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PSNH Changes to Alternative Default Service Would Close Traditional Default Service to Shopping Customers

September 17, 2014

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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Public Service Company of New Hampshire has proposed changes to its Rate ADE - Alternative Default Energy Service which would eliminate the ability for certain large customers to return to traditional fixed price default service (Rate DE) after having migrated to competitive supply.

Currently, Rate ADE, which is available to customers returning from competitive supply, is a rate based on PSNH's marginal costs of serving such customers, plus an adder for non-operating costs of the Merrimack scrubber. The hope was that the rate would result in customers returning from competitive supply paying at least a portion of PSNH fixed energy costs, which have increasingly been borne by non-shopping customers, who are mostly made up of small volume customers.

However, PUC Staff and the Consumer Advocate said that experience has shown that Rate ADE is increasing the burden on non-shopping customers.

In response, PSNH is proposing to change the eligibility and pricing for Rate ADE - Alternative Default service.

With respect to eligibility, PSNH proposes that the redesigned Rate ADE would only apply to customers taking service under rates GV, LG and B. Rate ADE would not be available to customers taking service under rates R, R-OTOD, G, G-OTOD, EOL or OL.

As of January 1, 2015, any customer taking service in rate classes GV, LG or B and taking service under Rate ADE on that date will stay on Rate ADE, and any customers in these rate classes taking service with a competitive supplier that comes back to PSNH's default service after January 1, 2015 will be required to take service under Rate ADE. Standard fixed price default service (Rate DE) would no longer be available to these customers during the pendency of the current Rate ADE pilot.

Rate ADE was originally implemented on a pilot basis for 36 months and that period will expire July 1, 2016. PSNH proposes that at that time, any customer on Rate ADE would then be moved to Rate DE on their next meter reading date. Until that time, any Rate GV or LG customer coming back to PSNH default service would only have Rate ADE available.

Additionally, PSNH proposes to change the pricing of Rate ADE.

Under the new design, Rate ADE would be a monthly rate, rather than an annual rate. On or by the 15th of the month PSNH would file a new rate and tariff pages to take effect on the first of the following month. For implementation on January 1, 2015, PSNH would make a filing in December showing the price of Rate ADE for the month of January 2015, along with illustrative projections of expected prices in the following months for informational purposes only.

PSNH said that the monthly rate would more closely track the market.

However, PSNH proposes that, as with the current Rate ADE, any over or under collection would be reconciled through the energy service rate.

PSNH said that the changes are needed to protect non-shopping customers from the burdens placed on them from customer migration.

"Over the last few years, it has become evident that small and large industrial customers have become more attuned to the energy markets, and PSNH is finding that costs are being shifted unfairly between customer classes. By migrating between the competitive market and PSNH's default service at opportune times, these larger customers have been creating costs that are borne by smaller customers, particularly residential ones, who are less likely to migrate. Therefore, not only is the migration reducing the total benefits to non-migrating customers, it is shifting the burden to them as well," PSNH said.

"For example, over the last twelve months residential customers have shown little migration, with approximately 25% of load, and 22% of customer count taking service from competitive supply. To contrast, in the same period of time customers in the smaller industrial class have had migration rates between 82% of load in low price months, and 72% of load in high priced In the large industrial class, between and 87% and 95% of load migrates in a similar fashion," PSNH said.

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