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State Directs Stakeholder Process to Explore Default Service Procurement Issues
The New Hampshire PUC has directed that a stakeholder process be created to explore issues surrounding the procurement of default service.
"Given the recent changes in retail markets for electricity in New Hampshire, the Commission instructs Staff to begin a separate stakeholder process to explore procurement of retail electricity supply for New Hampshire customers, through the state's utility default suppliers and otherwise," the PUC said.
The PUC's directives came in an order denying motions to intervene made by two competitive suppliers in a proceeding in which Liberty Utilities (Granite State Electric) requested approval of an alternate plan for procurement of default service requirements for all customer groups in the event of an unsuccessful competitive solicitation for such requirements
"A general interest in competitive markets or in a bidding process that has not yet occurred is insufficient to entitle these parties to intervene pursuant to RSA 541-A:32," the PUC said in denying the motions to intervene.
Liberty Utilities' petition for a contingency default service mechanism was prompted by a lack of responses to several recent default service RFPs in Massachusetts.
"At this time it is unclear if these actions are the result of a short-term response to uncertainties in the wholesale market in New England due to events which occurred this past winter (polar vortex, Winter Reliability Program, availability and pricing of natural gas) or a fundamental, industry-wide change by wholesale suppliers regarding such all-requirements solicitations," Liberty Utilities said
If the RFP solicitation results in no supplier, Liberty Utilities proposes to serve its default service customers by purchasing energy in the ISO-New England hourly Real-Time market and incurring both capacity and ancillary service costs associated with any obligation associated with the Real-Time market. Liberty will file a retail price based on a proprietary methodology that takes into account: i) energy prices in the NYMEX forward prices for the ISO-New England Mass Hub Off-Peak & On-Peak LMP Futures; ii) an adjustment for future price volatility; iii) the cost of ancillary services based on the most recent published summary data for the New Hampshire load zone; iv) capacity costs based on the Forward Capacity Market prices; and v) adjustments for losses from PTF to the retail customer.
To the extent migration to competitive retail suppliers results in a significant variance in cost recovery that is "unrecoverable" from remaining default service customers, Liberty Utilities said that it would propose a temporary, nonbypassable charge that will only be applicable to the distribution customers in a customer group for which the contingency procurement plan is implemented
Liberty Utilities stressed that it is not seeking, as part of its proposal, to change its default service pricing or terms, including consideration of such issues as time-of-use pricing, peak-period pricing and a "stay-out" provision that would require a customer returning to default service to remain on default service for a specified period of time. Presumably, such issues have arisen in response to Liberty Utilities' petition, and are likely to be explored in the generic proceeding directed by the PUC.
Docket DE 14-211
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September 9, 2014
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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
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