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PSC Directs Creation Of Time Of Use Pilots Offered Via Both Utility/SOS, And Retail Suppliers

Will Permit 2 Retail Suppliers (Rather Than 1) To Offer TOU Pilot Per Service Area

November 29, 2017

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

The Maryland PSC has directed the creation of supply rate time of use pilots offered via utilities to non-shopping customers, and through up to two retail suppliers per each of the three service areas with AMI (BGE, Pepco, an Delmarva).

The PSC was addressing a report draft by working group leaders regarding TOU pilots in PC 44 (see details here). The PSC did not adopt specific TOU programs at this time, but provided direction to the working group on certain policy issues and directed the working group to return with revised proposals meeting parameters set by the PSC

Notably, the PSC said that a pilot should be offered to SOS customers who do not shop, while there shall also be up to two TOU pilots, offered by two retail suppliers selected via RFP, per service area

The PSC directed that the pilots follow the provisions below:

Pilot No. 1: SOS

• The pilot shall be marketed initially to current SOS TOU customers, and shall be capped at a participant level that is large enough to realize a statistically significant sample size, such as 1,000 customers. In order to contain program costs and limit the exposure of Maryland customers to any unforeseen issues, the Commission wishes to limit eligibility to a reasonable size while also obtaining useful pilot results.

• The Workgroup Leaders shall address any other issues raised by running a new TOU pilot for distribution and supply under the SOS framework.

Pilot No. 2: Retail Supply

• The pilot shall limit the number of suppliers to 2 per service territory, and each of those individual classes of supplier customers shall be capped at a participant level that is large enough to realize a statistically significant sample size, such as 1,000 customers. In order to contain program costs and limit the exposure of Maryland customers to any unforeseen issues, the Commission wishes to limit eligibility to a reasonable size while also obtaining useful pilot results.

• Suppliers may enroll pilot customers who receive their electric supply from any source.

• Following workgroup consideration, the Workgroup Leaders shall also report to the Commission on how to ensure that suppliers pay their 'fair share' of marketing and recruitment costs.

• Following workgroup consideration, the Workgroup Leaders shall propose detailed RFP requirements, such as a clear process for submission and evaluation of bids, whether to require certain forms of security, and objective criteria for selecting bids. The Joint Utilities shall implement the RFP and select bids from competing suppliers, for the Commission’s approval. Objective criteria for bid selection should include, at a minimum, the record of the supplier in other states, the supplier’s experience with TOU rates, and the supplier’s ability to implement TOU pricing. Workgroup Leaders shall also ensure that the RFP requirements make clear that suppliers shall share aggregated data from the pilot with the Joint Utilities, the Commission, and as appropriate, other stakeholders. The Workgroup Leaders shall also make a clear recommendation as to whether or not the Joint Utilities should employ a competitive procurement to select their EM&V provider.

The two pilots shall run for 24 months in the territories of the utilities with AMI listed above, with a proposed start date or dates on or after November of 2018, so that the utilities have six to nine months from the date of the Commission approval to ready their systems for program implementation.

Both pilots shall offer both distribution and supply at peak and off-peak rates, while allocating, for purposes of these pilots only, primary demand costs into peak rates, with an overall (i.e. distribution combined with supply) on-peak/off-peak ratio of approximately 3 to 1. Both pilots shall also offer a 5-hour afternoon peak for distribution rates from June to September and a 3-hour morning peak from October to May. The SOS pilot shall also offer the same 5-hour afternoon peak for supply rates from June to September and 3-hour morning peak from October to May. The retail supplier pilot shall offer a 3 to 5 hour afternoon peak for supply from June to September with or without a 3-hour morning peak from October to May.

Suppliers should also be able to offer additional innovations – such as 'free Saturdays' – subject to review under the RFP process.

At the end of each pilot’s 24- month period, there should be an extensive educational component about participant shopping options as part of a general transition plan for all participants. If a participant does not make an active decision to choose a new retail supply option or SOS, however, the participant shall be placed on SOS by default, the PSC said

The Commission said that it supports joint marketing efforts to promote the retail supply pilots, but is concerned with both the cost of such marketing and the appropriate allocation of such costs between ratepayers and retail suppliers. But with an eye toward affordability, the Commission would like to receive further comments and recommendations from the Workgroup Leaders on the practicality and costs of addressing understandability of marketing and outreach materials through the workgroup; requiring utilities to develop and provide free bill analysis tools before enrollment; and requiring outreach materials to go to customer aggregators like neighborhood clubs and renter associations. The Workgroup Leaders should report further regarding the rationale, costs and options for allowing the use of ratepayer funds to develop utility tools and apps, as well as options for the use of other technology enhancements like energy wise programs and home energy reports. The Workgroup Leaders should also provide information on the practicality of and amount of savings that could be derived from limiting use of an online comparison tool to BGE, which the Commission understands BGE (but not Pepco or DPL) has already developed.

The Workgroup Leaders should also work to provide the Commission with the opportunity to enable the utilities to integrate uniform or similar SOS pilot program designs across the joint utilities, as well as a better understanding of how such a design might work, with an eye toward saving costs. Finally, the Workgroup Leaders should provide specific estimates of marketing costs to the Commission.

Although the Commission is sensitive to the concerns that several advocates raised about lowering participation costs for low-to-moderate income customers or holding them harmless from the costs they incur under a pilot, the Commission believes that it is important to have a pilot with meaningful price signals and is also concerned about the ratepayer impact of any such options. Thus, with ratepayer impacts in mind, the Workgroup Leaders shall provide information about specific options for, and the estimated cost of, having utilities provide low-to-moderate income customers demand response technology at a nominal charge.

Given the above parameters, the Commission directs the Workgroup Leaders to continue convening the workgroup with the purpose of further refining the design of two pilot programs in each service territory of the utilities -- one for customers who wish to receive Standard Offer Service, and another pilot for customers who wish to receive service from a retail supplier. The workgroup should attempt to reach as much consensus as feasible, and deliver more detailed pilot proposals to the Commission no later than January 31, 2018.

Of its decision to adopt a non-shopping TOU pilot for SOS customers as well as retail supplier TOU pilots, the PSC said, "The Commission believes ... that it can more effectively meet its stated goal of 'ensuring customer options for time-varying rates for generation service' by authorizing pilot programs that offer TOU rates for electric supply under both an SOS framework and through retail supply."

"The Commission is also hopeful that the time-varying rates will make retail choice a more attractive option for many consumers. As described below, by allowing retail suppliers to offer up to six pilots [e.g. two per each of 3 EDC service areas], there should be ample opportunity for the pilots to educate customers about their options for procuring energy and realizing the benefits of a modern electric grid," the PSC said

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