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Aggregator Alleges Costs Sought To Be Included Under Supplier's Invocation Of Regulatory Change Clause Do Not Qualify For Pass-Through Treatment

Consumer Counsel To Retain Consultant Regarding Supplier's Action, Review ISO-NE Market Rules

December 18, 2018

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

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Bridge Energy Services, LLC, a registered aggregator in Connecticut, filed on December 14 a letter with the Connecticut PURA alleging that there have not been any regulatory changes in ISO New England which would authorize Agera Energy, LLC to exercise a regulatory change and pass-through clause under its contracts with certain non-residential customers.

Bridge's clients with fixed price Agera supply contracts, and for which Bridge alleged pass-through price increase notices were received, include the City of Hartford, twelve (12) Connecticut colleges and universities, twenty (20) franchised restaurant operators, and twenty-three (23) interstate service plazas.

As exclusively reported by EnergyChoiceMatters.com, PURA had initially directed Agera to provide information concerning its invocation of the regulatory change clause in response to a complaint from a non-residential customer. As alleged in a customer complaint, the Agera letter of the pass through stated that, "This letter is to notify you of a Regulatory Change in the ISO New England territory affecting your electricity supply contract with Agera ('Agreement')."

In response to an inquiry from PURA, Agera on December 14 provided further details (see story here) concerning the exercise of the Regulatory Change clause, describing the regulatory changes authorizing the invocation of the clause as follows, "As noted in the Notice, there was a Regulatory Change in the ISO New England ('ISO-NE') service territory. Specifically, ISO-NE made numerous structural changes, as reflected in its tariff, for the June 1, 2018-May 31, 2019 capacity period. First, ISO-NE used a system-wide sloped demand curve for the first time. Second, it made changes to the Capacity Zones. Third, it implemented the Pay-for-Performance program. Lastly, it ended the Transitional Demand Response Program. These changes constitute a 'Regulatory Change' under the terms of Agera’s contracts with its customers."

Bridge filed a letter with PURA on December 14, the same day on which Agera provided the details concerning the specific changes Agera says qualify for use of the regulatory change clause. It did not appear that Bridge had yet seen Agera's response when filing its letter on the same day

Bridge alleged in its December 14 letter to PURA that, "Promptly following receipt of the Price Increase Notices, Bridge contacted Agera in order to obtain background on Agera's claims of a 'Regulatory Change.' Despite extensive and repeated efforts, Agera has been unwilling and/or unable to articulate what events or circumstances it believes constitute a Regulatory Change for the purposes of the fixed price supply contracts with Bridge's clients. Agera's unwillingness and/or inability to respond continued unabated since this firm [a law firm authoring the letter on behalf of Bridge] became involved on November 30, 2018. Following additional outreach attempts this morning [Dec. 14], Raima Jamal, an attorney for Agera, contacted this office to indicate that Agera would be filing a response to the Authority's inquiry and that Agera was willing to discuss customer concerns thereafter."

Bridge said in its December 14 letter to PURA that, "Bridge strenuously objects to the assertion that there has been a 'Regulatory Change in the ISO New England territory' as asserted by Agera in the Price Increase Notices. Despite its best efforts, Bridge has found no evidence of any such Regulatory Change and has confirmed with three prominent third party power marketers that there was no such Regulatory Change."

Bridge alleged in its December 14 letter to PURA that, "While Agera has remained unwilling and/or unable to articulate any Regulatory Change, Bretton D. DeNomme, Agera's Executive VP, Sales & Marketing, did share with Bridge that the capacity reserve margin applied by ISO-NE for certain months was higher than what Agera may have forecasted. Bridge believes that Agera's pricing methodology may be inaccurate, in that even if the capacity reserve margin was greater than Agera expected, correspondingly, other capacity related pricing determinants ought to have been lower, resulting in an offset to the impact to Agera. In any event, (i) fluctuations in the capacity reserve margin do not constitute 'Regulatory Changes' for the purposes of the relevant fixed price supply contracts and (ii) the fixed price in the relevant Agera supply contracts, per Section 18 thereof, expressly 'includes the fees associated with providing electric services such as capacity, transmission costs, ancillaries, and delivery costs plus all other applicable taxes, fees, charges or assessment.'"

Bridge alleged in its December 14 letter to PURA that, "The relevant fixed price supply contracts define 'Regulatory Change', in relevant part, as ' ... a change in any law, rule, regulation, tariff, or regulatory structure ... which impacts any term, condition or provision of this Agreement including, but not limited to price....' Section 15 of the relevant Agera fixed price supply contracts."

"Bridge respectfully requests that the Authority take appropriate steps to prevent Agera from implementing price increases under fixed price supply contracts as described in the Price Increase Notices," Bridge said in its December 14 letter to PURA

The Connecticut Office of Consumer Counsel, which is a party to the docket in which PURA's inquiry related to Agera's pass-through notice was filed, said in a filing that it, "has determined that it is necessary or desirable to retain one or more consultants in the subject proceeding."

With these consultants, OCC said that it intends to supplement or complement its existing staff expertise in this docket. The areas of expertise include but are not limited to:

1. ISO-New England market rules and tariffs;

2. Generation Supply Agreements with Commercial Customers;

3. Retail electric competition for commercial customers, including through aggregators and brokers; and

4. Other topics as may become necessary.

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