Energy Choice
                            

Matters

PSC Staff: State-Endorsed Opt-In Program Not Appropriate; Staff Also Wary Of Opt-in Pilots Staff "Supports" Retail Market Enhancements

January 23, 2017

Email This Story
Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Staff of the Maryland PSC have advised against introduction of a state-endorsed opt-in retail electric supply program, where a single supplier would be selected by the state

Staff's comments were filed in PC 47, which is examining the potential for an opt-in affinity program in the state (see story here).

"Maryland's retail market is diverse, mature and functions to offer customers alternatives to Standard Offer Service ('SOS'). Under current rules, retailers must acquire and retain customers in competition with SOS and other retailers. Should a large portion of this market be turned over to one or a few suppliers in the hope that residential and small commercial customers will save money on their commodity bills, there may be detrimental effects on other customers both on SOS and Retail Choice," Staff said

"The establishment of an Opt-in Electric Affordability Program ('Program') could have the unintended effect of operating to the detriment of both ratepayers and suppliers, both retail and SOS. Such a program would result in the selection of one or several suppliers to provide a large Opt-in Electric Affordability Program. Although the successful bidding supplier may benefit, other suppliers might be encouraged to reduce marketing efforts in Maryland or leave the State entirely, and there would be little true choice for customers not opting into the Program Moreover, if participants in the Program or even in the proposed low income pilot discussed below were to return to SOS at some point in the future resulting in a significant portion of load returning to SOS, wholesale SOS suppliers may be able to re-price their SOS bid prices at market rates under the terms of the SOS Firm Service Agreement. This re-pricing mechanism could act to the possible detriment of all SOS customers and even their suppliers under a scenario where the proposed program was initially successful at beating SOS rates but was unable to maintain that pricing advantage. The result could lead to the unintended consequence of SOS suppliers pricing-in such an event in future SOS auctions. Consequently, the long term, fixed price contract provided by the Program may offer ratepayers certainty at the expense of savings with no good retail Choice or SOS options," Staff said

Staff recommended against two pilot opt-in programs suggested in the PC 47 consultant report -- a pilot based on a targeted group of low-income customers, or a pilot targeted to a single municipality.

Staff expressed concern that, "[b]y establishing a Commission-authorized community aggregation pilot, the Commission places its imprimatur on a specific retail supplier and a specific method of aggregation."

"A pilot limited to one supplier or even a few retail suppliers provides a significant benefit to the selected supplier(s); however, it could as has been discussed above, upset the delicate Choice/SOS balance," Staff said

In any case, Staff noted that opt-in aggregation of electricity purchases is already allowed under the law, and no formal pilot is required

Staff instead suggested that EUSP (Electric Universal Service Program) participants be offered a list by the Office of Home Energy Programs (OHEP) of suppliers that have agreed to sell electricity at or below the SOS price.

"Staff believes that it would be possible for OHEP to manage low income customers' participation in Choice to the agency's benefit. If it wished, OHEP could hold discussions with suppliers interested in serving low income customers and willing to offer those customers retail rates below the price of SOS. Suppliers willing to commit to this pricing constraint would enter into memoranda of understanding with OHEP. OHEP could then publicize the names of those suppliers willing to serve low income customers who were signatories to such an MOU. In this way low income customers could be protected from unanticipated retail supply rate increases, and OHEP might, as a result of such savings be able to serve more participants in its programs," Staff said

Staff noted that the PC 47 consultant's report recommended several retail market enhancements including: (1) seamless move, (2) instant connect, (3) remote enrollment (enroll by wallet), and (4) education and robust shopping platforms.

"Staff supports these market enhancements and has discussed them previously in the Supplier Coordination Working Group, among other forums. Staff intends to continue these discussions and hopes to implement these enhancements in the future when there is sufficient interest and a working example in other Retail Choice markets," Staff said

"However, as the Report notes, because new switching and marketing regulations have very recently been adopted, it is Staff's position that these enhancements, with the possible exception of consumer education, should not be ordered at this time in order to allow recent utility system changes to be effected," Staff said

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Marketing Associate -- Retail Supplier -- Houston
• NEW! -- Directors: Telemarketing or Broker Channel Management - Retail Electric Supplier -- Houston
• NEW! -- Analysts, Sales and Marketing - Retail Electric Supplier -- Houston
• NEW! -- Market Director -- Retail Energy
• NEW! -- Energy Business Development Professional
• NEW! -- Managers, Sales and Marketing - Retail Electric Supplier -- Houston
• NEW! -- Director, Wholesale & Retail Electricity Operations
• NEW! -- Director, Finance & Operations
• NEW! -- Sales Support Specialist -- -- Retail Supplier
• NEW! -- Sales Associate -- Retail Energy
• NEW! -- Energy Sales Rep
• NEW! -- Channel Sales Manager -- Retail Supplier
• NEW! -- Sales/Pricing Support Coordinator
• NEW! -- Marketing Coordinator
• NEW! -- Channel Partner Manager -- Retail Supplier
• NEW! -- Retail Energy Sales