January 25, 2019
NEM’s Winter Executive Committee Meeting and Western Energy Policy Roundtable will be held January 28-30, 2019, at Caesars Palace in Las Vegas, Nevada. You may register here.
A Draft Agenda is available here. Sponsorships are available. Please contact headquarters if you are interested in sponsorship.
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|Commission Report on SOS and Competitive Retail Electric Market|
The Commission is required to prepare a report on standard offer service and development of the competitive retail market every five years for the Governor and General Assembly. The Commission issued its report for the period concluding December 2018.
The Commission reports that as of August 2018, 19% of residential customers, 33% of small commercial customers, 53% of mid-sized commercial and industrial customers and 83% of large industrial and commercial customers were served by retail electric suppliers, representing 46% of total load. The Commission briefly addressed recent reports critical of the competitive market. "Notwithstanding the cyclical nature of supplier rate performance as compared to SOS rates, the competitive electricity market in Maryland has come under increased scrutiny because of concerns that residential customers are not saving money when compared to the SOS default rate. Recently, consumer advocates have issued reports alleging abuses by suppliers, particularly toward low-income customers. It is important to note that although the Commission has not verified the assertions or calculations in these reports, and (by statute) does not regulate suppliers' rates, the Commission has taken steps to prevent abuses, increase transparency, and facilitate a competitive environment." The Commission noted it had conducted several enforcement cases against specific suppliers. It has also been engaged in improving the rules that govern the functioning of the competitive market through rulemaking, public conferences and working groups. It concluded by stating that "since the events of the polar vortex, the Commission has been particularly active enforcing its existing rules and regulations and creating new ones. This process is ongoing and will also consider the findings of recent reports by ratepayer advocates and other interested parties."
The full text of the Report is available on the NEM Website.
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|Investigation into Initiatives to Protect Consumer Interests in the Retail Electric Competitive Supply Market|
The Department has issued a Notice Of Inquiry on measures to improve residential consumer protections related to the marketing and delivery of competitive supplier product offerings. The NOI follows the Attorney General report issued last year that recommend elimination of retail choice for residential electric customer, or, if allowed to continue that measures be implemented to increase market transparency and ensure adequate oversight and enforcement over competitive supplier activities. THE NOI focuses on three areas: increased consumer awareness of the competitive electric market; Department oversight and investigation of supplier marketing practices; and initiatives to improve the operational efficiency of the competitive electric supply market, resulting in an increase in consumer value received.
The Department issued questions for comment related to these three areas as follows:
1. What types of general education activities would be most effective to increase customer awareness of the value that the Competitive Supply Website can provide (see Section II.B)? For each type of activity, identity the appropriate role of the Department, the distribution companies, the competitive suppliers, and other stakeholders.
2. Would it be reasonable and appropriate for the Department to require competitive suppliers to provide customers with information regarding the Competitive Supply Website through their marketing materials/scripts (see Section II.B)? If no, explain why not. If yes, identify the information (e.g., Website URL, number of participating suppliers, number of products listed) that would be most effective to increase customer awareness of the value that the Competitive Supply Website can provide.
3. Would it be reasonable and appropriate for the Department to require the electric distribution companies to put information regarding the Competitive Supply Website on their bills (see Section II.B)? If no, explain why not. If yes, identify the information (e.g., Website URL, number of participating suppliers, number of products listed) that would be most effective in increasing customer awareness of the value that the Competitive Supply Website can provide.
4. What other steps could the Department take to increase customer awareness of the value that the Competitive Supply Website can provide?
5. Would it be reasonable and appropriate for the Department to establish uniform requirements by which competitive suppliers would notify customers of the automatic renewal provision in their supply contracts (see Section II.C, above)? If no, explain why not. If yes,
a. What information should competitive suppliers be required to provide to customers (e.g., the date on which the automatic renewal will take effect, the price and pricing structure to which the contract will automatically renew)?
b. How long before the automatic renewal takes effect should competitive suppliers be required to provide such notification to customers?
c. What method(s) should competitive suppliers be allowed to use to provide the notification (e.g., direct mail, e-mail)?
d. If the contract would renew to a monthly-priced product, should competitive suppliers be required to notify customers on an ongoing basis regarding the
price that will be in effect during the upcoming month? If no, explain why not.
e. What state(s) have established automatic renewal notification requirements? For each state, discuss the manner in which the state implements such a requirement.
6. Would it be reasonable and appropriate for the Department to require the electric distribution companies use their monthly bills to provide information to competitive supply customers about the automatic renewal provision in their supply contracts (see Section II.C, above)? If no, explain why not. If yes,
a. What information should be provided through the bills (e.g., the date on which the automatic renewal will take effect, the price and pricing structure to which the contract will automatically renew)?
b. How often should the electric distribution companies be required to provide this information (e.g., on all bills to competitive supply customers for whom the supply contract includes an automatic renewal provision, only on the bill preceding the month in which the renewal takes effect)?
c. What other supply product-related information should the electric distribution companies be required to provide to competitive supply customers through the bills (e.g., early termination fees)?
