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PUC Staff Make Recommendations on Retail Choice Program Changes

July 20, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Two Maine hearing examiners have made recommendations on behalf of the Maine PUC advisory staff regarding changes to the retail choice program at Northern Utilities.

Staff agreed that daily metered customers should have the option to be Capacity Exempt.

"For non-daily metered C&I customers, who are likely to be less willing or able to manage the risks associated with Capacity Exempt status, it is our view at this point that capacity should be assigned based on 100% of their TCQs [Total Contract Quantity]. This would enable Northern to plan for and procure adequate levels of supply to cover these customers’ demands upon return to Sales Service, and also ensure that supply for Capacity Assigned and Sales Service customers is adequate system-wide. The latter point is important given that, in contrast to daily metered customers, it would be less practical (or perhaps impossible) to curtail non-daily metered customers, nor could their load and supply balance be accurately measured on any given day," the hearing examiners said.

"Finally, we note that, with 100% capacity assignment, and the changes associated with Capacity Exempt customers, including allowed curtailment, it is not apparent that Northern should carry the same level of capacity reserves as it does under the current Program. We also ask the parties to comment on this issue. However, we do agree with the Company that the cost of any reserve that is carried should also be allocated to Transportation Service customers, not just to Sales service customers," the hearing examiners said.

The Staff agrees with Northern that capacity should be assigned based on each Transportation Customer’s TCQ and that the TCQs would be established annually. "Customer capacity requirements can change significantly over time in either direction. Unless the TCQs are re-established periodically, there could be inequitable allocation of costs among Capacity Assigned customers and marketers, as well as between Sales and Transportation customers," the hearing examiners said.

Under the existing Retail Choice Program, only Northern’s off-system peaking and Washington 10 storage and pipeline path capacity resources are assigned, and only for the five winter months of November through March. In its proposed End State Program, Northern proposes that all of its capacity resources, except off-system peaking, be assigned and available in accordance with the contract terms applicable to the resource.

"Staff agrees that all of the Company’s resources should be assigned. This approach would result in the same resource availability and cost responsibility for Capacity Assigned customers as for Sales Service customers and, therefore, eliminate inequitable cost shifting or cross-subsidization between these two customer groups. With respect to Northern’s proposal to exclude the off-system peaking resources from assignment, the rationale is unclear; thus, Staff requests that Northern provide an explanation as to why these resources should not be assigned," the hearing examiners said.

"With respect to Granite State Gas Transmission, we agree with the OPA that Granite capacity is different from other capacity resources in Northern's portfolio because suppliers must transport on Granite to deliver gas to the Northern city gates. Thus, even if less than 100% of Northern’s other capacity resources are assigned, we agree that Granite should be 100% assigned. In addition, we note that the same logic would seem to apply to Capacity Exempt customers, and indicate that 100% of Granite be assigned to them as well," the hearing examiners said.

"In Staff’s view, all capacity that is assigned should also be released to the suppliers, unless there are contractual restrictions or other specific reasons not to do so, such as appears to be the case for Northern’s on-system peaking resource. This approach would allow the market to provide supply for retail choice customers to the greatest extent possible, and would eliminate the administrative complexities, disputes, and costs associated with the Company Managed approach," the hearing examiners said.

"The Staff’s view is that costs to marketers for assigned capacity should reflect the actual cost and quantity of each of the capacity resources they are assigned. This is consistent with Northern’s proposed End State proposal. For any resources that remain Company Managed, the associated commodity charges should also be based on actual commodity and associated operational and administrative costs. This would eliminate the need to rely on estimates which would then require some group of customers to bear the reconciliation to actuals," the hearing examiners said.

"We recognize that this approach may make it more challenging for marketers to determine their costs up-front and provide price certainty to their customers," the hearing examiners said. "However, the proposed approach appears to be more equitable than the status quo given that Sales Service customers now bear the reconciliation risk between estimated and actual costs associated with Transportation Service. Finally, if the Program is changed in this respect, we note that it will be important for marketers to have access to the prices and other terms applicable to the capacity resources so that they can plan and price accordingly. We ask Northern to comment on whether there would be any barriers to providing such access."

Docket No. 2014-00132

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