Weekly Update courtesy of Utility Regulatory News #3968 …

Finding that their operation within Iowa might violate state statutes giving regulated electric utilities exclusive service area rights, the Iowa Utilities Board has temporarily prohibited aggregators of retail customers (ARCs) from offering service in the state.

ARCs obtain the rights or options of retail electric consumers to purchase electricity at a certain regulated rate, with the ARCs then turning around and selling those options in the wholesale market. In the board’s view, ARCs essentially engage in arbitrage.

The board’s suspension directive came in response to an announcement from the Midwest Independent Transmission System Operator (MISO) that it was contemplating certain rule changes in order to accommodate demand resources bid by ARCs into wholesale energy markets. MISO explained that its move was in deference to FERC orders requiring regional transmission organizations to consider the efficacy of allowing ARCs to bid demand response measures into wholesale and ancillary services markets. Observing that Iowa never deregulated or pursued industry restructuring, the board expressed concern that ARC operations could interfere with those state laws granting exclusive territorial rights to electric utilities.

The board contended that other constitutional questions were raised as well, including the potential for discriminatory rate impacts on captive utility customers. Consequently, the board held that a moratorium on ARC operations should remain in place until such legal matters can be resolved. Subscribe to URN for the full story.