Maine Confirms Process for Indexed Standard Offer Pricing for Large Customers at CMP, BHE

A Maine PUC order, which has now been released publicly without confidential redactions, establishing large customer default service at Central Maine Power and Bangor Hydro-Electric for the six-month period beginning September 1 confirms the indexing process that will be used to determine the Standard Offer price.

Matters first reported on July 30 that the PUC again adopted index-based default service for CMP and BHE large customers, but specific details on the pricing were not available at that time. In the same story last month, Matters also first reported the new Standard Offer prices for medium C&I customers at CMP and BHE (see prior story for rates)

Under the indexing process for large customer Standard Offer rates at CMP and BHE, the retail price (and payment to default service suppliers) will include four components: (1) energy; (2) capacity; (3) fixed adder; and (4) uncollectible adder.

The Energy Component billed to retail customers will be established by the Commission prior to each service month using the load-weighted average ISO New England Internal Hub Peak and Off-Peak LMP Swap Futures, as settled through CME Group on the 15th day of each month prior to the effective date of the Standard Offer service price. The load-weighting will reflect representative usage of the class for the service month.

The Energy Component paid to the Standard Offer Provider, however, will be the real-time or day-ahead Maine Zonal Locational Market Price (LMP) as applicable for the load asset, as assessed by ISO-NE through the market settlement system.

The Capacity Component paid by retail customers and paid to Standard Offer Providers is identical, and was set through bids. The Capacity Component, fixed for the six-month term, is $3.55601/kW-mo. at CMP, and $3.92000/kW-mo. at BHE.

The Fixed Adder Component paid by retail customers and to Standard Offer Providers, intended to cover the provider's other costs and risks to serve the large default service class, is as follows for each month:

CMP Large Class Fixed Adder:
Sep 2012: $0.00469/kWh
Oct 2012: $0.00477/kWh
Nov 2012: $0.00485/kWh
Dec 2012: $0.00472/kWh
Jan 2013: $0.00517/kWh
Feb 2013: $0.00524/kWh

BHE Large Class Fixed Adder:
Sep 2012: $0.00631/kWh
Oct 2012: $0.00631/kWh
Nov 2012: $0.00631/kWh
Dec 2012: $0.00631/kWh
Jan 2013: $0.00682/kWh
Feb 2013: $0.00682/kWh

The Uncollectible Adder Component will be reflected in retail prices and Standard Offer Provider payments in the same manner as for the medium Standard Offer class. The uncollectible percentage for the current Standard Offer term is 3%.

Because the energy component paid by retail customers and paid to Standard Offer providers may differ, the PUC authorized CMP and BHE to recover any costs associated with the difference between what the utilities bill their large class standard offer customers and what the utilities pay the provider under the alternative pricing structure Standard Offer Provider Service Agreements. That difference shall be tracked through and charged to the uncollectible retainage account each month through the standard offer term. Any costs not recovered through the retainage account shall be recovered at a future time and through a method to be determined by the Commission after the conclusion of this standard offer term.

The PUC also disclosed winning Standard Offer providers for the medium and large classes for the six-month term beginning September 1.:

CMP Medium Class: PPL EnergyPlus (80%); New Brunswick Power Generation Corporation (20%)

BHE Medium Class: PPL EnergyPlus

CMP Large Class: NextEra Energy Power Marketing, LLC

BHE Large Class: Algonquin Energy Services Inc.