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March 23, 2018
NEM Upcoming Events

NEM’s 21st Annual National Restructuring Conference will be held April 30 – May 2, 2018, at the Hyatt Regency Capitol Hill Hotel, Washington, DC. A Draft Agenda is available here. You may register at this hotlink.

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Commission Approves Supplier Request to Offer Supplier Consolidated Billing

The Commission issued an Order on Rehearing to permit a competitive supplier to offer supplier consolidated billing (SCB) in the WGL service territory. The supplier's request was filed prior to the Petition in Case 9461 by multiple suppliers requesting the implementation of SCB for competitive electric and natural gas customers in Maryland. The Commission has not yet issued a decision on the Case 9461 petition.

Attendant with its request, the individual supplier in this case made the following commitments:

1) A commitment to abide by the minimum billing requirements contained in Case No. 8846, 92 Md PSC 430, 434-437 (2001).
2) A commitment not to terminate a customer’s gas service for failure to pay any charges billed by supplier, including any receivables supplier has purchased from Washington Gas. Additionally, should a customer fail to pay its bill, supplier will return that customer to Washington Gas without any arrearages.
3) Supplier will not impose any pre-paid security deposits on customers.
4) Supplier will provide the Commission, Staff and OPC with a sample of its residential customer bill for review.
5) Supplier will facilitate the process by which supplier learns of and provides credits to those customers who have received funds from the Maryland Energy Assistance Program (“MEAP”).
6) Supplier will provide Staff and OPC with a copy of its Maryland marketing materials at least 45 days prior to offering them to customers.
7) Supplier will not charge a termination fee.
8) Supplier will lower its prices for customers who reduce energy usage through the EmPower Maryland program.
9) Subject to specific exceptions, supplier will not terminate a customer’s contract should the customer’s gas usage vary from what supplier expected.

It is noteworthy that a number of these commitments vary significantly from the multi-supplier SCB petition in Case 9461.

In granting the supplier's request to offer SCB, the Commission found that it "will strengthen the competitive market of gas suppliers in the WGL territory. . . . Subject to [supplier's] compliance with the commitments set forth in its Request for Rehearing and Reconsideration, and with the express understanding that this approval is subject to any changes to rules regarding supplier-consolidated billing the Commission may create in Case No. 9461 or otherwise, the Commission grants [supplier's] request to offer competitive billing services in the WGL service territory, contingent on the agreement of WGL."

Commissioner O'Donnell dissented from the Order. He argued that "the absence of a comprehensive regulatory framework for supplier consolidated billing procedures" renders the request premature, particularly in view of the Commission's on-going review of the issue in Case 9461. He argued that approval of the supplier's request would lead to a "patchwork regulatory framework."

The full text of the Order is available on the NEM Website.

Pepco Microgrid Proposal

Pepco filed a pilot public purpose microgrid proposal, as anticipated under one of the conditions of the Exelon-Pepco Merger agreement that was approved by the Commission. Pepco is seeking authorization under the proposal for:

1. Authorization no later than June 1, 2018 to proceed with the development of the identified Montgomery County and Prince George’s County microgrids to permit sufficient time to construct the Montgomery County microgrid by the summer of 2021 and defer the construction of two distribution system improvements.
2. Authorization to establish a Regulatory Asset in which the Company will record microgrid costs net of any available grant monies, including depreciation and amortization expense. The Regulatory Asset will accrue a return based upon Pepco’s authorized rate of return.
3. Authorization to recover the established Regulatory Asset through a future base distribution rate case, subject to prudency review.
4. Authorization for Pepco to own the battery energy storage systems and the microgrid controllers in each proposed microgrid, as well as authorization for a third-party project developer to own the natural gas-fired generation and photovoltaic solar arrays at each proposed microgrid.

Pepco proposes to recover the $63.4 million in project costs, net of other contributions, from all of its Maryland electric distribution customers. Pepco estimates project benefits of $13.4 million in distribution deferrals and $7.6 million in outage avoidance benefits as well as reliability benefits and community resiliency benefits that were not quantified. Pepco plans to own the microgrid controller and battery energy storage system (BESS), that will be competitively procured. A third-party developer will own the natural gas fired generation (NGG) and the photovoltaic solar arrays (PV), that will be selected through an RFP process. However, the third-party developer will install and integrate all microgrid components.

With respect to retail choice participation, Pepco stated that, “Microgrid Participants will continue to have the same access to the retail competitive supply market as any other customer. Specifically, the Microgrid Participants will continue to be served by their retail energy supplier of their choosing, and will pay the same energy supply rate that they would otherwise pay (independent of their interconnection with the microgrid). The Microgrid Participants will continue to receive their electricity bills as they currently do.”

The Comment has requested comments on the proposal by April 6, 2018, and will hold a legislative-style hearing on the proposal on April 24, 2018. The full texts of the Pepco Proposal and Notice of Hearing and Request for Comments are available on the NEM Website.

New York
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Order Denying Petition Requesting Reform of Gas Cost Recovery Mechanism

The Commission issued an Order denying a 2015 Petition requesting the institution of an investigation to examine the Annual Reconciliation of Gas Expenses and Gas Cost Recoveries under current regulation and to examine an alternative cost recovery mechanism that would ensure that the monthly gas adjustment clauses(GAC) are reflective of current market costs. In denying the Petition, the Commission found "the current gas recovery mechanism remains the most appropriate mechanism that best balances timely recovery of gas costs and bill volatility."

The Commission cited many reasons for its decision. First, it stated that changing the frequency of the reconciliations could impact rate volatility. Second, the Commission rejected the idea of excluding the annual reconciliation rate from the monthly GAC, because it is a commodity-related cost. Third, utilities can utilize interim adjustments to the gas cost rate to better reflect current costs and minimize end of period imbalances. Finally, certain utilities have implemented changes to their retail access programs to provide ESCOs with more control over gas nominations, resulting in lower monthly cash outs and consequently lowering the annual GAC imbalance. Certain utilities also now provide ESCOs with more control over the capacity assets used to bring gas into those service territories.

The full text of the Order is available on the NEM Website.

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