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FERC Sets Hearing On Capacity Rule Change That PUC Has Linked To Change Default Service Rate Structure

December 29, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

FERC has set for hearing proposed changes to capacity obligations in the Northern Maine Independent System Administrator, Inc., stating that the sought changes have not been shown to be just and reasonable

The proposed market rule change is notable because the Maine PUC has made a change in its default service rate setting process at Maine Public Service (Emera-Maine Public Division) contingent on FERC accepting the rule change.

NMISA is proposing to change the capacity obligations in Northern Maine under Market Rule 10. Generally, the proposed change would allow generation resources located within the New Brunswick Balancing Authority Area to meet a supplier’s capacity obligation in the NMISA northern region without the need for the firm transmission into northern Maine.

The current version of Market Rule 10.2(d) outlines a deliverability-assurance requirement for resources outside of the Northern Maine transmission system in order to provide eligible unforced capacity. NMISA asserts that this requirement used to be necessary due to a transmission constraint between Northern Maine and New Brunswick and the fact that, absent reasonable assurance of deliverability from New Brunswick, a resource located outside Northern Maine could not be depended upon to meet the capacity obligation.

However, NMISA states that an application to replace and upgrade the Tinker transformer (Tinker upgrade) located at the New Brunswick-Northern Maine interface was accepted on September 25, 2015, and, as a result of this upgrade, the interface will no longer be constrained. Therefore, according to NMISA, there will no longer be any need for market participants to make a specific showing of deliverability for a resource located outside Northern Maine but within the New Brunswick Balancing Authority Area, because there will be assurance that transmission service will be available over the unconstrained interface.

NMISA's application was opposed by ReEnergy Biomass Operations, which owns generation in Northern Maine.

FERC issued an order setting NMISA's application for hearing and settlement judge procedures, stating, "Our preliminary analysis indicates that NMISA’s proposed amendment to the deliverability-assurance requirement in Market Rule 10 of its Tariff has not been shown to be just and reasonable and may be unjust, unreasonable, unduly discriminatory or preferential, or otherwise unlawful."

"Moreover, NMISA has not demonstrated that the Tinker upgrade located at the New Brunswick-Northern Maine interface will relieve the constraint at this interface, or that capacity located inside and outside of the Northern Maine Transmission System is capable of meeting Northern Maine’s peak load capacity requirements before and after the Tinker upgrade. Accordingly, we will accept NMISA’s proposed Tariff amendment for filing, subject to refund, suspend it for a nominal period, to become effective November 1, 2016, as requested, and establish hearing and settlement judge procedures," FERC said

As noted above, the Maine PUC conditionally adopted changes to default service rate setting at Maine Public Service contingent on NMISA’s proposed changes receiving FERC approval.

Specifically, if the NMISA change is adopted, Standard Offer rates for residential and medium non-residential customers at Maine Public Service will be based on an "index", with such index generally based on wholesale market prices for the remainder of 2017, and on Standard Offer prices in the comparable Standard Offer classes at Central Maine Power Company and Bangor Hydro-Electric for calendar years 2018 and 2019.

If the NMISA change is adopted, the MPS Standard Offer rate for residential and small C&I customers, for 2018 and then again in 2019, shall be set at 95% of the "Southern Maine Index Rate." The Southern Maine Index Rate equals the weighted average (based on total small class load for the preceding calendar year) Small Class Standard Offer Service rate set for each respective calendar year by the PUC for Bangor Hydro-Electric and Central Maine Power. The use of the Southern Maine Index as defined above is contingent on the PUC using historic approaches to set CMP and BHE default service rates.

See our prior story on the new Maine default service rate process at MPS for further details

FERC Docket No. ER17-192

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