Maine Advisory Staff Presents Initial View of Dynamic Pricing at CMP

Maine PUC Advisory Staff has requested comment on a number of different issues related to the design and operation of possible Central Maine Power dynamic pricing programs (Docket No. 2010-132).

In particular, Staff seeks comments from Competitive Electricity Providers (CEPs) that might submit bids to provide dynamic pricing at CMP.

Staff's initial view is that, "dynamic pricing programs should be available on a voluntary basis and that the structure for CMP's dynamic pricing programs should be similar to the standard offer process in that:

1. The Commission conducts a competitive bid process periodically, probably concurrent with the standard-offer process;

2. Bid(s) are selected based on providing the best value to customers;

3. CMP performs the billing on behalf of the winning supplier(s), and payments and bad debt are treated in the same manner as standard offer service for which suppliers are paid based on billed usage and accepted bid prices less a pre-set uncollectible percentage."

Among other things, Staff asks whether multiple programs offered by multiple suppliers should be offered, or whether only one supplier should be selected at a time to provide one or multiple dynamic pricing programs under this model. Additionally, Staff asks whether the dynamic pricing product should be provided by the same supplier(s) that is providing Standard Offer service, or whether it should it be open to any CEP.

Staff sought comment on four types of potential dynamic pricing mechanisms, including Time of Use Rates, Critical Peak Pricing, Peak Time Rebates, and Day-Ahead Hourly Dynamic Pricing. Staff's view is that a Peak Time Rebate program, "is less preferable to other potential programs."

Regarding the term of the program, Staff's initial view is that there should be an annual open enrollment period and a minimum enrollment term with a penalty for early withdrawal from the program, in order to minimize load volatility and administrative costs.

The Staff's initial view is that at the end of a customer's enrollment term, the customer should be automatically re-enrolled in the program for another term. The customer should receive notice of the upcoming re-enrollment, as well as their opportunity to opt-out of continued service during the enrollment period, Staff said.

Staff believes that utility-administered dynamic pricing programs should be limited to residential and small commercial customers, as dynamic pricing programs, "will likely be available from the competitive market for other classes and it is therefore not necessary for the Commission to be involved in developing those programs."

Since Staff's initial view is for a dynamic pricing program structured similar to the Standard Offer, the disconnection rules should also follow the Standard Offer model. Accordingly, the Staff initially finds that a customer enrolled in a dynamic pricing program could be disconnected for non-payment under the same terms as they could be under Standard Offer service, and that they would not first lapse to Standard Offer, as they would if they had been served by a competitive electricity provider.