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PUC Opens Investigation On Whether Time of Use Default Service Rates Should Be Offered
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The Maine PUC opened an investigation to consider whether the state's investor-owned electric utilities should be required to develop and offer time of use rates for Standard Offer service for
residential and small business customers.
"The Commission opens this investigation to determine whether time of use rates
for electric delivery and default supply service in Maine can be designed in a way that
assures short-term and long-term savings to residential and small business customers
while ensuring utilities have an opportunity to earn a reasonable return," the PUC said
"If so, the
Commission will consider adopting an order to direct CMP and Versant to undertake to
implement appropriate delivery rates and to prepare billing and metering systems for TOU standard offer rates," the PUC said
"Further steps needed to implement TOU standard offer rates
would need to occur in different dockets," the PUC said
The PUC previously received a report from a consultant with TOU recommendations. Among other things, the consultant report had recommended that:
• The Commission should adopt an opt-out TOU rate
structure. [in other words, customers would have a choice in Standard Offer rates: the TOU rate which would be the default rate, and an optional flat Standard Offer rate would be available]. The consultant does not recommend mandatory TOU Standard Offer rates which would require all customers taking SOS to be enrolled in a TOU rate
• The Commission should require alignment of TOU
enrollment across both distribution and supply services.
--- Customers should be required to enroll in aligned (both flat or both TOU)
rates for SOS supply and distribution services. Aligning supply and distribution
rates allows for the Commission to apply an effective price differential as well as
avoid excessive administrative burdens for utilities.
• The Commission should adopt a 12-month stay
restriction for customers who elect to opt in or opt out of a TOU rate.
--- Assuming opt-in/opt-out TOU rates, a 12-month stay restriction is typical
after providing an initial opportunity for customers to elect their status. Enforcing
a 12-month commitment period helps ensure stability and accurate cost
forecasting.
• Widespread TOU rate deployment should be
conducted in waves.
--- Conducting the rollout in waves allows for adjustments to the utility system
and eases the potential for sudden spikes in customer service demand. This
approach is facilitated by the use of administrative methods for converting flat
SOS rates into TOU rates (or vice versa).
• The Commission should pursue residential TOU
rates that incorporate all relevant time-varying energy costs, including wholesale
energy prices, capacity costs, network service costs, and distribution system
marginal costs.
• The Commission should initially adopt a
straightforward TOU structure consisting of one clearly defined on-peak period
and one off-peak period.
• A near-term residential TOU period adopted in Maine
should treat the hours of 3:00-8:00 pm on non-holiday weekdays as on-peak.
• In the near term, a single, year-round TOU rate
design is appropriate for Maine.
• The Commission should establish a TOU rate
differential in excess of a 2:1 ratio between on-peak and off-peak rates.
• The Commission should set up bill protection for
customers for the first year following enrollment in a TOU rate.
• The Commission should work with the utilities to
provide shadow billing [with respect to flat vs. TOU] on customers’ bills prior to the wide rollout of TOU rates.
• The Commission should adopt a revenue-neutral
supply TOU rate with a cost reconciliation mechanism.
--- Under this approach, the Commission would initially establish
differentiated on-peak and off-peak TOU rates based on anticipated usage
patterns. These rates would be structured in a manner that does not increase or
decrease total revenue collected compared to existing flat rates. Then, to ensure
ongoing revenue neutrality, a reconciliation mechanism would periodically adjust
the TOU rate differentials to reflect actual customer usage patterns and supplier
costs recovery outcomes. This approach ensures suppliers are neither
disadvantaged nor excessively compensated due to discrepancies between
projected and realized load shifts. By decoupling supplier compensation from
load forecasting accuracy, this structure encourages broader supplier
participation in SOS bidding and has proven effective in other retail choice
jurisdictions.
• The Commission should only require one type of bid
(flat or time-differentiated) from SOS bidders. This bid should be convertible into
alternative representations of the rate using pre-published adjustment factors.
Docket No. 2025-00176
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June 20, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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