Emerging opportunities for direct access cited as reason

Update courtesy of Utility Regulatory News #4056: Finding that customer response to the state’s resurrected direct access (DA) program was likely to be more robust than some investor-owned electric utilities (IOUs) were predicting, the California Public Utilities Commission has told the state’s three largest IOUs that in developing their strategies for procuring electric supplies for their bundled customers, they should base their power purchase decisions on an assumption that DA offerings will be fully subscribed during future procurement planning periods. One IOU, Southern California Edison Co. (SCE), had already embraced the notion that DA service would prove popular and be fully subscribed, meaning that the IOU would not need to procure as much supply for those customers that remained “bundled” as it might otherwise need to secure. However, the state’s other two large IOUs, Pacific Gas & Electric Co. (PG&E) and San Diego Gas & Electric Co. (SDG&E), had expressed “serious reservations” about standardized planning assumptions that presume greater shifting of load from bundled service to DA service. The commission deemed SCE’s approach to be the more reasonable, noting that updated data showed growing interest in DA. It held that absent recognition of a DA load factor in their bundled procurement plans, PG&E and SDG&E would end up overstating their electric supply needs, thereby incurring unnecessary and excessive costs, to the detriment of ratepayers. For the full story, subscribe to URN.

Posted: February 6th, 2012 under energy markets, retail competition.
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Finds FERC acted reasonably in approving ARC terms

Update courtesy of Utility Regulatory News #4055: The U.S. Court of Appeals for the District of Columbia Circuit has affirmed a pronouncement by the Federal Energy Regulatory Commission (FERC), which ruling adopted a tariff proposed by a regional transmission organization, PJM Interconnection. The tariff establishes a process by which a PJM member can be recognized as an aggregator of retail customers (ARC) for the purpose of entering the demand response efforts of individual retail customers into the wholesale market. While there was general consensus that some accommodation should be made for incorporating demand response into the market, the Indiana Utility Regulatory Commission (URC) had protested that aspect of the PJM tariff that designates electric distribution companies (EDCs), rather than the ARCs, as the party responsible for determining the eligibility of an end-use customer to place demand response into the market. According to Indiana, FERC’s decision to accept the tariff had been arbitrary and capricious and represented an unwarranted intrusion by federal authorities into rate-making matters that had been reserved for the states. Noting that FERC orders are entitled to due deference absent a showing of clear legal error or an abuse of discretion, the court held that there had been nothing patently improper about FERC’s ruling. The court pointed out that there was ample record evidence demonstrating that EDCs and ARCs were equally capable of handling the eligibility certification function, such that FERC’s agreement with PJM that EDCs should perform that task was neither arbitrary nor capricious. As to the arguments about federal interference with state rate-making authority, the court found that the URC had been unable to cite any particular section of the Federal Power Act that would proscribe the challenged tariff provisions. For the full story, subscribe to URN.

Posted: January 30th, 2012 under energy markets, transmission.
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Universal Service Fund Can Be Tapped to Pay Marketers

Update courtesy of Utility Regulatory News #4031: The Georgia Court of Appeals has determined that the Georgia Public Service Commission (PSC) acted responsibly when, following the bankruptcy of a competitive natural gas supplier, the PSC tapped the state’s Universal Service Fund (USF) as part of its efforts to equitably divide the entity’s supply liability among remaining natural gas marketers.

The supplier, Catalyst Natural Gas, had filed for bankruptcy at a time when it was unable to fulfill its customers’ actual consumption quota. In fact, its supply deficit was so great that other natural gas marketers could not meet the needs of Catalyst’s customers without incurring substantial losses of their own. Neither, however, did Catalyst have the financial resources to pay the true-up charges that ordinarily would apply in such a situation, leaving the other marketers without full compensation for their service. The commission, although acknowledging that it could not make the marketers whole, nevertheless attempted to mitigate the marketers’ losses by ordering that some of the monies normally placed into the USF be redirected to the marketers, but the commission capped the marketers’ recovery at 60%. Not surprisingly, the marketers were dissatisfied with that limit, and appealed the ceiling to the court, arguing that it constituted an impermissible taking. The court, however, said that the marketers’ losses were caused by Catalyst’s bankruptcy and a free market economy, not by the commission taking private property for a public purpose. Moreover, the court pointed out that the marketers had entered into Georgia’s competitive natural gas market voluntarily and with full knowledge that there is always an element of risk in any market venture.

The court added that far from the PSC appropriating any of the marketers’ property rights for its own use, the commission had actually gone the extra mile in trying to devise a plan that would ensure at least some amount of compensation for their losses. For the full story, subscribe to URN.

Posted: August 25th, 2011 under energy markets, natural gas, retail competition.
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Migration still small, but growing quickly

Update courtesy of Utility Regulatory News #4028: In its fourth annual report to the Illinois Commerce Commission, the state’s Office of Retail Market Development (ORMD) has provided data showing that greater numbers of competitive power suppliers have been entering the retail electric markets traditionally served by both Commonwealth Edison and AmerenIllinois.

According to the ORMD, of particular note are figures showing “significant” movement among alternative suppliers by residential customers in ComEd’s service territory. The ORMD related that as of the end of 2010, the number of residential customers availing themselves of the choice option had been only about 1,100. However, it said, that number had swelled to almost 21,000 by the end of May 2011. While the report indicated that such numbers reflect only a very small fraction of ComEd’s overall customer base, the ORMD posited that they nevertheless also demonstrate strong growth in switching within a very short period of time. Although the ORMD acknowledged that choice programs had been much slower to take off within AmerenIllinois service areas, a discernable trend toward increased growth in switching was seen there as well, by virtue of the fact that several competitive suppliers had recently amended their operating certificates to include service to residential customers.

The report pointed out that participation in customer choice programs remains much more robust for nonresidential customers, with more than 70% of such customers now taking supply service from alternative power providers. For the full story, subscribe to URN.

Posted: August 25th, 2011 under energy markets, retail competition.
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