 6-month rate period. This averaging was intended to provide some stability from one 6-month period to the next. However, potential legislation to auction off Standard Service customers led to a pause in this transition.
The procurement manager now proposes further tweaks to the 2012 procurement plan, with such changes emphasizing the ability to change the procurements in response to favorable prices, or legislative, market, or other unforeseen issues.
Specifically, the manager proposes that, going forward, each EDC will schedule four Standard Service procurements per year, in a pattern of 6- and/or 12-month contracts, such that each rate period will reflect an average of contracts awarded during approximately three to four different procurement dates. The EDCs, with the consent of the Procurement Manager, may add or drop procurement events if warranted, while still ensuring a diversity of procurement dates and adhering to the procurement objectives identified in the procurement plan.
For Connecticut Light & Power, the above applies to the full requirements portion of Standard Service; CL&P would continue to self-manage a portion of Standard Service load.
For example, if the Procurement Manager and the EDCs reject all bids on a procurement day, an additional procurement date would be scheduled. Alternatively, if sufficient contracts at favorable prices have been awarded to complete a service term, the remaining procurements for that service term would not be needed.
In the course of a year, should the need arise for immediate modification of the Procurement Plan due to legislative, market, or other unforeseen issues, the Procurement Manager may, upon oral approval of PURA Commissioners, make such modifications immediately while soliciting official review and approval of such modification in the following year's Annual Review, the procurement manager proposes.
In an attachment to the procurement manager's report which was represented as comments from United Illuminating, UI was represented as raising a "cautionary note" from the extremely high and volatile winter natural gas citygate prices, which have been resulting in equally high and unpredictable energy prices in New England.
"While suppliers are able to partially hedge their Standard Service obligations, they are not able to fully hedge them. UI is concerned that the winter natural gas price volatility, coupled with ISO-NE's efforts to improve generation reliability through initiatives such as the 2013-14 Winter Reliability Program, could have an adverse impact on supplier participation, or risk premiums in supplier bids. While UI believes the current protocol is working well, it is essential that the procurement plan remain flexible to accommodate changes in the marketplace and allow for alternate procurement strategies to best respond to such changes," the attachment said.
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March 13, 2014
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
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