april 20061 maine’s competitive electricity market rules
TRANSCRIPT
April 2006 1
Maine’sCompetitive
ElectricityMarket Rules
April 2006 2
T&D Utilities:
• Cannot own generating assets• Cannot participate competitively in
the electric power market• Affiliate participation is limited (CMP has no affiliate. BHE and MPS have no affiliate
activity.)
April 2006 3
Competitive Electricity Providers sell electricity
T&D Utilities deliver electricity
April 2006 4
Who Sells Electricity in Maine: Competitive Electricity Providers (CEPs)
• Suppliers sell electricity to retail customers. A supplier may be a generator selling its own electricity or a marketer purchasing and reselling electricity.
• Aggregators & Brokers
intermediaries who do not sell electricity
April 2006 5
Rules and Business Processes
• Business operations generally consistent with other states
• Business operations run smoothly
• Minor tinkering with rules occur, but consistency remains
April 2006 6
Providers Licensed in Maine
• Approximately 35 licensed suppliers
• Approximately 25 licensed aggregators or brokers
• Extent of activity in Maine varies
April 2006 7
Green Power
• A green market exists, for residential and business customers.
• Green market supply includes hydro, biomass, landfill gas, wind, and solar. Supply or certificates may be purchased.
April 2006 8
Load Served by Competitive Providers in March 2006
CMP BHE MPS
Resid’l/Small C/I <1% <1% 7%
Medium 35% 33% 46%
Large 84% 66% 90%
Total 39% 27% 41%
State load served by competitive providers: 37%
April 2006 9
Migration to Standard Offer – CMP and BHE Medium and Large Customers
Migration to the Retail Electricity Market Medium and Large Commercial and Industrial
Statewide Totals
0%
20%
40%
60%
80%
100%
Jun 00 Dec 00 Jun 01 Dec 01 Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05
% o
f Loa
d
Medium C&I
Large C&I
April 2006 10
T&D Service Areas
April 2006 11
Consumer-Owned Utilities
• 6% of Maine’s load
• Do have retail access
• Rules are simpler, might be different
April 2006 12
ISO-NE• The bulk power system administrator in
New England
• To serve load within ISO-NE territory, you must:– Be an ISO-NE participant or– Contractual arrangement with ISO-NE
participant
April 2006 13
Northern Maine• Part of Maritimes Control Area• Transmission entry through New
Brunswick• Northern Maine ISA does settlement and
transmission scheduling• Must be a participant or have a
contractual arrangement with a participant in NMISA administered market
April 2006 14
Information:
Can be found on the MPUC web page,
www.maine.gov/mpuc
April 2006 15
Standard Offer
Chapter 301
April 2006 16
Standard Offer Service
• Maine’s only default service• Provided by a competitive electricity
provider(s) • At a rate determined by competitive
bid
April 2006 17
Customers in Standard Offer
Standard Offer Providers
Customer makes no choice
Customer drops provider
Provider drops customer
April 2006 18
General Model• S.O. provider does not enroll or interact with
individual customers• T&D reads meters, bills, collects for S.O. provider• T&D informs each S.O. provider of its S.O. sales • S.O. provider is paid its bid amount times its sales,
less a pre-defined percentage for uncollectibles
April 2006 19
Number of Providers
• More than one provider may provide standard offer service
• Total load for a customer class is apportioned among multiple providers based on the percentage of load won in the bid
April 2006 20
Term of SO Rates
• Terms described in RFPs issued by the PUC• Length currently 6 months for medium and
large classes. Thus the rate for these customers tracks the market.
• 1/3 of total residential and small commercial requirement purchased annually. This mitigates volatile wholesale prices.
April 2006 21
Residential & Small
Commercial( PRICE “A” )
Medium Commercial & Industrial
( PRICE “B” )
Large Commercial& Industrial( PRICE “C” )
There is one Standard Offer Price for each customer group.
Standard Offer Rate Classes
April 2006 2220
How Rate Classes are Served
•A provider may serve one or more classes. •Provider will serve in 20% increments in a rate class.
