Retail Supplier Details Costs Being Passed-Through To Certain C&I Customers Under Change In Law Provision
December 11, 2018 Email This Story Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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Spark Energy, LLC, in replying to an inquiry from the Connecticut PURA, has provided more details concerning the specific costs which are being passed-through to certain non-residential customers on fixed rate contracts
As exclusively reported by EnergyChoiceMatters.com, PURA directed Spark to provide information in response to a complaint from a non-residential customer concerning the pass-through, which, in PURA's correspondence, had only generally been described as ISO-NE capacity costs.
In its reply to PURA, Spark stated that, "Connecticut General Statutes § 16-245o(f)(2) permits electric suppliers to include in customer contracts 'circumstances under which the rates may change.' As is common in the industry, Spark’s standard form Master Electricity Service Agreement ('MESA') includes a provision which contemplates the pass-through of certain costs associated with a change in law. Section 4 of Spark’s MESA defines a 'change in law' to include changes in 'market design.' Section 4 also states that 'in the event that Seller determines that any index price or other component necessary for a Contract Price is not available or there is a change in the formula for or the method of deterring such index, then Seller may either adjust the Contract Price for each affected period or use another index.'"
In its correspondence to PURA, Spark stated that, "One component of the Contract Price includes capacity costs determined by ISO New England. Specifically, one component of the Contract Price includes peak demand assumptions determined by ISO New England and published in its Demand Report which sets the Zonal Capacity Obligation. In February 2018, ISO New England issued a new Demand Report with significantly altered peak day assumptions. This change to a component of the Contract Price required adjustments to the Contract Price pursuant to Section 4 of the MESA. In addition, on June 1, 2018, ISO New England instituted a new capacity market design known as Pay for Performance. Pay for Performance represents a significant new market construct and institutes new Capacity Scarcity Conditions which significantly alter the cost of securing capacity. In addition, ISO New England also revised its rules regarding the integration of demand-response resources into the region’s wholesale electricity markets and as part of the Integrating Markets and State Public Policies (IMAPP) process implemented a new capacity market construct known Competitive Auctions with Sponsored Policy Resources (CASPR). As a result of these changes in market design, the change in law provision contained in Section 4 of the MESA was also triggered."
In its reply to PURA, Spark stated that it issued notices to 532 customers during August of 2018 concerning the pass-through. "On account of these unusual changes to the ISO New England market and increase to the Contract Price, Spark as a courtesy has not charged any early termination fees for customers electing to terminate on account of the pricing changes," Spark said in its correspondence to PURA