As required by statute, the Department has prepared a report on the state of competition in its electric market. The Department notes that, "only 3.4 percent of CL&P's residential customers and 0.6 percent of Company's commercial and industrial customers have chosen an alternate supplier for generation service." The Department noted some scenarios to improve retail competition. These included allowing Standard Service and Supplier of Last Resort to begin as planned on Janaury 1, 2007. Under Standard Service, utilities will procure power, and residential generation rates will vary periodically but not more than quarterly. The Utilities must also provide Supplier of Last Resort service to large customers. The Utilities will procure this power, and rates must "reflect the full cost of providing power on a monthly basis." The Department also noted that costs related to billing, customer service overhead and bad debt could be assigned to generation service. Utilities could also support choice through bill inserts and marketing support. The Deaprtment also noted additional possible scenarios such as a retail bid for standard service, customer aggregation program, and requiring utilities exit the merchant function.

The Department made other observations about the electric market. It noted that, "many of the challenges and pressures that our state energy system faces today would create upgrade price pressure regardless of the regulatory paradigm," and listed the dramatic increase in fossil fuel prices and negative characteristics of the underlying utility infrastructure as examples. They also noted that continued regulatory uncertainty inhibits the long term energy planning and infrastructure investments that are needed. The Department concluded that, "the existing regulatory framework, with some adjustments, has the flexibility to accommodate our ability to implement many of the objectives we will need to pursue to move our state forward in the coming year." The full text of the Department's Report on Electric Competition is available on the NEM Website.

The Commission conducted a hearing this week on the impending expiration of BGE's residential rate freeze and proposed mitigation measures that could be taken to lessen the impact of expected price increases. The Commission denied the Motions of the BGE and Pepco to Dismiss portions of NEM Testimony. NEM supported the Staff’s short-term, elective, lender/ratepayer funded, Commodity Price Mitigation Loan Proposal. However, NEM also urged the Commission to use price, service and technology competition to augment and maximize the consumer value of any ratepayer funds used to mitigate prices. NEM argued this should maximize the competitive impact of a transition to a reliable, liquid, and competitively priced energy market in the BGE territory.

In an additional post-hearing submission to the Commission, NEM suggested that the Commission’s Final Order should: (1) provide competitive suppliers with customer lists, while ensuring that all consumers have a right to opt-out, (2) structure consolidated billing to permit any party to purchase receivables on any bill (or to compete as an independent market-based factor of receivables). However, as long as the utility remains sole provider of SOS, the Commission should require it to purchase receivables on a non-recourse basis at a discount rate equal to its unrecoverable bad debt percentage, (3) ensure that any ratepayer-financed customer education program educates consumers on a competitively neutral basis; (4) ensure that any consumer that elects to borrow money from BG&E in the form of a commodity price mitigation loan receives a transparent and accurate explanation of the true costs of the funds borrowed as well any additional costs associated with the newly defined “regulatory assets,” and (5) when consumers elect to borrow price mitigation funds, they should receive understandable and accurate information about as many regulated and competitive choices as possible, to help them make an informed choice, and (6) most importantly, the price mitigation loans should not become an obstacle to easy switching.

CIEP customers pay a "retail margin" of 5 mills/kwh to the utilities which accumulated to $45 million by August 31, 2005. The Board examined what should be done with these retail margin funds. The Board determined that $23.1 million of the retail margin funds should be used for a load management RFP, Building Operator Certification tranining in new technology and energy efficiency, and energy audits. The programs are targeted at the the customers in the CIEP class and with a peak load share of 750 kw or greater. Remaining retail margin funds should be returned to the general retail margin accounts maintained by the utilities. The full text of the Board's Retail Margin Funds Order is available on the NEM Website.

O&R filed modifications to its PowerSwitch program in conformance with the ESCO Contract Option model in the Commission's ESCO Referral Program Order. Under O&R's program, residential and small commercial customers participate in a two month, seven percent introductory discount. Customers can select a specific ESCO to take service from or can request that they be assigned to the ESCO. After the introductory period, service will continue on a month-to-month basis, under the terms of the ESCO contract that is to be provided to the customer within five days of the customer's enrollment. Participating ESCOs must agree to serve all eligible customers, permit O&R to purchase its receivable and provide a consolidated bill. Customers will be enrolled in the program via enrollment card, recorded telephone call or electronically. The full text of O&R's Filing is available from NEM headquarters.