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Utility Proposes New Method To Procure, Price Default Service; Would Transition Large Customers To Monthly Variable Rates

July 5, 2017

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

Public Service Company of New Hampshire (Eversource) has filed with the New Hampshire PUC a proposal to procure and price default energy service (ES) effective January 1, 2018, due to the pending divestiture of its power plants which are currently used, in part, to provide default service.

PSNH proposes to separate customers into two groupings for default service under the new mechanism. Currently, all customer classes at PSNH are eligible to receive the same fixed default service rate (except for certain instances where returning from competitive supply).

Under PSNH's proposal, there would be a small customer class consisting of customers in the following delivery service classes: Residential Rates R and R-OTOD; General Service Rates G and G-OTOD; private area lights associated with these residential and small general service accounts and billed under Outdoor Lighting Rate OL; and municipal lighting on Outdoor Lighting Rates OL and EOL.

For these customers, PSNH is proposing to provide default service with a flat rate that changes every six months, on January 1 and July 1

For the small customer group, PSNH is proposing that it will use a laddering approach to contracting. Except for the initial transition period, PSNH proposes to procure service for 50 percent of the small customer load for a one year period every six months. For example, in March 2018 Eversource would solicit bids for 50 percent of the small customer load for the period of July 2018 through June 2019 and in September 2018 it would solicit bids for 50 percent of the small customer load for the period January 2019 through December 2019. The result, in this example, would be that for January through July of 2019, customers would pay a rate that is a blend of those procurements.

In other words, PSNH would procure 50 percent of the residential and small C&I requirements about 8 months ahead of the rate period (Jan-June or July-Dec) and the other 50 percent about 2 months ahead of the respective rate period.

"The timing of these procurements means that small ES customers would see rates that somewhat lag the market, but that would not be fixed for an unreasonably long time. Eversource would still be offering a market-based rate, but it would be one that is more stable, predictable, and understandable to small customers," PSNH said

"Procuring portions of the supply at varying times, and providing customers a blended rate comprised of multiple procurements, will help ensure that there will not be substantial and unpredictable swings in rates. In this way, the ES rate will provide customers a stable, predictable, and understandable rate against which they may meaningfully compare their options in the marketplace," PSNH said

The large customer group would consist of delivery service customers in the following classes: Primary General Service Rate GV, Large General Service Rate LG, Backup Service Rate B, and any private area lighting associated with these accounts and billed under Outdoor Lighting Rate OL.

For these customers, PSNH proposes that the default service rate vary monthly. PSNH would procure, with monthly prices, six-month contracts to serve 100% of the large customer group every six months.

For all default service customer classes, PSNH would solicit via competitive RFPs load following, full requirements (excluding RPS) service.

Default service rates would include the winning wholesale suppliers' bids for energy, capacity, ancillary services, and other components of all requirements service, plus the RPS rate under the process discussed further below, along with PSNH's, "internal overhead, working capital and uncollectible expense costs," and a reconciling adjustment

Any rate adjustments necessary to accommodate the reconciliation would accompany the filing for the January 1 rate proposal and would take effect with the ES rate changes on January 1 of each year.

PSNH said that, in the future, if over and under collections are caused by "gaming" of the default service rate, "the company reserves the right to petition the Commission to change the reconciliation recovery from then current ES customers only to a non by-passable charge to be collected from all customers within the small and large customer groups."

With regard to RPS compliance obligations, PSNH would manage its RPS needs outside of the default service RFP process. PSNH would establish the bypassable RPS rate based on publicly available, current market price information (daily broker quotation sheets) and Renewable Energy Certificates class percentage requirements as of the time the rate setting filing is being prepared. Fulfillment of required quantities would be accomplished through the issuance of RFPs or purchases either directly from producers or through the bilateral market, in the same manner as how it is accomplished today for current ES customers.

Regarding fulfillment of Class I REC requirements, Eversource will continue to purchase Class I RECs from the Burgess BioPower and Lempster Wind facilities under existing PPAs. Under the 2015 divestiture settlement, "RECs from such PPAs will be managed prudently to benefit customers." The REC amounts purchased from these sources may more than meet energy service obligation quantities, eliminating the need for Class I purchases. Since the 2015 Agreement calls for the costs of those PPAs to be recovered via the SCRC, a transfer price for RECs obtained under those PPAs used to satisfy RPS needs for ES customers must be set. In order to properly account for these Class 1 REC purchases for both ES and SCRC purposes, Eversource proposes to establish a transfer price equal to the Class I REC prices established via the mechanism described above, PSNH said

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