First Energy commits to economic development initiatives.

Weekly Update Courtesy of Utility Regulatory News #3987: Citing FirstEnergy Corp.’s agreement to hold ratepayers harmless from costs incurred in switching from one regional transmission organization (RTO) to another, and pointing to the company’s pledges to devote more funding to local economic development programs, the Ohio Public Utilities Commission has signed off on a modified bidding structure by which FirstEnergy’s operating subsidiaries procure supply for their standard service offer (SSO) customers. FirstEnergy’s Ohio operating companies are Ohio Edison Co., Cleveland Electric Illuminating Co., and Detroit Edison Co.

The new SSO procurement process will be based on a twice-yearly competitive bid protocol that will utilize an independent bid manager and rely on a descending clock format. Pursuant to settlement, FirstEnergy agreed not to reflect in resulting rates $42 million in exit fees and integration costs it is incurring as it moves from the Midwest Independent System Operator RTO to the PJM Interconnection RTO. The utility also assented to forgoing recovery of certain “legacy” regional transmission expansion planning charges. In addition, FirstEnergy said that during the three-year period the new SSO bidding arrangement is in place, the utility will provide at least $25 million for economic development and job retention programs.

As part of that commitment, FirstEnergy said it would target automakers, offering those consuming more than 45 million kilowatt-hours at a single site in 2009 a monthly discount for increases in production. For the full story, subscribe to URN.

Posted: September 29th, 2010 under Uncategorized, energy policy, regulation, retail competition, transmission regulation.
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PSC guidelines to give customers “apples to apples” comparisons

Weekly Update courtesy of Utility Regulatory News #3979: Determining that electric ratepayers in the state were receiving little meaningful information in the “price to compare” (PTC) line item of their bills, the Maryland Public Service Commission has announced new guidelines for how such PTC data should be presented.

To facilitate retail competition and customer choice programs pursuant to industry restructuring, Maryland electric utilities had been instructed to list on each billing statement a line item denoting the PTC, so as to provide customers with a baseline supply cost with which to compare offers from alternative electric suppliers. However, no particular method had been ordered for ascertaining the PTC, such that the PTC varied from utility to utility in terms of both its measurement and presentation. In most cases, the commission observed, the PTC represented just a simple weighted average of a utility’s standard offer service (SOS) supply cost. However, because SOS solicitation protocols have changed over the years, with several tranches now fulfilled in any one year for varying lengths of time, the commission found that the weighted average approach no longer reflected a utility’s true costs. That is, it said, existing PTCs were more likely to compare apples to oranges than apples to apples. Thus, to bring the PTC more in line with actual SOS procurement practices, the commission directed utilities to replace their present PTCs with the following: (1) both current and known future SOS prices, properly identified and with their effective dates; (2) the date beyond which no SOS price is yet known; and (3) a weighted average of known SOS prices, with the date through which such average is valid.

The utilities were told that they must update their PTCs whenever appropriate, as when a new supply tranche comes up for auction. The commission required the utilities to modify their Web sites to show the new PTC data as well. For the full story subscribe to URN.

Posted: August 13th, 2010 under Uncategorized, regulation, retail competition.
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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.

Posted: May 25th, 2010 under Uncategorized, regulation, retail competition.
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