Municipal Aggregator: Utility Must Plan For Alternative Default Service Procurement If Largest City Implements CCA For Supply

October 18, 2021

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

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In comments to the Massachusetts DPU, Colonial Power Group (CPG) urged Unitil (Fitchburg Gas and Electric) to submit plans or alternatives for the provision of basic (default) service for its residential and small general customers, "given the high likelihood that the City of Fitchburg will launch its municipal aggregation program in the near future."

Colonial Power Group's comments were made in a proceeding which Unitil and the Massachusetts Attorney General have agreed to proposed capped default service rates, in light of a sharp increase in rates due, in part, to the utility procuring 100% of its supply in today's higher-priced market (rather than 50%) to avoid risk premiums associated with the uncertain launch date of the City of Fitchburg’s proposed municipal aggregation plan.

See background on the proposed rate cap and deferral here

"With the benefit of hindsight, the city’s petition for approval of its municipal aggregation plan in December 2020 should have served as the catalyst for Unitil to develop and obtain approval for a new basic service procurement strategy since the exit of much of the city’s load from basic service was only inevitable," Colonial Power Group said

"The small amount of remaining basic service load may require an entirely new approach for setting basic service rates that may not include securing fixed prices from wholesale suppliers," Colonial Power Group said

"CPG believes that any new mechanism should be approved for its use to set basic service rates starting June 1, 2022. At the very least, a fully vetted 'plan B' mechanism should be in place and approved by the Department in the event Unitil is unable to secure acceptable fixed price offers in the conventional manner. Assuming that Unitil and the Department agree such an undertaking is warranted at this time, CPG suggests that it may be prudent for the Department to defer any decision on the time period over which Unitil shall recover its deferred basic service costs. The Department may find it easier to make such a determination after current unknowns become clearer or resolved, including the total amount of deferred costs that Unitil needs to recover, a possible new basic service procurement methodology, and projected market prices for the next basic service period. The lack of clarity on these issues makes it difficult to make a reasoned decision on an appropriate cost recovery timeline, though CPG anticipates the period may need to be longer than the seven months proposed by Unitil," Colonial Power Group said

With respect to the proposed rate caps and deferrals, Colonial Power Group said that it did not oppose the cap, but objected to the proposed recovery of any deferral being from customers not taking basic service at the time of procurement or during the relevant delivery period

CPG recommended that Unitil be allowed to collect any deferred costs by assessing a recovery charge on any customer account that (1) was enrolled on basic service as of the RFP Date, or (2) is enrolled on basic service after the RFP Date and prior to Unitil concluding the collection of its cost deferral (the "Deferral Recovery Date").

CPG proposes that such accounts should be assessed the recovery charge for the full deferral recovery period even if any such account enrolls with a competitive supplier prior to the Deferral Recovery Date.

"This approach captures those customers that were included in customer data provided to prospective wholesale suppliers as well as customers who, for whatever, reason enroll on basic service prior to the Deferral Recovery Date. It excludes ratepayers who have previously contracted with competitive suppliers and, consequently, should not be classified as a contributing factor for these basic service procurement costs," CPG said

D.P.U. 21-BSF-A4

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