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PSC Adopts Final New Retail Supplier License Rules

Reverts To Broad Definition Of Entities Required To Be Licensed (Includes Intermediaries Who 'Arrange' Or Market Supply)

Clarifies Definition Of Customer To Include Small Commercial Customers

Clarification Appears To Require Suppliers To Post Rate Information For Commercial Customers On Website

Requires Existing Suppliers To Submit Renewals

September 20, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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The District of Columbia PSC has adopted as final new licensing rules for retail electric suppliers.

The final rule deletes from prior NOPRs the term "Nontraditional Marketers" as an exclusion from the definition of "Electricity Supplier".

Under prior drafts, Nontraditional Marketers were to be defined as, "A community-based organization, civic, fraternal or business association that works with a licensed Electricity Supplier as an agent to market electricity to its members or constituents. A Nontraditional Marketer: (i) conducts its transactions through a licensed Electricity Supplier; (ii) does not collect revenue directly from retail Customers; (iii) does not require its members or constituents to obtain its electricity through the Nontraditional Marketer or a specific licensed Electricity Supplier; and (iv) is not responsible for the payment of the costs of the electricity to its suppliers or producers."

As noted above, the prior draft would have excluded Nontraditional Marketers from the definition of "Electricity Supplier".

The PSC said it erred in this proposal

"Regretfully, the Commission should not have added the term [Nontraditional Marketers] and its definition in the second, third, fourth, and fifth NOPRs because the term and its definition are neither consistent with nor contemplated by the Retail Competition Act. The Retail Competition Act unambiguously defines 'Electricity Supplier' to mean 'a person, including an aggregator, broker, or marketer, who generates electricity; sells electricity; or purchases, brokers, arranges or, markets electricity for sale to customers . . .' Because there is no exclusion from the definition of 'Electricity Supplier' in the Retail Competition Act for nontraditional marketers, all marketers are deemed an 'Electricity Supplier'. Therefore, the Commission cannot include a subset category of marketers that would be excluded from the definition of 'Electricity Supplier' in Chapter 46," the PSC said in its final order

The final order adopts a definition of electricity supplier, defining entities which are required to be licensed by the PSC, as follows:

Electricity Supplier: A person, including an Aggregator, Broker, or Marketer, who generates electricity; sells electricity; or purchases, brokers, arranges or markets electricity or electric generation services for sale to Customers. The term excludes the following:

(a) Building owners, lessees, or managers who manage the internal distribution system serving such building and who supply electricity solely to the occupants of the building for use by the occupants;

(b) Any Person who purchases electricity for its own use or for the use of its subsidiaries or affiliates;

(c) Any apartment building or office building manager who aggregates electric service requirements for his or her building or buildings, or who does not: (1) Take title to electricity; (2) Market electric services to the individually-metered tenants of his or her building; or (3) Engage in the resale of electric services to others;

(d) Property owners who supply small amounts of power, at cost, as an accommodation to lessors or licensees of the property;

(e) Consolidators;

(f) A Community Renewable Energy Facilities ('CREFs') as defined in Subsection 4199.1 and as described in Subsections 4109.1 through 4109.3 pursuant to the Community Renewable Energy Amendment Act of 2013 (D.C. Law 2047; D.C. Official Code §§ 34-1518 et seq.);

(g) An Electric Company; and

(h) Any Person that owns a behind-the-meter generator and sells or supplies the electricity from that generator to a single retail customer or customers behind the same meter located on the same premise

Furthermore, the final rules broadly define "Broker" as, "A Person who acts as an agent or intermediary in the sale and purchase of electricity but who does not take title to electricity."

The final rules define "Marketer" as, "A Person who purchases and takes title to electricity as an intermediary for sale to customers."

Any Person who engages in the business of an "Electricity Supplier", as defined above, in the District of Columbia shall be required to hold an Electricity Supplier License.

The final rules omit an earlier proposal that supplier licenses would expire after five years. Instead, suppliers are subject to a five-year review of their license.

An Electricity Supplier that has been licensed for more than five (5) years from the effective date of the new rules shall submit an Application for review by the Commission pursuant to the licensing requirements and procedures set forth in §§ 4601 and 4602 within ninety (90) days from the effective date of this Chapter.

The final rules retain a notice requirement to the PSC before a supplier may begin marketing.

"A Licensee, both new and existing, who has not initially started serving Customers shall file a notice with the Commission within three (3) business days before the Licensee begins soliciting or marketing to Customers directly or through an authorized representative in the District of Columbia. This is a one-time initial notice prior to the Licensee beginning its marketing to or soliciting of District of Columbia Customers. The notice shall include the name of the licensee’s designated contact person for pricing information if the Licensee is serving Customers and the URL address of the Licensee’s website. All door-to-door sales representatives and agents of the Licensee shall be required to present photo identification to Customers as part of the solicitation process. In addition, the Licensee is required to maintain a record of the identity of each sales representative and marketing agent or representative active in the District of Columbia, including the company photo identification, and make it available upon request to the Commission," the final rules provide

Regarding the required one-time notice of marketing noted above, the PSC clarified that this section (Section 4602.8), "applies not only to residential customers, but to small commercial customers as well because the definition of 'customer' as defined in this chapter does not differentiate between a residential and small commercial customer."

The PSC noted that, "The term 'customer' is defined in Chapter 46 as '[a] purchaser of electricity for their own end use in the District of Columbia.'"

Specifically, the final rule defines "Customer" as, "Customer: A purchaser of electricity for end use in the District of Columbia. The term excludes an occupant of a building where the owner, lessee, or manager manages the internal distribution system serving the building and supplies electricity solely to occupants of the building for use by the occupants."

While the PSC in its final order clarified that the term includes small commercial customers, in response to stakeholder comment, the term would, barring any other statutory limit of the PSC's authority of large C&Is in the retail market, also include large commercial and industrial customers.

This is notable given the requirements that suppliers must follow with respect to "customers" elsewhere under the rules

Notably, the rules obligate suppliers to, "post on the Internet or on the Licensee’s website adequate and accurate information about its services and rates for Customers." Failure to do so is grounds for PSC action

In discussing the original of this proposal, the PSC said in its final order that, "the Commission in the Second NOPR proposed to modify Section 4609.2 (h) to require electric suppliers to post 'adequate and accurate' information regarding their services and rates for Small Commercial Customers and Residential Customers on the Internet." However, nothing in the rules themselves explicitly limits this obligation to small commercial service. Indeed, an earlier draft had limited the internet information posts to, "Small Commercial Customers and Residential Customers," but now the final language only uses the broader term "Customer", which as noted above would appear to encompass all sizes of customers

Since the PSC has clarified that "Customers" includes all customers, the obligation to post "adequate" information on rates now ostensibly applies to not only small C&I service, but also large commercial and industrial service. The specific disclosures which would constitute "adequate and accurate" information about a supplier's services and rates is not addressed in the rules

The PSC deleted the proposed requirement that a licensee provide the Commission with a copy of its flyers, consumer pamphlets, scripts and other proposed marketing material at the time of notification of impending service

The rules set forth a $50,000 integrity bond for load-serving suppliers to the extent the supplier does not meet one of the following standards

(a) A current credit rating of BBB- or higher from a nationally recognized credit rating service;

(b) A current commercial paper rating of A2 or higher by Standard & Poor's and/or P2 or higher by Moody's or similar rating by another nationally recognized rating service; or

(c) An unused line of bank credit or parent guarantees deemed adequate by the Commission.

The final rule confirms that the PSC may order suppliers to provide customer refunds as a sanction or enforcement mechanism


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