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Retail Suppliers Offer Proposal for Massachusetts Shopping Website

January 30, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A group of retail suppliers presented a proposal for the electric shopping website to be developed by the Massachusetts DPU.

The suppliers agreed with most of the strawman arguments put forth by DPU Staff earlier this month (click here for story)

Among the notable differences in the suppliers' proposal is the suppliers' opposed a requirement that would limit fixed rate products to increments of three months (e.g., 3 months, 6 months, 9 months, etc), although suppliers do agree a fixed product should last at least 3 months.

The provision for three-month increments, "is too limiting and would unnecessarily prevent suppliers from offering term lengths that may be beneficial and advantageous to consumers," suppliers said. "A consumer shopping today, in late January, is most likely interested to enroll with a competitive supplier coincident with its next meter read in February. Because the least expensive wholesale hedge products are typically tied to calendar years, the highest value fixed price offering in January may be 4 months (ending in June) or 10 months (ending in December)."

"Consumers may be interested in, and suppliers may wish to offer, supply terms that coincide with utility basic service terms, which are different across the utilities. Consumers may value terms that either include or avoid the winter season. In future years when capacity costs become a larger component of the total price, consumers may be interested in supply terms that change coincident with a new ISO-NE power year (starting June 1)," suppliers said.

The straw proposal had also provided that, for variable products, the rate board would identify the manner/method by which supplier will determine prices, such as at the discretion of supplier based on market conditions, or tied to market indices, specifying both the index and the formula by which prices will be calculated

Suppliers said that they do not support a requirement that would obligate a supplier to post its proprietary and commercially sensitive hedging, procurement or costing strategies. If a supplier offers a formulaic, index-based variable price product, disclosure of the specific formula or pricing mechanism is appropriate. However, if the supplier manages the monthly price changes by engaging in hedging and procurement strategies that somewhat divorce the resulting energy price from a pure index price, the supplier should be allowed to offer its variable product provided that it adequately discloses to the customer that the variable rate is set at the discretion of the supplier, the suppliers said.

Suppliers also said that, to the extent technically feasible, the website should present supplier offers in a randomized or "round robin" manner to avoid providing any undue preference to any particular supplier. "For example, an alphabetical display order would favor those suppliers whose names start with 'A'", the suppliers said.

The suppliers also recommended displaying fixed price offers ahead of variable price offers.

While basic service prices should be listed on the site, the suppliers stressed that the website should be designed to recognize the DPU's longstanding view that basic service serves as a last resort supply option.

"[P]roviding an on-line calculator with which to compare against the basic service rate is inconsistent with the Department’s long-stated objective and should be discouraged," the suppliers said.

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