The Commission opened two significant proceedings to examine the electric market in Maryland. One proceeding is a comprehensive examination of the optimal structure of the electric industry in the state. It will entail a two phase process: 1) thorough discussion of current and evolving wholesale and retail market factors in the region; followed by 2) examination of actions or recommendations including statutory changes, that would be "appropriate and beneficial" for Maryland electric consumers. This proceeding will utilize a legislative-style process. A scheduling conference will be held June 7, 2006, in the Commission's 16th floor hearing room. Requests to be added to the service list should be filed by June 2, 2006. The full text of the Order Instituting Proceeding on Optimal Electric Market Structure is available on the NEM Website.

The second proceeding opened by the Commission is a policy review of the provision of Standard Offer Service (SOS) to small commercial (Type I) customers and Allegheny Power, DPL and PEPCO residential customers. The case will proceed in two phases, a policy phase and an implementation phase. The Commission stated that three fundamental policy options guide the provision of SOS service: 1) "whether there will be a market-priced SOS offering prescribed by terms set by the Commission, or whether all customers must shop for an electric supplier in the same way that there is no default supplier of fuel oil, propane, gasoline, or most other goods and services"; 2) "whether SOS/default service will be provided by the local utility or by an electric supplier"; and 3) "whether the primary objective of SOS/default service should be reducing price volatility or achieving the lowest price." Staff was directed to conduct a technical conference to include presentations on current approaches to retail competition and retail market innovations that have emerged. A prehearing conference will be held June 7, 2006, in the Commission's 16th floor hearing room. Interventions are due June 2, 2006.

Staff scheduled a second meeting on EPAct/rate design policy that will focus on rate design policies, metering issues and what would be involved if the Board pursues this matter further. The meeting will be held May 23, 2006, at 10AM in the 8th floor hearing room. Teleconferencing will also be provided. The dial in number is 601-352-8646, and the passcode is 967286.

The meeting agenda will include:
1) Whether real time pricing, critical peak pricing or TOU pricing make economic sense for ratepayers, and whether the Board can rely on data from other programs to make such a determination;
2) Whether “standard” utility interval meters are sufficient or are there advancements in metering that could provide additional advantages and need to be considered? What are the metering costs involved?;
3) What other factors need to be considered?;
4) What other costs are involved?; and
5) If authorized by the Board, what is a reasonable timeline to get all issues resolved and start implementation?

Staff has circulated a proposed recommendation on the issue of the presentation of price to compare information for natural gas customers. With respect to C&I customers, Staff proposes removal of the price to compare from all C&I bills. In its place, there should be an indication that the current and historical monthly BGSS rate can be found on the utility's website. Detailed BGSS calculations should be posted on utility websites on a monthly basis and maintained as a rolling twelve month spreadsheet.

Staff recommends deferral of consideration of the issue with respect to residential customers. However, Staff does recommend that the utilities post their current and historical monthly residential BGSS rate on their websites and post detailed BGSS calculations on their website to be maintained as a rolling twelve month spreadsheet. Staff recommends that the utilities be required to circulate the proposed detailed residential BGSS calculation format and that parties would have twenty days to raise associated issues. Nine months after the C&I changes go into effect, the parties would reconvene to discuss residential price to compare issues in view of the reaction to the C&I change. Comments on Staff's proposed recommendations should be circulated to the listserver by May 18, 2006.

Staff submitted a reply brief in NYSEG's electric rate case reiterating its opposition to NYSEG's proposed extension of its Fixed Price Option (FPO). Staff explains, "The basis for our opposition to the FPO proposed by NYSEG is simple: based upon what we now know, it fails to pass any reasonable interpretation of "just and reasonable rates", due to its high profit margin and it is anti-competitive impacts." Staff argued that, "NYSEG is making excessive profits on commodity. In 2005 NYSEG charged customers $106 million for commodity profits." Additionally, "residential customers paid less under NYSEG's VRO [Variable Rate Option] than its FPO during 2003-2005. And this occurred even during a period of dramatic market price increases."

It is Staff's recommendation that, "a properly hedged VPO [Variable Price Option] is the sole appropriate commodity option for NYSEG." However, in the event that NYSEG is permitted to offer a fixed price service, Staff recommends that it be limited to residential full service customers and that it be optional, not the default service. In that case, Staff would continue the price mark-up to include the costs associated with the commodity (Staff proposed a 17.5% mark-up floor with a three mil adder). The mark-up is not intended to permit NYSEG to earn a profit on the fixed price commodity service. The full text of Staff's Brief is available on the NEM Website.