7. How could the presentation of competitive supply information on electric distribution companies’ bills be revised to provide competitive supply customers with improved awareness of their competitive supplier and their competitive supply product (e.g., a separate page dedicated to the competitive supply component of customers’ electric service, the insertion of competitive supplier logos on the bill)?
Department Investigation of Competitive Suppliers
8. Would it be reasonable and appropriate for the Department to establish door-to-door marketing standards of conduct for competitive suppliers related to the disclosure of supply product information (see Section III.B, above)? If no, explain why not. If yes,
a. What supply product information should door-to-door marketers be required to disclose to customers?
b. Should the Department establish uniform language (and a uniform format) that suppliers would be required to use to disclose this information?
9. What other standards of conduct should the Department add to the door-to-door marketing standards of conduct established in D.P.U. 14-140-G?
10. Would it be reasonable and appropriate for the Department to establish standards of conduct for marketing channels such as telemarketing and direct mail (see Section III.B, above)? If no, explain why not. If yes, identify the marketing channels for which the Department should establish standards of conduct and, for each marketing channel, discuss how the standards of conduct should differ from the standards of conduct for door-to-door marketing.
11. Would it be reasonable and appropriate for the Department to expand the role of TPV to include confirmation that a competitive supplier has complied with the marketing standards of conduct (see Section III.C, above). If no, explain why not. If yes, should the Department establish uniform language that TPV service providers would be required to use to confirm that suppliers have complied with the marketing standards of conduct?
12. Would it be reasonable and appropriate for the Department to require competitive suppliers to periodically provide the Department with data on the types of marketing channels through which they have signed up customers (see Section III.D, above)? If no, explain why not. If yes,
a. What data should competitive suppliers be required to provide the Department?
b. How often should competitive suppliers be required to provide this data to the Department?
13. How else could the Department improve its ability to investigate suppliers’ marketing activities?
14. Would it be reasonable and appropriate for the Department to make competitive supplier complaint and/or performance information available to customers and other stakeholders? If no, explain why not. If yes,
a. Identify other state(s) that make this information publicly available; and for each state, discuss the usefulness of (1) the information that is provided and (2) the manner in which that information is presented.
b. Based on your response to (a), identify best practices for (1) determining which competitive supplier complaint and/or performance information should be made publicly available, and (2) presenting that information (stakeholders are welcome to provide a visual representation of such best practices).
Barriers to Market Efficiency
15. Would it be reasonable and appropriate for the Department to direct the electric distribution companies to initiate competitive supply service during a customer’s meter read cycle (see Section IV, above)? If no, explain why not. If yes,
a. Discuss how this would improve the value that the market can provide customers.
b. Identify other states that allow the initiation of supply service during a customer’s meter read cycle. For each state, describe the manner in which the state implements such an approach.
16. Would it be reasonable and appropriate for the Department to eliminate the customer account numbers as required information on an enrollment transaction (see Section IV, above)? If no, explain why not. If yes:
a. Discuss how this would improve the value that the market can provide to customers.
b. Identify alternate piece(s) of information that could be required on enrollment transactions in order to provide the same level of customer protection that a customer’s account number provides.
17. What other rules may act as barriers to a more efficient competitive market? For each answer, propose ways to mitigate those barriers.
18. In what ways could the electric distribution companies better inform customers of their ability to prevent distribution companies from providing their account information to competitive suppliers and electricity brokers?18?
19. Would it reasonable and appropriate for the Department to require the electric distribution companies to establish a “do not switch” list, which would preclude a company from switching a customer to a competitive supplier? If no, explain why not. If yes,
a. Discuss the manner in which the “do not switch” list should be implemented.
b. Identify other states that have established such a list, and, for each state, describe the manner in which the state has implemented the list."
The Department additionally asked whether the investigation should extend to examining any of the above-listed issues with respect to small commercial electric customers and the residential gas customers.
Comments are due February 19, 2019. The full texts of the Notice and Order Opening Investigation are available on the NEM Website.
Related to this Department investigation, bills have been introduced in the state legislature that would prohibit new competitive electric supply contracts for individual residential customers starting in 2020.
SD880 specifically provides that:
"Beginning on January 1, 2020, no supplier, energy marketer, or energy broker shall execute a new contract for generation services with any individual residential retail customer. This provision shall not apply to, or otherwise affect, any government body that aggregates the load of residential retail customers as part of a municipal aggregation plan pursuant to chapter 164, § 134. Any violation of this provision shall be deemed an unfair and deceptive act pursuant to the provisions of chapter 93A, and the attorney general is hereby authorized to bring an action under section 4 of chapter 93A to enforce this provision and to obtain restitution, civil penalties, injunctive relief, and any other relief awarded pursuant to said chapter 93A."
