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Regulator Considering Authorization For Opt-out Municipal Aggregation Posts Draft Report From Investigation

October 12, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com

The Connecticut PURA has posted a draft report from its study to examine the potential opportunities and challenges associated with the implementation of electricity community choice aggregation (CCA) for the State of Connecticut

The draft report would summarize the Authority’s findings.

If the draft is adopted as filed, PURA would report that, "The Authority does not take a position on the adoption of a CCA program in Connecticut at this time. Rather, the Study identifies key issues that decision-makers should consider when evaluating or enabling the potential implementation of CCA in the State. The Authority appreciates the efforts of the Petitioner and all other docket Participants who engaged in this proceeding to assist in the development of this report."

The draft would provide that, "The Authority recommends, in the event CCA enabling legislation is pursued in Connecticut, that the General Assembly clearly define through any enabling legislation its objectives for the proliferation of community choice aggregation in the State, including a ranking or prioritization of such objectives, if possible."

Under the draft, the Authority would take no position at this time with respect to the various potential considerations and conditions, but did provide a list of potential considerations in the report. Among other things, the draft cites Eversource's statement that CCAs may increase load uncertainty and lead to risk of price volatility.

The draft states, "In summary, the Study yielded information both for and against the proposition that CCAs be required to reduce energy supply costs (rather than simply strive for such an outcome), as well as varying opinions as to whether adoption of a CCA model in Connecticut would have a negative impact on the energy supply costs of non-participants (as measured by the standard service rate). Given that the specifics of any CCA program implementation would likely drive the ultimate determination of this issue in Connecticut, the Authority declines to make any findings at this time; rather, the Authority recommends that the General Assembly, should it choose to promulgate enabling legislation, consider defining an objective with respect to the effect of CCA on energy supply costs of both participants and non-participants. Moreover, such legislation, and its resulting implementation, would need to address issues of load certainty and coordination with the EDCs’ standard service processes, at a minimum."

The draft noted, "Based on an examination of other states’ legislation and CCA experiences, an opt-out model is more conducive to CCA implementation. However, such an approach raises significant consumer protection issues as discussed by the OCC and AARP, which are evaluated further [in the draft]."

The draft also stated that, "In any resulting enabling legislation, the Authority recommends that the General Assembly consider the integration of CCAs into the existing retail energy market, including whether different program rules should be established vis-à-vis the residential and non-residential sectors, the impact of different program design options on existing supplier contracts, and the extension of consumer protections currently applicable to licensed electric suppliers. Additionally, such legislation should consider whether it is appropriate to retain the existing Conn. Gen. Stat. § 16-245b construct [which allows municipalities to serve as electricity aggregators, essentially under an opt-in model on part with third-party aggregators] in the event that a more advanced CCA model is considered for the State."

The draft further noted, "while it is premature to attempt to quantify specific costs of CCA adoption that would be incurred by EDCs, ultimately, consideration must be made with respect to how those costs would be recovered from ratepayers. An opt-in CCA model that only permits a CCA to procure electric supply for the communities it serves would have the least cost impact to the EDCs. Under that scenario, a CCA would operate similar to other third-party electric suppliers, which EDC billing systems can already accommodate in today’s environment. If an opt-out model is preferred, however, the EDCs indicated that there would be costs incurred to develop procedures and to modify systems. Further, a CCA model that allows for a broader scope of services would likely have an impact on existing EDC operations, likely resulting in increased costs. Measures exist elsewhere that may mitigate or inform cost recovery issues, such as the imposition of a so-called “exit fee” wherein electric utilities charge customers who switch from default supply service to join a CCA. NREL Study, pp. 21-22. While such exit fees are historically contemplated in regulated markets, Id., the general design principal may be adaptable."

"An in-depth analysis of the degree of potential costs to accommodate CCAs in Connecticut, and who is responsible for incurring those costs, is beyond the scope of this Study, but should be considered in any final determination regarding implementation of CCAs in Connecticut," the draft stated

"Ultimately, this Study does not reach a definitive conclusion as to whether CCA would be appropriately promulgated in the State; rather, it identifies a number of factors that should be considered by the General Assembly when evaluating CCA as an option for Connecticut electricity consumers. In short, the Authority respectfully advises that given the range of potential CCA frameworks, enabling legislation should seek to identify – and if possible, prioritize – the desired public policy objectives that a resulting CCA program should be designed to achieve. Doing so would inform subsequent program design considerations, permitting interested stakeholders to recommend a program implementation plan that best achieves the stated objectives while allowing the Authority to balance the interests of both CCA participants and non-participants. Lastly, the General Assembly may wish to give due consideration to the degree and duration of oversight that it wishes the Authority to exercise over a potential CCA program, as important consumer protection issues are potentially invoked by adoption of CCA in Connecticut. Given the potential effects on standard service and other State energy issues, the Authority respectfully opines that a similar degree of oversight to that which it exercises over the third-party electric supplier market may be warranted," the draft concluded

Docket 20-05-13

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