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PUC Staff Supports Six-Month Contracts for Default Service, Disinclined To Support Laddering At This Time
Staff of the New Hampshire PUC have recommended that for the residential and small commercial customers, the PUC should use six-month contracts for default service, with 100% of required load being bid at each procurement.
Staff's comments came in a generic PUC proceeding examining the design of default service.
"Staff expects that the use of six-month contracts will ensure a measure of price stability during the six month period while at the same time ensuring that price signals 'from the market are not lost on consumers. Furthermore, bidding 100% of load in each six month cycle will increase the possibility that potential load-serving entities will be willing to bid, and may result in lower pricing," Staff said.
Staff said that it was disinclined to support laddering default service contracts at this time, absent additional investigation of any benefits and costs from laddering.
"It is not clear that lowering rate volatility by blending the prices from different procurements at different times will reduce the level of market exposure faced by default service customers, but it may have a negative impact on the ability of competitive retail suppliers to compete in the market place. In addition, laddering may result in higher overall prices for default service due to increased risk premiums. Staff is unclear whether the potential benefits arising from perceived reductions in price volatility will justify the possibility of erosion of the market for competitive supply, and thus Staff is disinclined to support laddering without further investigation," Staff said.
Staff did note that moving the actual calendar for default service contracts to better embrace both peak and shoulder months of demand, and adjusting the timing of default service procurement to avoid overlap with neighboring states' procurements, may further diminish the impact on price volatility.
"Staff has no preferred position in this matter but recommends the Commission consider the timing of competitive bidding processes for larger utilities in neighboring states and the potential impact on the New Hampshire bidding process if it wishes to shift the procurement periods in New Hampshire," Staff said.
Docket IR 14-338
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May 7, 2015
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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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