Retail Supplier Seeks Waiver Of Certain PSC Rules For Newly Developed "Innovative" Product
April 16, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
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Star Energy Partners LLC (Star) has petitioned the Maryland PSC for a waiver of certain COMAR provisions to enable Star to offer a real-time wholesale electricity market index product to customers in Maryland that would include a subscription (or membership) charge
Specifically, Star requests a waiver of COMAR 20.53.07.13(A)-(B) (Notice of Change in Rate) and the related provision in COMAR 20.53.07.08(A)(2)(n) (Supplier Contracts).
Star said that it has developed a real-time wholesale electricity market index product that Star would like to offer to customers in Maryland, as well as the other markets Star serves in the PJM footprint.
"This product will utilize interval meter data and real-time PJM wholesale market pricing to allow customers to access wholesale market pricing under a subscription model. Star will charge a fixed subscription (initially set at $15 per month, but subject to change) to provide the wholesale market index product with no markup, in addition to online access to the current wholesale rate and the receipt of email price notifications. Star’s wholesale market index product can be a great fit for customers that are willing to accept the volatility of the wholesale market for the opportunity to obtain no-markup electricity supply for a fixed monthly subscription, without the risk premiums embedded in other products on the market today," Star said
"Importantly, Star’s product is not a variable-price product as seen in the market today. Variable price offerings are generally based in part on wholesale market prices, and may also include markups for business conditions, expenses, margins, risks, and other factors that the supplier includes in its pricing. Typically, variable price products change in price each month and retail suppliers do not provide a quantitative breakdown of the cost components used to calculate the customer’s monthly variable price. By contrast, Star’s innovative offering will provide a transparent wholesale market price to customers with a price that changes in real-time with the wholesale market. Star’s customers would consent to pay the real-time wholesale price (inclusive of all applicable price components) with no markup, plus a fixed monthly subscription. Star believes that this innovation offers a level of transparency not available in the Maryland retail electricity market today," Star said
"[T]he current variable price change notifications required under COMAR 20.53.07.13, and the related supplier contract requirement in COMAR 20.53.07.08(A)(2)(n), are not compatible with Star’s index offering. Therefore, Star requests that the Commission waive these COMAR provisions subject to the conditions discussed below," Star said
Star said that, "COMAR 20.53.07.13(A) is the Notice of Change in Rate requirement that was promulgated in RM54 to provide variable-price customers the ability to access their upcoming variable price at least 12 days prior to the close of the customer’s billing period. Subsection (B) of COMAR 20.53.07.13 allows a supplier to provide an estimated rate for the customer’s billing period, provided that the supplier may not bill a higher rate than the estimate provided. Star acknowledges the important consumer protection this advance notice of price change regulation affords residential customers in Maryland. However, real-time wholesale market pricing is not available 12 days prior to the close of a customer’s billing cycle. Star could provide an estimate to customers, but any estimate would be tied to a wholesale market price cap or historical pricing data and would not provide customers with the specific pricing that COMAR 20.53.07.13 contemplates. Instead, as discussed below, Star proposes to provide a transparent wholesale market pricing tool that will allow customers to see their wholesale market index price in real-time."
Star requests that the Commission grant the requested waiver subject to two conditions
"First, as an alternative to the notifications under COMAR 20.53.07.13, Star will provide customers real-time pricing information via a tool on the Star website. Customers can check their current real-time index price at any point, while also seeing a chart of historical pricing as compared to the Standard Offer Service ('SOS') rate. Star will maintain this tool on a publicly accessible page on its website. Planned enhancements to the website include a forecast of estimated upcoming real-time index prices and individualized usage and pricing data, which will be password protected and accessible using unique credentials for each customer. The online pricing tool will be coupled with email notifications regarding significant weather or other events that may affect wholesale market prices, enabling customers to understand and respond to price fluctuations in the wholesale market," Star said
"Second, Star will not charge any early termination fees for customers that enroll in Star’s real-time wholesale market index product. If a customer tries the offering and decides that another retail electricity supply product is a better fit, then Star will process any customer drop request without charging penalties or early termination fees. With accelerated switching, customers can make that transition in three business days. Star understands that a wholesale market product carries with it the risks and volatility of the wholesale market. While Star expects that many customers will find great value in accessing wholesale market pricing through this offering, some customers may decide, for example, that the certainty of a fixed-price offering is a better fit. Customers that choose to switch to a different supplier or back to SOS will be able to do so without any penalty from Star," Star said