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PUC Approves New Design, Procurement Mechanism For Default Service At PSNH

January 2, 2017

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

The New Hampshire PUC on December 29 approved a non-unanimous settlement governing the provision of default service once the sale of Public Service Company of New Hampshire's (Eversource) generation facilities is complete (Docket DE 17-113).

The settlement adopted by the PUC relies on sealed-bid RFP competitive procurements to procure default service energy supply for PSNH, with two customer class groupings.

Under the PUC's order, competitive procurements at Eversource will be for 100% of the load to be delivered in an applicable 6-month period, and will forego the use of laddering (which is a change from an earlier proposal that included laddering).

For the small customer class (consisting of customers in 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), Eversource shall use a single procurement every 6 months for full requirements, load following service for a 6-month term. The default service rate for the small class will be set at a flat cents-per-kWh level for each 6 month term. Tranches offered to bidders will be designed as percentages of load aimed at being approximately 100 MW in size.

The 6-month periods, with fixed pricing, for the small customer group shall be February 1 to July 31, and August 1 to January 31.

The PUC noted that under such schedule, "Eversource has designed energy service for its small customer group in two six-month periods that divide the historical two highest-priced winter months between the two procurement periods to mitigate price changes between the shoulder months and winter months, and thus offers more stable rates for those customers who value that service."

For the large customer class (consisting of customers in 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) Eversource shall use a single procurement every 6 months for full requirements, load following service for a 6-month term. The default service rate for the large class will vary monthly in line with the monthly pricing identified by the winning bidder.

Under the PUC's order, Eversource shall transition to the competitively sourced default service mechanism beginning April 1, 2018, or within approximately 90 days following the closing of the sale of Eversource’s thermal generation assets.

The PUC approved the agreement of settling parties that any non-scrubber reconciliations relating to PSNH's provision of self-managed default service prior to the transition to the new competitive mechanism will be recovered as a nonbypassable stranded cost.

Furthermore, starting with the effective date of competitive default service, existing legacy IPP and PPA costs will be recovered through the nonbypassable stranded cost recovery charge instead of the default service charge. The Retail Energy Supply Association had opposed such treatment, but the PUC dismissed RESA's concerns.

In the event that Eversource's hydroelectric generating assets have not been sold as of the start of the competitively sourced default service, the competitively procured default service rate shall incorporate a "hydro adjuster," which is a cents-per-kWh rate for the upcoming rate term consisting of the estimated costs and revenues relating to the hydroelectric assets amortized over forecasted default energy service sales.

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