Maine PUC Directs BHE to Remove Contract Extension Language from Pilot Relying on Retail Supplier

The Maine PUC ordered Bangor Hydro-Electric to remove certain language regarding the extension of a contract between a customer and the BHE-selected retail supplier offering dynamic pricing, but otherwise approved the BHE dynamic rate trial which will be conducted through a competitive supplier (2010-14).

The PUC's order confirmed an earlier hearing examiners' report.

Under the rate trial, BHE solicited interest from competitive electricity providers to provide dynamic rates to 100 small volume customers. Freedom Energy Logistics was selected.

The PUC noted that the proposed customer terms of service states that the contract entered into under the trial, "may be extended if offered by Supplier beyond the end of the Program and agreed to by Customer."

The PUC found this term to be inconsistent with its determination that the rate trial is limited and will end after nine months. "This term appears to give FEL an unfair market advantage over other CEPs [competitive electric providers] by allowing for a contract renewal as part of the Customer Terms of Service for the rate trial. Accordingly, the contract extension provision should be removed from the customer terms of service," the PUC said.

Otherwise, the PUC dismissed objections to the pilot made by Competitive Energy Services.

The PUC said that BHE would not be acting as a CEP or broker in acting as an intermediary in recruiting and enrolling customers in the rate trial.

"We conclude that, given the scope and purpose of the proposed short-term rate trial, BHE's actions as an intermediary are a related function of its status and responsibilities as a T&D utility and not as a CEP. The Rate Trial will end after nine months and is limited to 100 participants. The purpose of BHE's actions is to 'test the dynamic price process, to ensure that when Bangor Hydro begins to deliver dynamic price service to all of its customers, it is able to do so effectively, efficiently and successfully,' not to enter the competitive electricity market," the PUC said.

"BHE's proposed activities within the limited scope and purpose of the short-term rate trial are not the kind of marketing activities the Legislature or the Commission sought to restrict T&D utilities participation," the PUC added.

The PUC rejected CES's claim that the short-term rate trial would cause BHE to violate the no discrimination code of conduct, as competing electric providers were given an opportunity to participate in the selection of an electricity provider for the short-term rate trial.

The PUC also will not remove the No Losers Guarantee (a hold harmless provision), stating that, "there is a reasonable basis for this provision within the context of the proposed short-term rate trial," and thus the provision does not represent "undue" discrimination.