Northeast Regulatory Update
Maryland
Massachusetts DOER Developing Solar Requirement for State’s RPS
The Massachusetts Department of Energy Resources (DOER) is in the process of developing a solar carve-out as part of the Massachusetts Renewable Portfolio Standard. On January 8, the DOER issued an emergency regulation to incorporate its proposed solar carve-out rules into the state’s RPS, effective Jan. 1, 2010. The RPS already requires electricity suppliers to provide a certain percentage of each customer’s load from renewable energy sources but the new regulation requires a portion of the RPS to come from solar-based renewable attributes. In this regulation, an alternative compliance payment (ACP) was set to help suppliers fulfill their obligations and to encourage the development of solar renewable generation supply in the state.
As a result of the new requirements and the fact that solar renewable generation is more expensive than other alternative energy sources, the costs associated with meeting the state’s RPS requirements will increase. In addition, the DOER has the ability to revise its emergency regulations and could do so in the next several months.
For more information on the Massachusetts RPS and the DOER’s emergency regulation to incorporate its proposed solar carve-out rules in the state’s RPS, please visit www.mass.gov/doer and click on “Renewable Energy” under “Key Initiatives” in the left-hand navigation.
NY PSC Approves Changes to Utility Tariffs That Affect the Billing of Ancillary Services
The New York Public Service Commission (PSC) recently approved a change in utility tariff that will affect how customers are billed for ancillary services in two utility territories beginning on Jan. 1, 2010.
Background on the Change
For the past several years, both New York State Electric & Gas (NYSEG) and Rochester Gas and Electric (RGE) have offered electric customers a fixed price option, in addition to a default service option with a monthly variable price. Customers were allowed to enroll in the fixed price option or choose service from a competitive supplier for several months in the fall of each year. These programs were unique to NYSEG and RGE. Other New York electric utilities offer only a monthly variable default service or, for larger customers, an hourly-priced default service, and they allow customers to switch to a competitive supplier at any time during the year.
NYSEG and RGE also engaged in several other practices not shared by other electric utilities in New York. These included collecting ancillary services charges and New York Power Authority Transmission Access Charges (NTAC) on behalf of all of their distribution customers through a nonbypassable charge.
Beginning in 2010, NYSEG and RGE will no longer offer the fixed price offer, making 2009 the last year in which this program will be available. As of Jan. 1, 2010, NYSEG and RGE will offer only the monthly variable or hourly-priced default service (depending on a customer’s rate class). They will also allow customers to choose a competitive supplier at any time during the year rather than only for several months in the fall. As a result these changes, and efforts to bring their practices more in line with those of other utilities, NYSEG and RGE will begin collecting for ancillary services and NTAC for customers through their supply charge, instead of their distribution charge. Competitive suppliers, like Direct Energy Business, will now be responsible for billing and collecting for these charges. NYSEG will also begin allocating “unaccounted for energy” to suppliers, including itself in its role as a load-serving entity.
As a result of these changes, it will be necessary for competitive suppliers, like Direct Energy Business, to collect the costs of ancillary services from customers, since those costs will no longer be collected by NYSEG or RGE through the nonbypassable charge. These charges will vary on a monthly basis, as they do now, however the amount that consumers pay will not change under the new billing approach. The charges will simply be billed and collected by power suppliers, instead of by NYSEG or RGE, which is consistent with the manner in which these charges are collected by RGE and other New York utilities.
NYISO Sees Adequate Supplies for Winter
The New York Independent System Operator (NYISO) recently reported that it would have adequate winter supplies this year, projecting demand at 24,998 MW with available supply of 41,055 MW. This forecast is slightly higher than last year's actual demand of 24,673 MW but it’s below the record winter peak of 25,541 MW.
The NYISO’s Winter Reliability Assessment is positive news as the RTO continues to demonstrate adequate generation capacity and solid reliability for the system.
Explosion Occurs at Middletown Kleen Energy Power Plant
A massive gas explosion at the Kleen Energy Systems power plant in Middletown, Connecticut left at least five dead and 26 injured on Sunday morning, Feb. 7. The explosion occurred immediately after the purging, or cleaning, of the underground natural gas pipeline that runs about 800 to 1,000 feet through the plant.
The $1 billion gas-fired, combined cycle power plant was still under construction and expected to come online this summer, which was ahead of schedule. The 620 MW plant was being designed to operate at over 60 percent efficiency would produce 620 MW.
CL&P and UI Post New Standard Service and Last Resort Rates
Connecticut Light and Power (CL&P) and United Illuminating (UI) filed with the Connecticut Department of Public Utility Control (DPUC) their Standard Service rates (customers under 500 kW) for 2010 and Last Resort Service rates (customers 500 kW and up) for Q1 2010.
Note: United Illuminating revised its Generation Services Charge (GSC) for all classes for various periods in 2010 after its initial release of rates. The revised rates reflect an increase in the GSC adder of 0.2477¢/kWh to recover the GSC allocated costs. Standard Service GSCs for customers <500 kW were also increased to recognize that UI's wholesale procurements for Standard Service for 2010 now contain "Type B" bids. UI estimated that the appropriate adder is 0.0353¢/kWh.
DPUC Rules that Termination Fee Prohibition Applies Only to Referral Program Customers
In its Final Decision within Docket 09-04-40, the DPUC ruled that the prohibition on “the imposition of additional charges” contained in Conn. Gen. Stat. §16-244c(k)(5) does not apply to all customers but rather only applies only to customers in the supplier referral program.
