PGE Seeks to Limit Annual Multi-Year Direct Access Program to Customers 10 MW or Larger

Portland General Electric has proposed modifying OAR 860-038-0275(5) to specify that, "the annual multi-year direct access program offered by electric companies be open solely to customers with 10 MW or greater peak load at a site."

Currently, OAR 860-038-0275(5) provides that, "[a]t least once each year, electric companies must offer customers a multi-year direct access program with an associated fixed transition adjustment."

PGE currently offers, on an annual basis, customers 200 kW and larger a three-year and five-year cost-of-service opt-out program, with the five-year program allowing customers to cease paying transition charges at the end of the five-year period.

PGE further proposed amending OAR 860-038-0275(5) to specify that customers smaller than 10 MW peak load at a site and larger than 250 kW peak load at a site with meters that aggregate to 1 average MW need only be offered the multi-year direct access program once every five years.

"PGE proposes these changes because offering the multi-year direct access option to numerous smaller customers has become increasingly administratively burdensome to PGE," PGE said in comments to the Oregon PUC.

"PGE has offered larger nonresidential customers the option of permanently leaving cost-of-service pricing annually since 2003. Currently, PGE has approximately 140 accounts on multi-year direct access that have various separate transition adjustments depending upon which of the ten previously offered windows these accounts chose multi-year direct access. Separately tracking these accounts for purposes of ratemaking and load forecasting is becoming challenging and onerous. PGE believes that allowing smaller customers the opportunity to choose multi-year direct access once every five years will help diminish the burden of maintaining the multi-year program while still allowing smaller customers options other than PGE cost-of-service pricing or annual direct access service," PGE said.

PGE further said that, "the Commission should consider whether the offering of an annual permanent opt-out of cost-of-service pricing is consistent with the utility's long-term resource planning process, which by its nature is a multiple-year process."

"For example, is it fair to cost-of-service customers that a subset of customers can annually select long-term direct access service just prior to the on-line date of a new generation resource and avoid cost responsibility for the new generation resource? PGE is not averse to customers exercising choice of suppliers, but we believe that such decisions should be made earlier in our resource planning process, so that we can make reasonable adjustments before we make commitments towards these new resources. The current annual long-term direct access option combined with the necessary multi-year utility resource planning process places unnecessary risks on cost-of-service customers," PGE said.

In contrast, the City of Portland sought expansion of the current annual multi-year direct access option to non-residential customers larger than 30 kW demand, including the unmetered ratepayers under PGE Schedule 91 for Street Lighting and PGE Schedule 92 for Traffic Signal rate schedules, plus all medium-large sized customers of PGE under Schedules 83 and 85.

The Industrial Customers of Northwest Utilities requested that the PUC modify OAR 860-038-0275(5) to specify that each utility must offer a "more permanent" opt-out with a transition adjustment phase out, similar to the five-year program at PGE. Under PGE's three-year program, and the program at PacifiCorp, while transition adjustments are fixed for a set period, the customer is returned to cost-of-service at the end of the program's term, and thus must again pay transition charges if wishing to continue on direct access for another term.

ICNU said that under its proposal, for PacifiCorp, "this also would include phasing out the fixed generation charge."

Furthermore, ICNU sought elimination of the current caps on participation in the multi-year opt out programs, which are 300 aMW at PGE and 200 aMW at PacifiCorp.

ICNU also sought introduction of a Puget Sound Energy-style retail wheeling opt-out program. PSE's Schedule 449 allows customers to purchase power in wholesale power markets by providing transmission access pursuant to PSE’s OATT. ICNU said that two features of this program, which is limited to customers 5 MW and larger, are key to its success. First, there are no requirements related to supplier certification, meaning that customers can purchase from many suppliers. Second, there are no transition charges or credits in the PSE approach.

Under the PSE approach, customers opting-out and taking direct access agree that they are "non-core" customers precluded from returning to service from the utility's generation sources, "under any circumstances."

While ICNU suggested modifications to a PSE-style program to conform it to Oregon law, Noble Americas Energy Solutions LLC said that certain provisions of Oregon law would complicate adoption of the PSE retail wheeling program. Notably, Oregon law mandates that utilities offer a cost-of-service option to all customers, which is inconsistent with the PSE model in which customers give up their right to a cost-of-service option. Additionally, Oregon law requires direct access to be provided from a Commission-certified Electricity Service Supplier, though ICNU noted that in certifying Electricity Service Suppliers, the Commission is only statutorily obligated to address the following aspects of the ESS certification process: 1) the ability of the ESS to meet its direct access obligations; and 2) the ability of the ESS to comply with applicable consumer protection laws.

In contrast to retail wheeling, Noble Americas Energy Solutions LLC said that the PGE five-year opt-out program, with its eventual cessation of transition charges, is a useful model that is tailored to work under Oregon's direct access law. Noble Americas Energy Solutions suggested modifying O.A.R. 860-038-0275(5) so that the long-term cost-of-service opt-out is offered to all commercial and industrial customers, and that, upon completion of the program's term, the utility shall cease the assessment of transition charges (similar to the PGE five-year program).

Docket: UM 1587