State Asks Utilities To Opine On Potential Regional, State-wide Default Service Procurement; "Flexible" Laddering Of Contracts (Including Suspension Of Procurements)

October 11, 2022

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

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The New Hampshire PUC has issued a series of questions to the state's investor-owned electric utilities under the PUC's investigation into potential changes to the procurement and design of default service, given recent pricing outcomes (IR 22-053)

The PUC issued the following lines of inquiry to the EDCs which the PUC said, "aim to provide a further refinement to the scope of this investigation." However, the PUC added that, "further recommendations on timing, frequency of bidding, etc. to help mitigate price volatility could be explored."

(i) Consolidated Procurement: What is the viability of a regionally harmonized and/or a state-wide approach to energy procurement?

• Possibilities include coordinated statewide procurement by the electric utilities, procurement conducted by the New Hampshire Department of Energy (or some other instrumentality of government), as opposed to the utilities themselves, for all default service customers in New Hampshire, and common procurements among retail affiliates across state lines.

a. Please identify the constraints in consolidating procurement of default energy service for customers served by all New Hampshire electric utilities in a single process.

b. Please indicate how these constraints could be eliminated.

(ii) Flexible Implementation of Laddering/Full Requirement Procurement: Can a more flexible approach to combining laddering and full requirement procurement, based on the expected near future pricing trends, be instituted by the utilities to better manage energy volatility in electric prices and its impact on ratepayers? Please provide alternatives that can be explored herein. In such an exploration of alternatives, please take into consideration factors listed below:

a. the balance between achieving price stability (with risk premiums) versus exposure to market volatility.

b. laddering timeframes (including their suspension) to more closely reflect market prices with a goal to providing greatest relief to New Hampshire ratepayers, without compromising market bidding outcomes.

c. The intervals, frequencies, timing, and scale of procurements and/or rate changes.

(iii) If a solicitation fails to achieve any bid or is found to be noncompetitive, please provide back-up options that can be followed to rely entirely on spot purchases, while instituting a retail-level process that still imparts some stability in energy prices for default service customers.

(iv) Balance between Price Stability and Volatility: Are there tangible avenues to reduce the risk premium included in bids by balancing the speed of regulatory approval and effective oversight during the procurement process? If so, please discuss the specific possible improvements in regulatory oversight during Request for Proposals and/or procurement solicitation processes and opine on the possibility of an order nisi-based approach to the approval of default service procurements.

(v) Default Service Practices: With the goal of enabling consistent pricing and rates across utilities, companies are requested to share a detailed outline as well as supporting process documents on the practices that they have adopted by their affiliates in their various jurisdictions.

(vi) RPS: Explore possible avenues to improve ratepayer cost outcomes as well as compliance-related and administrative processes to meet RPS standards.

(vii) Miscellaneous: Any other issues that could improve the default service process in New Hampshire.

The PUC said that non-utility participants are welcome to prepare and submit written comments on these matters. "Non-utility participants are especially encouraged to share best practices from comparable jurisdictions regarding these issues," the PUC said

"The Commission will also provide an opportunity for these participants to submit responses to the utilities’ technical statement submissions, after they are made," the PUC said

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