Maine Rejects Inclusion of ISO Winter Reliability Charges in Previously Established Default Service Rates

The Maine PUC rejected a waiver sought by NextEra Energy Power Marketing which would have allowed existing Standard Offer providers to recover material out-of-pocket charges imposed by the ISO New England pursuant to the out-of-market Winter Reliability Program.

The out-of-market Winter Reliability Program was adopted by ISO-NE because the current capacity market has failed to ensure resource adequacy.

NextEra argued that the out-of-market surcharges are material changes that could not have been reasonably foreseen by existing Standard Offer providers in preparing their bids for Standard Offer service covering the period December 2013 through February 2014. NextEra stated that the out-of-market surcharges that ISO-NE expects to assess total $78 million.

The PUC denied the requested waiver, finding it inconsistent with the competitive market and the appropriate allocation of risk.

"The Commission does not dispute that the costs to load serving entities resulting from the ISO-NE's Winter Reliability Program are significant and could not have been reasonably foreseen or hedged in the market."

"However, the Commission's standard offer practice has consistently been to allocate the risk of changes in regional market rules or federal regulations to suppliers, while allocating the risk of State law and regulation changes to customers. This risk allocation is clearly stated in our standard offer documents and is not disputed by NEPM or the other suppliers," the PUC said.

"We recognize that the denial of NEPM's waiver request may increase suppliers' perception of the risks of providing standard offer service in Maine. Nevertheless, the standard offer providers accepted the risk and cost consequences of changes in the ISO-NE's market rules by accepting their designation as standard offer providers in Maine. If we were to allow an exception in this case, it would open to door for future controversies and uncertainty over whether suppliers or customers should pay the costs of ISO-NE market rule changes. It is this type of controversy and uncertainty that the Commission intended to avoid by clearly articulating the allocation of such risks and obligations in the standard offer documents," the PUC said.

Docket 2013-00329 et. al.