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Retail Suppliers Seek Modifications To Tucson Electric Power's Proposed Competitive Supply Program For C&I Customers

October 29, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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Retail suppliers have filed testimony seeking various modifications to Tucson Electric Power's proposed competitive electric supply program for large C&I customers

As previously reported by, TEP's proposal, known as Market Pricing-Experimental (MP-EX) or Rider 18, would be available for customers who have a peak load of 3000 kW or more at a single service point and are served under rates LPS-TOU or LPS-TOU-HV.

Total MP-EX program participation shall be limited to 60 MW of customer load, under TEP's proposal. A lottery would be established to award available space under the program to customers.

Under the proposal, a Capacity Reserve Charge of $5.00 per kW-month will be applied to the Customers Purchase Sale Agreement kW block size. Customers will be charged a $1000 per month billing fee and a monthly settlements fee of $500 for each service point billed under the program

As proposed, customer block purchases under MP-EX may not displace more than 50 percent of a customer's delivered energy based on the prior 12-month period. The use of block purchases, rather than a load following program, is one of the major differences versus the APS program

See our prior story here for full details on rates, eligibility, and related issues under TEP's proposal

Calpine Energy Solutions, LLC, Constellation NewEnergy, LLC and Direct Energy Business, LLC (the "suppliers") filed testimony calling the TEP proposal "deficient" and at odds with the ACC's directive that TEP propose an alternative generation/buy-through program, "for medium and large commercial and industrial customers."

The suppliers said that TEP's proposal is only open to LPS customers. The suppliers said that, per TEP's response to a data request, not more than 10 customers in its entire service territory would be eligible for the program as proposed by TEP

"Restricting the program only to customers in the LPS rate schedules leaves out all the customers in TEP's Large General Service and, Large General Service TOU rate schedules. not to mention that it also makes no provision for offering such service to TEP's medium size commercial and industrial customers that are currently served under at least two (2) current TEP rate schedules, namely. a Medium General Service and a Medium General Service-Time-of-Use rate schedule," the suppliers said

The suppliers listed the deficiencies and problem areas of the TEP proposal as: "(i) program size that is too small, (ii) program eligibility criteria that is too restrictive, (iii) limitations on aggregation that will further restrict participation. (iv) the nature and amount of the proposed $5.000 kW-month capacity reserve charge must be clarified, (v) the proposed ··'point of delivery'· for generation service providers' delivery of power needs clarification, (vi) the proposed duration of the MP-EX Program needs modification, and (vii) lack of clarity as to TEP's role in relation to the wholesale market vis-a-vis any buy-through program."

The suppliers said that the buy-through program should be at least 120 MW

The suppliers said TEP's proposed 50% of delivered energy restriction is fundamentally inconsistent and at odds with a wholesale buy-through program under which the alternative generation provider supplies 100% of the customer's delivered energy

The suppliers further opposed TEP's proposed 5 MW 7x24 minimum block size purchase requirement for participation, which means that the customer must have expected energy usage of at least 43,800 MWh of energy in a year.

"That requirement, in and of itself, is set too high for many large commercial and industrial customers on the TEP system to satisfy, and presumably would be unattainable for most (if not all) of its medium size commercial and industrial customers," the suppliers said

The suppliers proposed an alternative buy-though program which included the following provisions:

• Eligibility would be open to customers in the TEP Medium General Service. Medium General Service TOU, Large General Service, Large General Service TOU. and LPS rate classes.

• The minimum aggregate peak load required for each customer would be 2 MWs.

• Customers in those rate classes would be allowed to aggregate their peak loads across multiple customer-owned sites to achieve the minimum size eligibility requirement.

• 100% of the customer's load would be eligible for the program.

• The size of the program would be at least 120 MW.

In separate testimony, the Freeport Minerals Corporation and Arizonans for Electric Choice and Competition raised similar concerns regarding TEP's proposal, and offered alternatives similar to the suppliers' proposal

The Residential Utility Consumer Office said that TEP's proposal would shift costs to other customers, and said that, "TEP's proposed Experimental Market Pricing Pilot Program should not be adopted unless and until it can be clearly demonstrated that no other customers, including particularly residential customers, will be harmed as a result of the program."

"The Company's proposed method of recovery estimated lost revenue associated with its Experimental Market Pricing Pilot Program should not be adopted unless the Commission can first determine that these costs would not be shifted to non-participating customers, such as onto customers in the Residential rate class," the Residential Utility Consumer Office said

Docket E-01933A-19-0028

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