20%20%
20%
20%
20%
April 2006 23
Rate Structure
• Residential & Small C/I must be a flat per kWh rate
• Medium may have seasonal rates, demand charge
• Large C/I may have monthly or time-of-day rates, demand charge
April 2006 24
Pricing Examples
$.05 per kWh
$1.00 per kW $ .05 per kWh
Standard Offer Prices:
$ .06 Winter kWh$ .03 Summer kWh
T&D Rate
$ 10.00 Customer Charge
$ 5.00 Winter kW $ 2.00 Summer kW
$ .10 Winter kWh $ .05 Summer kWh
April 2006 25
Standard Offer Bid ProcessResidential/Small Commercial Rate Class
ABC CoBid 4.4
LMN CoBid 4.7
RST CoBid 4.8
Providers receive the price they bid$$$
The customer is billed one Standard Offer Rate: 4.6
40% 40% 20%
Exam
ple Only
Exam
ple Only
April 2006 26
Collections• T&D will bill and handle all credit
& collection for SOP
• Uncollectibles will be provided for by retaining a pre-determined percentage of revenues
• Consumer protection rules that apply to T&D will apply to Standard Offer (eg, payment arrangements, disconnect for non-payment)
April 2006 27
Treatment of UncollectiblesLet’s Say:
• Bid price: 4 cents
• Actual kWh sales: 100,000
• Pre-set uncollectibles percentage: 1%
Then: 100,000 x .04 = $ 4,000
$4,000 x .01 = $ 40
SOP receives $ 3,960
April 2006 28
Leaving Standard Offer
• Res’l and small C/I - may leave and re-enter SO as often as they like
• Medium and Large customers - opt-out fee applies if customer was in competitive market and then went onto standard offer service
• Aggregates with load >50 kW - subject to opt-out fee
April 2006 29
Opt-Out Fee
• Opt-out fee = 2 times the highest standard offer bill for the most recent period customer took standard offer
• Paid if customer leaves standard offer after less than 12 months
• No opt-out fee in Northern Maine
• PUC may waive fee
April 2006 30
Licensing
Chapter 305
April 2006 31
3 Steps to Provide Electricity Service In Maine
1 ) Obtain Maine License
2 ) Contract with T&D company for billing and metering services
3 ) EBT Training/Testing
April 2006 32
Consumer Protection – Two Groups of Customers, with different consumer
protection requirements
“Small” customers
- In T&D’s rate class that has no demand charge (<20 kW, 25 kW or 50 kW depending on T&D)
- More stringent consumer protection rules apply
Larger customers:
- All others
- Less stringent rules apply
April 2006 33
Licensing RequirementsFinancial Capability
• Most recent financial disclosures or that of corporate parent
• Additional documentation to demonstrate ability to refund customer deposits if deposits will be held
April 2006 34
Licensing Requirements Technical Capability
• Description of industry experience with electricity or natural gas markets
• Document that applicant is a participant in ISO-NE or NMISA market or has a contractual arrangement with a participant
April 2006 35
Licensing Requirements Financial Security
• Applies to CEPs serving residential and small commercial customers
• Initial amount - $100,000
• Subsequent – 10% of annual revenues from Maine sales
• Letter of credit or cash
April 2006 36
Licensing RequirementsEnforcement Proceedings and Customer
Complaints
• Disclose enforcement proceedings against applicant or associated entities within last 6 years
• Disclose customer complaints against applicant within last 12 months
April 2006 37
Licensing Requirements Miscellaneous
• Ability to satisfy portfolio requirement
• Disclosure of affiliates in retail electricity business
• Evidence of tax registration
• Contact persons
• List of jurisdictions in which applicant or affiliates engaged in electricity sales
• List of jurisdictions in which applicant or affiliates applied for license and disposition of application
April 2006 38
License Application
• Available electronically on MPUC Supplier Web Page
• Fee: $100
• MPUC will approve, deny or investigate within 30 days of application
April 2006 39
Licensing Conditions
• Comply with Maine laws and regulations• Update for substantial changes in circumstances• Reasonable efforts not to conduct business with
unlicensed entities• Submit to jurisdiction of Maine courts and MPUC• Contracts for service to residential and small
commercial customers interpreted according to Maine law and maintained in Maine courts and agencies
April 2006 40
Annual Reports
• File on or before July 1