The full text of SD880 is available on the NEM Website.
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|Board Sends Cease and Desist Letter to TPSs Regarding Fixed Rate Increases|
The NJBPU has sent a cease and desist letter to licensed third party suppliers regarding increases to fixed rates. Specifically, the letter is in reference to TPS fixed rate increases above rates set forth in customer contracts that were prompted by recent statutory changes to the renewable portfolio standard (P.L. 2018, c. 17).
The letter states:
“TPSs are not required by operation of law to change the prices that they charge to their customers as a result of P.L. 2018, c. 17. Therefore, the fact that a TPS may incur an increase in its costs as a result of P.L. 2018, c. 17 does not permit the TPS to increase fixed rates under N.J.A.C. 14:4-7.6(l), without the customer’s affirmative consent.
If your company has increased a rate for electric generation or gas supply service that it has characterized as ‘fixed’ or ‘firm,’ or your company has used other language to describe the rate as not variable, and you charged the customer a rate that is higher than the fixed rate during the period for which the rate was fixed, you are hereby notified that your company is in violation of N.J.A.C. 14:4-7.12. If this is the case, you are instructed to cease and desist charging these customers a rate higher than the rate for which they contracted with your company. Further, you are instructed to refund to each of these customers the amount that your company charged the customer in excess of the amount it would have charged the customer had the increase not been implemented. You are instructed to complete these refunds within five weeks of the date of this letter.”
TPSs were also instructed to send a letter to the Board’s Energy Division Director by March 1, 2019, detailing actions taken to remedy the matter, including number of customers affected, refund amounts and dates of refunds.
The full text of the Cease and Desist and Refund Instruction Letter is available on the NEM Website
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|Investigation into Default Service and PJM Settlement Reforms|
At a recent meeting of the Commission, Commissioner Place made a motion for the initiation of an investigation of default service policy prompted by changes that have occurred in the marketplace, including the deployment of advanced meters and data sharing enabled by those meters. Enabled by smart meters, "EDCs are developing updated wholesale settlement procedures and integrated cost allocation methods for energy, capacity and transmission costs via actual hourly energy use, as adjusted for losses and other factors, as well as 'tickets' assigned to individual customers based on allocation methods for capacity and transmission documented in each EDC's Attachment M-2 in the PJM Interconnection, LLC (PJM) Tariff. A customer's Peak Load Contribution (PLC) ticket is used to allocate capacity costs to the load serving entity (LSE) of the customer." Smart meters can enable a change in retail rate design so that consumers can be timely rewarded for behavioral changes.
Commissioner Place identified the following issues and related questions for comment:
A. Are Wholesale Cost Allocation Methods Reasonably Aligned with Cost Allocation
"1. What number of peak hours should be averaged to determine an optimal basis for allocation of capacity and transmission costs to LSEs? Should we include consecutive peak hours, or just one hour per peak day?
2. Should selected hours be based on the RTO peak or the EDC peak usage periods for capacity and/or transmission cost allocation?
3. Should we examine seasonal cost allocators for capacity and/or transmission to incent lower usage during, for example, the summer and winter periods?
4. Assuming some reform is ultimately implemented, what transitional period should this Commission adopt, recognizing that existing contracts could, in theory, be affected by changes in wholesale cost allocation?"
B. Evolving Retail Rate Design and Structure
As to energy related costs,
"1. Should default service rates evolve to include Time of Use (TOU) structures, such as on and off-peak rates, super off-peak rates, critical peak pricing (CPP) periods, or peak time rebate structures? If so, what specific TOU structures do interested parties believe are most optimal, and why?
2. What other energy market structures should we consider?
3. What modifications or standardization should be considered with regard to the design of HPS rates for large customers?"
As to the demand component of electricity supply service related to PJM capacity charges,
"1. Should we continue to have a simple, per kwh adder to the energy and ancillary supply price, as we do today?
2. Should we design a critical peak price to collect these PJM capacity costs from default service customers? If so, how should such a charge be designed and determined?
3. Should we switch to a demand charge equal to or similar to the PLC and NSPL tickets?
4. Should we switch to a demand charge with some other design feature, and if so, please describe the design element, and why this would be appropriate?"
C. Procurement Changes
"1. What evidence is there in PJM markets that long term contracts can be obtained in PJM markets that offer cost-effective hedges relative to status quo default service plans?
2. Assuming prudent opportunities exist:
*What type of RFP structure for energy or renewable attributes should be contracted for?
*Is there an optimal length for such long-term contracts?
*Is there an optimal amount of long-term contracting?
*Should contracting be limited to resources in a certain geographical area, and if so, what geographical area? Discuss the legal and cost impacts of any geographically limited proposal."
A Commission Order incorporating Commissioner Place's Motion has not yet been issued. Comments will be due ninety days after the Order entry date. The full text of the Motion is available on the NEM Website.
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