Utility's Default Service Rate Increasing 34%

PUC Establishes Default Service Rate Until Any Further Price Adjustment Warranted

Utility Had Sought To Recover Administrative Default Service Costs In Stranded Cost Rate

June 11, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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The Maine PUC has set the standard offer prices for the Emera Maine-Maine Public District (EME-MPD, formerly Maine Public Service) large commercial and industrial customer class for retail standard offer service until such time as the Commission determines any further price adjustment is warranted.

"[T]he price for this [EME-MPD large customer] class will be $0.11175 per kWh, effective July 1, 2019, subject to possible further quarterly adjustments," the PUC said

The current price for the EME-MPD large commercial and industrial customer class is $0.08325 per kWh

On March 22, 2017, the Commission issued an Order Designating Standard Offer Provider, approving EME-MPD’s proposal to provide retail standard offer services to the large commercial and industrial customer class for a term of thirty-three (33) months, beginning on April 1, 2017 and ending on December 31, 2019. The order specified the price for this class at $0.08325 per kWh, subject to possible quarterly adjustments.

The 2017 order provided that the standard offer price is subject to periodic adjustments on not more often than a quarterly basis through the remainder of the term, which extends through December 31, 2019. The 2019 order further provided that, consistent with its proposal, EME-MPD was directed to establish an accounting mechanism to track any differences between its estimated and actual costs to provide standard offer service, and report balances on a quarterly basis for the Commission to determine whether a $/kWh addition or reduction to the next period’s retail standard offer rate for the MPD large class is warranted.

In its February 1, 2019 quarterly report, EME-MPD expressed concern with regard to the variation between the current standard offer rate for the large commercial and industrial customer class and the upcoming average rates for the medium customer class, effective March 1, 2019. EME-MPD recommended an 8% price increase to $0.08991/kWh, which imitated the percentage increase in standard offer prices experienced by the medium class effective March 1, 2019. EME-MPD stated that its proposed rate increase to the large class standard offer price would help mitigate its "in-migration concerns," noting its view that the large standard offer class "is at its subscription limit."

In its April 22, 2019 quarterly report, EME-MPD expressly requested an increase in the rate for the large standard class, in part for the purpose of recovering administrative costs associated with providing the service. EME-MPD proposed recovering the administrative costs, in part, in its stranded costs proceeding, and to otherwise increase the large class standard offer rate by 8% to a rate of $0.08991/kWh. EME-MPD reasoned that 8% was similar to the increase experienced by the MPD small and medium standard offer classes effective January 1, 2019, but provided no analysis related to the extent to which the proposed rate is sufficient to cover ongoing administrative costs from large class standard offer customers. Staff requested additional analysis, and EME-MPD estimated that a rate between $0.11 and $0.12/kWh would be necessary to ensure that all future administrative costs are recovered from these customers. In particular, EME-MPD estimated that a rate of $0.11175/kWh would be sufficient in this regard.

The PUC ruled that, "Based upon the reported over-or-under amounts, which provide the basis for price adjustments in accordance with the Commission’s March 22, 2017 Order Designating Standard Offer Provider, as well as the expected administrative costs associated with providing standard offer service to this class, a standard offer rate of $0.11175/kWh is established for the EME-MPD large commercial and industrial customer class effective July 1, 2019. The approved rate increase is larger than that proposed by EME-MPD to more closely align the rate with the costs to provide standard offer service to the large class, including the administrative costs. This rate may be subject to further adjustments, either increases or decreases, in accordance with the Commission’s March 22, 2017 Order. EME-MPD is directed to provide written notice to affected customers of this price increase in advance of July 1, 2019."

The PUC did not specifically address legal or policy issues related to EME-MPD's proposal to recover administrative costs, in part, in its stranded costs proceeding, although by approving a higher standard offer rate than EME-MPD initially requested, more of such administrative costs will be recovered through the standard offer rate

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