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March 8, 2019
NEM Events

NEM's 22nd Annual National Energy Restructuring Conference will be held April 10-12, 2019, at the Hyatt Regency Washington on Capitol Hill. You may register here.

The following state PUC Chairs and Commissioners will participate in the event: John Betkoski, III, Vice Chairman, CT PURA; Odogwu Linton, Commissioner, MDPSC; Upendra Chivukula, Commissioner, NJBPU; Norman Saari, Commissioner, MIPSC; Diane Burman, Commissioner, NYPSC (invited); Valerie Espinoza, Commissioner, NMPRC; Boyd Dunn, Commissioner, AZCC; Tim Echols, Vice Chairman, GAPSC; and John Rosales, Commissioner, ICC. Additional invitations to federal and state officials are outstanding.

A Draft Agenda is available here. Sponsorships are available. Please contact headquarters if you are interested in sponsorship.

Senate Energy and Natural Resources Committee Hearing on the Electricity Sector in a Changing Climate

Earlier this week the Senate Energy and Natural Resources Committee convened a hearing to examine the electricity sector in a changing climate. As Committee Chairman Murkowski noted, "Our nation’s energy mix has changed significantly over the past decade – largely driven by the shale revolution and the low cost of natural gas, but also federal and state policies that have boosted low or zero emission energy technologies. The electricity sector is just one piece of the puzzle when it comes to climate change, but it is also the most visible and all encompassing. Reliable electric power is central to our very way of life . . . But as more renewables come online and the mix of baseload power changes, our committee will focus on maintaining grid reliability and resiliency. We will prioritize keeping energy affordable. And we will also be working to advance cleaner energy technologies that can help reduce greenhouse gas emissions."

One of the witnesses at the hearing was former FERC Chairman Joseph Kelliher, who appeared on behalf of NextEra Energy (the parent of Florida Power & Light). Kelliher testified that,

"Lowering costs was a primary goal of competition policy in both the electricity and natural gas industries. Competition produced the shale gas revolution, successfully shifted risk away from customers to market participants, and facilitated deployment of new technologies.

In my view, wholesale competition policy has been a major success. The same cannot be said about retail competition. Retail competition has largely been limited to states that historically had very high retail rates, with the exception of Texas, where consumers are mandated to choose a competitive supplier. In many states, retail competition has been a failure, at least for residential customers, resulting in higher rates from competitive suppliers than the rates charged by regulated utilities. Perhaps because of these outcomes, participation by residential consumers in retail programs has been declining since 2014. The real beneficiary of these retail programs appears to have been industrial and other large customers.

There are some who argue the electric sector transition is the result of systemic “market failure” that must be corrected. It should be recognized that the “market failure” these critics are trying to remedy is low prices resulting from market fundamentals. Their “solution” is to raise prices charged by a select few, which would tend to suppress prices for everyone else, discouraging the entry of new, more efficient economic generation. In the end, these types of proposals are designed to shift risk away from generators back to customers, contrary to a primary goal of competition policy. In effect, subsidies grant the owners of uneconomic generation facilities a safe haven from the hazards of competitive markets."

Kelliher's comments are notable given the current electric choice ballot initiative being pursued in Florida. The current status of the ballot initiative is available here.

The full text of Kelliher's testimony is available here.

Click here to view all past updates.
Proposed Decision to Open Rulemaking on Direct Access Expansion

For consideration at its agenda meeting next week, the Commission issued a proposed decision to implement SB237. The proposed decision would open a rulemaking on the expansion of direct access to additional nonresidential customers. SB237 requires that,

"On or before June 1, 2019, the commission shall issue an order regarding direct transactions that provides as follows: (1) Increase the maximum allowable total kilowatt-hours annual limit by 4,000 gigawatt hours and apportion that increase among the service territories of the electrical corporations. (2) All residential and nonresidential customer accounts that are on direct access as of January 1, 2019, remain authorized to participate in direct transactions."

SB237 also requires the Commission to make recommendations by June 1, 2020, to the legislature of expanding direct access to all nonresidential customers.

The Proposed Decision identifies the following issues for consideration:

"I. How should the Commission implement Section 365.1(e) of SB 237?

1. Whether the Commission should adopt Staff’s proposal, noted below, or a different approach.

Staff’s proposal:
a. The 4,000 GWh is apportioned as a percentage of the load for the full service territory of an IOU, excluding residential and existing Direct Access load, irrespective of which load serving entity currently serves the remaining load.
b. To comply with year-ahead Resource Adequacy requirements, and address potential cost-shifting, customers enrolled as a result of the 4,000 GWh expansion will not begin service until January 2020.
c. Eligibility to enroll new Direct Access customers is based off the waitlist that went into effect on January 1, 2019.

2. Whether there are any timing or process issues related to the increase in Direct Access load and the Commission’s rules and regulations for Resource Adequacy, the Integrated Resource Plan, and the Power Charge Indifference Adjustment.

3. Whether the Commission must take any additional action to comply with Section 365.1 (e)(2) of SB 237’s mandate that “[a]ll residential or non-residential customer accounts that are on [D]irect [A]ccess as of January 1, 2019, remain authorized to participate in direct transactions.”

4. Any other substantive issues necessary to implement Section 365.1.

II. With respect to the DACC Petition, the parties may comment on the following:

1. Whether the Direct Access Monthly Report, which IOUs provide to the Commission, should be revised to denote Direct Access load that is reserved and, therefore, not available to assigned to customers who are on the waitlist. Load will be considered as reserved if it is assigned to a customer who has a pending load replacement, load relocation, or account transfer.

2. Whether Direct Access customers should be permitted to relocate to a new location on the same premises."

The full text of the Proposed Decision is available on the NEM Website.

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