Specifically, the DPUC ruled that electric suppliers may impose termination fees on customers who are not in the supplier referral program, as well as customers leaving their referral plan supplier and switching to a supplier not participating in the referral program. However, if a customer is in the referral program and is 1) switching between suppliers participating in the referral program or 2) is switching to the utility Standard Service (for customers below 500 kW peak demand), then the supplier is prohibited from imposing termination fees and additional charges (including liquidated and actual damages, meter read fees, and fees for billing record changes) on the customer.
A referral customer may be required by their current provider to demonstrate that they are switching to Standard Service or to another participating electric supplier in order to avoid a termination fee. The decision does not expound on what evidence is sufficient for the customer to make such a demonstration.
Click here to read the DPUC’s Final Decision within Docket 09-04-40.
PUC Approves Plan for Met-Ed and Penelec to Acquire Electricity Supply for Use after 2010 Expiration of Rate Caps
In early November, the Pennsylvania Public Utility Commission (PUC) approved a settlement for the default service programs (DSPs) for Metropolitan Edison Co. (Met-Ed) and Pennsylvania Electric Company (Penelec).
The Commission voted 3-1 to approve the settlement among the companies, Office of Consumer Advocate, Office of Small Business Advocate, Retail Energy Supply Association and other formal complainants. Under the settlement, the DSP will have a 29-month term, beginning Jan. 1, 2011 and ending May 31, 2013.
Under the settlement, the companies will:
- Include competitive procurement plans that provide for a mix of spot purchases, short- and long-term contracts, including using a descending clock auction to procure the full-requirements component of the supply mix and requests for proposals
- Include a mix of supply resources that are designed to obtain least-cost generation supply contracts on a long-term, short-term and spot market basis
- Conduct a separate solar procurement process designed to meet the solar photovoltaic requirement for the duration of the programs
The 1996 electric competition law requires electric companies, or a Commission-approved alternative supplier, to provide default electric generation service to customers who have not selected an alternative generation supplier. The default service prices for electric generation service are required to result in a procurement strategy that produces the least cost to customers over time. The rate caps for both Met-Ed and Penelec are set to expire Dec. 31, 2010, along with Philadelphia Electric Company’s (PECO’s) rate caps.
Click here to read the full press release from the PUC.
PECO Completes Second of Four Electricity Purchases for 2011
In the second of four purchases for the electricity to serve customers beginning in January 2011, moderate wholesale market conditions resulted in lower electricity prices compared to the company’s last procurement in June 2009.
The September 2009 purchases resulted in a retail energy price of 9.16 cents per kilowatt hour (kWh) for PECO’s residential customers. When combined, the June and September purchases result in a retail price of 9.41 cents per kilowatt hour (kWh) for PECO’s residential customers—or about a 4 percent increase compared to current prices.
For the first time, PECO also purchased electricity for 2011 for its small and mid-sized commercial customers. This recent purchase resulted in a retail price of 9.79 cents per kWh, about the same as current prices for these customer classes.
Because energy prices fluctuate, PECO is buying the electricity needed in 2011 at four different times in an effort to reduce the risk of purchasing electricity all at once when market prices could be high. PECO will complete the remaining two purchases in June 2010 and September 2010. The results of all four purchases will determine the price in which PECO’s customers will pay for electricity beginning Jan. 1, 2011 when rate caps expire.
PECO is estimating an overall increase of 10–15 percent for customers once all procurements have been made.
Click here for the full press release from PECO.
PUC Approves Settlement Designed to Improve the Competitive Retail Electric Market in the PPL Service Territory
In mid-November, the PUC approved a settlement designed to create a voluntary program that will improve the competitive retail electric market in the PPL service territory.
The Commission voted 5-0 to approve the settlement, which creates a voluntary purchase of receivables (POR) program and merchant function charge. The settlement was reached among PECO, Office of Consumer Advocate, Office of Small Business Advocate, PUC Office of Trial Staff, Constellation New Energy, FirstEnergy Solutions, PPL Industrial Consumer Alliance, Dominion Retail, Direct Energy Services, and the Retail Energy Supply Association.
Click here to read the full press release from the PUC.
PPL Completes Final Supply Purchase for 2010; Rates to Rise
In October, PPL completed its final electricity supply purchase for the 2010 delivery year and has confirmed that rates will increase approximately 18-36 percent for small and medium business customers when rate caps expire at the end of this year.
Large customers and industrials that opted to accept PPL’s fixed price offer (which expired on Nov. 6) will see a 33.6 percent increase from what they’ve been paying. Large customers that stay with the utility but that did not opt to take the fixed offer* will default to market-based rates, which can fluctuate hourly.
According to the Pennsylvania PUC*, if current wholesale market trends continue, businesses in the PPL utility territory that purchase their supply from competitive electric suppliers will likely be able to secure rates below those for default service from PPL.
PPL’s rate increases are based on the average of six rounds of power supply solicitations from 2007-2009 for delivery year 2010. These higher electricity prices are reflective of the fact that the cost of generation today is higher than the cost in 1996 when rates were capped.
Click here for PPL's price-to-compare by rate class.
* Source: http://www.puc.state.pa.us/electric/pdf/PriceEstimates/Electric_Price_Estimates101409.pdf
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