• Average prices, revenues, sales by customer class and T&D territory
• Resource mix (ISO-NE territory use GIS certificates)
• Enforcement actions
• Compliance portfolio requirement
April 2006 41
Consumer Protection
Chapter 305
April 2006 42
Consumer Protection All Customers
• Obtain customer authorization
• No release of customer information
• Comply with Unfair Trade Practices Act
• No unreasonable collection costs
• Comply with Equal Credit Opportunity Act
• Comply with telemarketing limitations
April 2006 43
Consumer ProtectionSmall Customers – Terms of Service
• Send Terms of Service within 30 days of contracting w/customer
• Annual notification of Terms
• Include Uniform Disclosure Label with Terms
April 2006 44
Terms of Service
Price structure
Estimated bill method
Late payment terms
Deposits
Fees & penalties
Toll-free number
Contract length
Warranties
Do not call list
Rescission rights
Standard Offer
Credit agency procedures
April 2006 45
Consumer ProtectionSmall Customers - Verification of Choice
Supplier must receive verification that
customer chose supplier:
Written -- Strict Rules
Third Party Verification
April 2006 46
Consumer Protection Small Customers - Rescission Period
• Tell customers orally and in Terms
• Customer’s rescission may be oral, written or electronic
• Rescission Period
– 8 days by mail
– 5 days if sent electronically or by hand
April 2006 47
Consumer Protection Small Customers - Slamming Complaints
• Customer can file a complaint
• MPUC will investigate
• Provider must refund customer money plus expenses
• Penalties are determined by the MPUC
April 2006 48
Consumer Protection
Small Customers - Changes
• Provide customer with 30-day notice of change to Terms
• Provide customer with 30-day notice of contract termination
April 2006 49
Consumer Protection Small Customers - Generation Bill
Content
• Consumption, price, charge
• Average cent/kWh charged this month
• Itemized list of products billed
• Payments applied, arrears, late payment information
April 2006 50
Consumer Protection Small Customers - Generation Bill
Format
• Plain Language
• Separation, Definitions, Understandable
April 2006 51
Consumer ProtectionMarket Risk Disclosure
• Applies to real time products (prices vary with energy prices or indices)
• Written disclosure prior to or at time of contracting
• Separate document or in contract acknowledged by signature or initials
• Language specified by MPUC (alternative language may be allowed)
April 2006 52
Consumer ProtectionMarket Risk Disclosure
• Volatility risk
• Future performance
• Additional costs
April 2006 53
ResourcePortfolio Requirement
Chapter 311
April 2006 54
30% of annual kWhs sold to customers in Maine
(calendar year)
April 2006 55
Portfolio Requirement
EligibleOther
30% Eligible
April 2006 56
Eligible Resources• Small Power Production
• Efficient Cogeneration built before 1/1/97
• Renewable Generation < 100 MWFuel Cells Geothermal
Tidal Hydro
Solar Biomass
Wind Municipal Solid Waste
April 2006 57
Cure Period
• If 20% in one year,
can cure over next year
• MPUC may extend
April 2006 58
Compliance
• Use ISO-NE GIS system to comply with Maine’s RPS requirement for sales in ISO-NE territory
• Use settlement data or other documentation to comply with RPS for sales in northern Maine
• Verify compliance in annual report
April 2006 59
Uniform Information Disclosure
Chapter 306
April 2006 60
Label Content - Fuel & Emissions
• Resources used to meet load obligations in NE over most recent 12 month period
• Verified through NEPOOL GIS data for sales in ISO-NE territory or through settlement data or other documentation for sales in northern Maine
• Conform visually to MPUC sample label
April 2006 61
Label Content - Fuel & Emissions
• Fuel sources of resource portfolio -- biomass, MSW, fossil fuel cogen, fuel cells, geothermal, hydro, solar, tidal, wind, nuclear, gas, oil,coal
• Emissions from generation resources -- CO2, NOX, SO2
• Must compare emissions to a NE average emissions
April 2006 62
Product Offerings
• Separate label for each product offering
April 2006 63
Label must be:
• Mailed quarterly to “small” customers
• Available to all customers on request
• Sent with Terms of Service to small customers
April 2006 64
Compliance
• Provide labels and evidence of validity with annual report