Tucson Electric Power "Expands" Buy-Through Program, Amount Of Load Eligible For Alternative Supplier Actually Decreases

December 26, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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In rejoinder testimony in a rate case, Tucson Electric Power (TEP) said that it has expanded the customer classes and amount of load eligible for its proposed Market Pricing Experimental Pilot Program (MP-EX), but the amount of load eligible to take wholesale supply from an alternative supplier would actually decrease under the revisions.

In response to testimony from Arizona Corporation Commission Utilities Division Staff (see details here), TEP has expanded the eligibility requirements and total program load cap for MP-EX. As previously reported, TEP originally proposed to limit MP-EX to classes LPS-TOU or LPS-TOU-HV.

However, the revised proposal would only expand to medium customers a day-ahead pricing program, with no option for choosing an alternative wholesale supplier for such medium-sized customers. Additionally, the participation load cap for the proposed program that would allow large customers to choose an alternative supplier for wholesale supply would decrease under the revision

TEP now proposes a "Program 1" MP-EX General Service program under which customers in rate classes MGS and LGS would be eligible for the program, with customers required to have minimum aggregated peak demand of 3 MW.

However, "Program 1", MP-EX General Service would only allow customers to replace their existing Power Supply Charge and PPFAC [Purchased Power and Fuel Adjustment Clause] with a day-ahead market index price option, and customers would not have the ability to select an alternative supplier for wholesale power. Participating customers will continue to pay all applicable tariff charges (Basic Service and all non-fuel charges). "Program 1" MP-EX General Service would have a participation cap of 25 MW.

TEP will still offer to LPS customers an opportunity to purchase wholesale supply from an alternative supplier, under the "Program 2", MP-EX Large Power Service program. However, while the total MP-EX participation load cap has been expanded from 60 MW to 75 MW, the participation load cap for LPS customers (now Program 2) would decrease from an original 60 MW to 50 MW.

Under Program 2, LPS customers would have the option to replace their Power Supply Charge and PPFAC with an hourly market index price, or the customer may purchase 7x24 blocks of energy and capacity from a third-party wholesale market service provider (or sourced from TEP via an RFP). Minimum block sizes for LPS customers will be 5,000 MW. LPS customers are only eligible to block in a maximum of 50% of their average monthly peak demand based on the months of October through April.

Under Program 2, for alternative wholesale supply, the customer would need to post adequate credit support and pay for any associated credit support costs under these arrangements, TEP said. LPS customers who utilize the 7x24 block of energy and capacity option must have at least an investment grade credit rating or demonstrate creditworthiness in the form of either a 3rd-party guarantee from an investment grade rated company, surety bond, letter of credit, or cash in accordance with TEP's standard credit support rules

For both MP-EX options, the following charges will apply

          • Billing Charge: $1,000 per customer per month

          • Settlements Charge: $500 per meter/service point per month

For both MP-EX options, eligible customers may be aggregated if they have the same corporate name, ownership, and identity. In addition, an eligible franchisor customer may be aggregated with eligible franchisees or associated corporate account.

For both MP-EX options, participating customers must have a minimum aggregated peak demand of 3 MW.

For both MP-EX options, participating customers must have a load factor (or aggregated load factor) of 60 percent

TEP said that the ACC should finish its review of retail competition before approving a buy-through program such as MP-EX in the rate case proceeding.

Docket E-01933A-19-0028

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