Maine Adopts Alternative Mechanism for Standard Offer Service

The Maine PUC has adopted an alternative mechanism to supply Standard Offer service for large non-residential customers at Bangor Hydro-Electric for the period September 1, 2013 through February 28, 2014, after the PSC previously rejected bids from its standard RFP for default service supplies

Specifically, the PUC adopted a form of Standard Offer service for BHE large non-residential customers under which Standard Offer prices are indexed to wholesale market prices and will be set in advance of each month, which is similar (especially with respect to customer rates) to the most recent format used for the class.

The actual prices for BHE's large customer class will be determined prior to each month of the September through February term, with the energy component based on ISO-NE Internal Hub Peak and Off-Peak Locational Marginal Pricing (LMP) electricity futures as settled through CME Group on the 15th day of the prior month.

However, the Standard Offer provider will be paid the 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 PUC noted that this pricing difference may result in a divergence between the revenues received through retail pricing, and the revenues granted to the Standard Offer provider.

"BHE shall recover any costs associated with the difference between what it bills it[s] large class standard offer customers and what the utilities pay the provider under the Alternative Pricing Structure SOP 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 said.

Retail Standard Offer rates shall consist of four components: (1) energy; (2) capacity; (3) fixed adder; and (4) uncollectible adder.

As noted above, the energy component is established based on settled LMP futures. For September 2013, the PUC set the energy component at $0.03410/kWh for the BHE large class.

The capacity component was set at $4.0553/kW-month for the BHE large non-residential class for each month of the term, September 2013 through February 2014.

The fixed adder was set as follows for each month of the term ($/kWh):

Sept 2013      $0.00680 
Oct 2013       $0.00691 
Nov 2013       $0.01117 
Dec 2013       $0.01037 
Jan 2014       $0.01670 
Feb 2014       $0.01543 

The uncollectible percentage for the alternative price structure for BHE's large non-residential Standard Offer term is 3%.

The resulting Standard Offer price for BHE large non-residential customers for September 2013 is $0.042870/kWh, plus the capacity charge of $4.0553 kW-month

Algonquin Energy Services was selected as the Standard Offer provider for 100% of the large non-residential class at BHE for the six-month period beginning September 1.