CMP Directed to Offer Dynamically Priced Standard Offer Product, Served by Retail Supplier

Central Maine Power will be required to offer a dynamically priced Standard Offer option, served by a retail supplier, under an order from the Maine PUC (2010-132).

The dynamic pricing program at CMP, structured as an optional Standard Offer service, will be open to residential and small commercial customers, and will mirror the current standard offer service process in that:

1. The Commission will solicit retail suppliers for the dynamic pricing program by conducting a competitive bid process periodically, in coordination with the fixed-rate Standard Offer bid process;

2. Bid(s) will be selected based on the best value to customers

3. CMP will perform the billing on behalf of the winning supplier(s), and suppliers will be paid 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.

4. Standard Offer suppliers will not be required to bid on both the flat-rate Standard Offer and the dynamic pricing standard offer, and the Commission may select different suppliers for the two Standard Offer products. The PUC does contemplate that Standard Offer providers could make contingent bids for both the fixed-price and dynamic pricing standard offer.

Although retail suppliers urged the PUC to rely on the competitive market for dynamic pricing, with no Standard Offer option for dynamic rates, the PUC said that, "[b]ased on the history of competitive activity for the small customer class, we cannot be confident that a retail competitive market will develop to broadly provide small class customers with the type of options and cost savings opportunities that were contemplated when CMP's AMI program was approved."

"To assure that the dynamic pricing benefits of CMP's AMI investment will be available to all of its residential and small commercial customers, we will proceed with the standard offer alternative approach as outlined above," the PUC said.

The dynamic pricing Standard Offer may be either a Time of Use (TOU) of Critical Peak Pricing option, or an alternative that combines both pricing approaches. The PUC will not require CMP to accommodate a peak time rebate option at this time due to implementation complexities.

To avoid the complexities involved in billing for supply and T&D using different time periods, the TOU Standard Offer option will employ the existing time periods for T&D (without the shoulder periods). Customers that choose the TOU Standard Offer option may also choose (but will not be required to choose) the T&D TOU rate.

With respect to hourly pricing, the PUC said that it understands that it is impractical for CMP to design its systems to allow for the prospect of a large number of its customers choosing this option, especially when only a small percentage of customers are likely to do so. However, the PUC said that it expects CMP to design its systems, within reasonable cost limitations, so that at least some percentage of CMP customers could take advantage of an hourly pricing alternative.

To minimize load volatility and administrative costs, there will be an annual open enrollment period and a minimum enrollment term of one year for the dynamic Standard Offer product.

Customers that switch from the dynamic pricing Standard Offer to the fixed-price Standard Offer before the end of the enrollment term will not be allowed to re-enroll in the dynamic pricing Standard Offer for at least 12 months after switching to the fixed price Standard Offer option, and then not until the next open enrollment period. Otherwise, there will be no penalty for leaving the dynamic pricing Standard Offer.

At the end of a customer's enrollment term, the customer will be automatically re-enrolled in the dynamic Standard Offer program for another term. The customer will receive notice of the upcoming re-enrollment, as well as an opportunity to decline continued service during the enrollment period.

To maximize customer participation in the dynamic pricing Standard Offer service, CMP should allow customers to enroll in dynamic pricing programs online through a web-portal, by calling CMP, and by mail (e.g., returning a mail-in card), the PUC said. CMP will be responsible for initiating any necessary EDI transaction.

The PUC declined to adopt a hold harmless provision for customers electing the dynamic pricing Standard Offer option (e.g. total cost capped at the normal Standard Offer cost), as requested by the Public Advocate.

While the Standard Offer dynamic pricing option will be limited to small volume customers, the PUC said that it expects CMP's system programming to allow for the flexibility to accommodate consolidating billing of dynamic pricing programs for other rate classes.