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PUC Sets New Level For Alternative Compliance Payment, Rules On Retail Suppliers' Requests

Revised Rule Addresses Exemption Of Existing Contracts From Recent Legislative RPS Change

November 11, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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The Maine PUC has adopted final rules to implement the recently enacted L.D. 1494 which, among other things, established a new Class IA RPS applicable to retail suppliers and SOS suppliers, with the Class IA RPS equaling 40% of sales by 2030

A contested issue in the rulemaking was the level for the Alternative Compliance Mechanism.

The statute states "The commission shall set the alternative compliance payment rate by rule, which may not be greater than $50, and shall publish the alternative compliance payment rate by January 31st of each year."

Various renewable developers favored setting the ACP at $50 per megawatt-hour immediately

The Retail Energy Supply Association had argued that the initial ACP should be set near market prices. RESA supported setting the initial ACP slightly above current market prices with annual adjustments based on the change in the Consumer Price Index until the cap is reached

RESA had said that, "If the legislature had intended for the Commission to set the ACP at $50 immediately, it could have said so. Instead, it left it to the Commission to set the ACP at no higher than $50. Moreover, if the legislature had intended the Commission to set the ACP at $50 immediately, there would be no need for the Commission to publish the ACP 'each year.'"

"[I]f the Commission were to set the ACP at or near the cap now, based on RESA’s experience, this would artificially inflate the cost of RECs to the detriment of ratepayers," RESA had said

The PUC ordered that the ACP be set at $50 per MWh immediately

The PUC adopted language stating that: "Alternative Compliance Mechanism. The Class I and Class IA requirements of this section may be satisfied by an alternative compliance payment according to this subsection. The payment for an applicable year shall be made to the Commission by July 1 of the following year."

"For RPS requirements on or after January 1, 2020, the alternative compliance payment rate shall be $50.00 per megawatt-hour," the adopted rule states

The PUC said, "Because the market prices of Class IA RECs cannot be known in advance with any certainty and, historically, a high ACP has not affected the market rate Class I RECs, the ACP in the amended rule is $50 per megawatt-hour for both the Class I and Class IA portfolio requirements."

The PUC's rule also addressed revising language which exempts existing retail contracts from the RPS changes

The final rule language adopted by the PUC states, "Exemption. Retail electricity sales pursuant to a supply contract or standard-offer service arrangement that is in effect on or before September 19, 2019, is exempt from the requirements of this section until the end date of the current term of the supply contract or standard-offer service arrangement."

The PUC further explained, "The Commission agrees with the majority of commenters that the exemption applies to retail electricity sales pursuant to a supply contract or standard offer service arrangement that was in effect on or before the effective date of the Act, September 19, 2019, regardless of whether it was originally executed, renewed or extended prior to or on that date. However, for simplicity, the amended rule refers to contracts that are in effect as of September 19, 2019."

The statute allows a customer receiving service at a transmission or subtransmission voltage level to elect to have its supply exempt from the requirements of the Class IA portfolio requirement contained in this section. The customer must provide the Commission with written notice of the election.

The adopted rule provides that, except for customers receiving standard offer service, "a customer has the obligation to inform its competitive electricity provider of [such] an election or rescission."

The rule further provides that, "The transmission and subtransmission customer’s notification of an election, or subsequent rescission, pursuant to this section will occur through a Commission adopted proceeding."

RESA had commented that, to ensure that customers and CEPs can determine if a transmission and subtransmission customer has made the election, the Commission maintain on its website a registry or database of transmission and subtransmission customers who provide it notice of their election not to be subject to the Class IA requirement and/or their subsequent rescission of this election.

"Because of the notification requirement in the amended rule, the Commission will have a list of all customers that have made an election, or subsequent rescission, pursuant to this section of the rule. The Commission will open a docket for purposes of customer notifications pursuant to this section of the rule. However, a decision on whether this list should be public cannot be made upon the information in the record of this proceeding. Accordingly, the Commission will initiate a process on whether this list of customers should be public," the PUC said

Concerning the ACP rate for thermal RECs, certain stakeholders asked that the Commission set the ACP for the thermal RECs as part of the instant rulemaking proceeding.

RESA commented that this issue was not noticed as part of this rulemaking proceeding and, accordingly, the ACP for thermal RECs should not be determined in this proceeding.

The PUC said that the Notice of Rulemaking in the instant proceeding specifically stated that, because the thermal renewable energy resource requirement does not begin until 2021, the rule amendments related to the thermal renewable resource requirement would be conducted in a subsequent rulemaking proceeding.

"Accordingly, the Commission agrees that it would be inappropriate to determine the ACP for the thermal portfolio requirement in this rulemaking proceeding," the PUC said

"The Commission notes, however, that it does not interpret the intent of the Act to require the establishment of a single ACP that would apply to the Class I, Class IA and the thermal portfolio requirements. Thus, the ACP for the thermal portfolio requirement need not be $50 per megawatt-hour," the PUC said

Docket No. 2019-00177

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