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April 6, 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. The following Commissioners are confirmed to attend with additional invitations to state and federal regulators and legislators outstanding: Betty Ann Kane, DCPSC Chairman; Dallas Winslow, DEPSC Chairman; Tricia Pridemore, GAPSC Commissioner; John Rosales, ICC Commissioner; Odogwu O. Linton, MDPSC Commissioner; Upendra J. Chivukula, NJBPU Commissioner; and Larry Friedeman, PUCO Commissioner.

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NEM Comments on Pepco Microgrid Proposal

NEM filed comments on Pepco’s proposed pilot public purpose microgrid project. NEM made a general recommendation that competitive markets should be relied upon for the provision of distributed energy resource (DER) solutions, including microgrid projects, such as are at issue in the Pepco proposal. NEM argued that permitting the utility to function as a DER provider would thwart technological innovation by deterring competitive entry and investment by competitive market participants, vest the utility with instant economies of scope and scale in the provision of competitive DER products and services, implicate market power concerns and run counter to established state law and Commission policy in favor of competitive markets. NEM also suggested that the Commission develop and implement generally applicable rules and standards applicable to microgrid projects that provide market participants with clear “rules of the road” to facilitate third party investment and participation. The full text of NEM's Comments is available on the NEM Website.

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Attorney General Report on Retail Electric Market

The Attorney General's office commissioned a report on whether residential consumers participating in the retail electric market are realizing savings compared to the basic service rate. The report was prompted by the AG's office receipt of more than 700 complaints from residential consumers from January 1, 2014 through December 31, 2017, regarding various competitive suppliers. The report analysis claims "that Massachusetts consumers in the competitive supply market paid $176.8 million more than they would have paid if they had received electric supply from their electric company during the two-year period from July 2015 to June 2017." The analysis was performed using "detailed supplier-specific data" obtained from the electric utilities. Low income shopping customers were found to have paid $23.6 million more, and the report suggests that there has been "disparate targeting of low-income customers for enrollment in competitive supply accounts."

The report recommends that "legislators in Massachusetts consider eliminating the electric supply market for individual residential consumers." If residential electric competition continues, the report recommends:

a) Public disclosure of: 1) each supplier’s historical rates by product for the prior 24 months; 2) the current and historical residential fixed basic service rates for each electric company for the last 24 months; 3) aggregated complaint data for each supplier based on complaints received by the Department, the AGO, and the electric companies.

b) Monthly reporting by the electric companies of: 1) all suppliers in each electric company’s service territory who billed consumers for the prior month; 2) all the rates charged by each supplier for the prior month; and 3) the number of residential consumers charged per supplier, per rate.

c) The establishment of a dedicated enforcement team at the Department funded by competitive suppliers.

d) The Legislature should consider prohibiting variable rates.

e) Establishment of "do not switch" options for consumers to block unauthorized switching of their accounts.

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

New York
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Briefs Filed in Track I Proceeding on ESCO Service to Mass Market Customers

Parties to the Track I proceeding examining ESCO service to mass market customers filed initial briefs in the proceeding.

In its brief, Commission Staff argued that mass market customers were “overcharged” by over $1.3 billion dollars during 2014-16 by ESCOs. Staff recommended that ESCO use of distribution utility systems be limited to three scenarios: "the ESCO provides a guarantee that each customer’s total electric and/or gas bills are lower than, or no greater than, that charged by the utility for delivery and commodity service over the calendar year"; ESCO provision of "energy generated through 100 percent renewable resources, that are delivered to and consumed in New York and otherwise in compliance with the Commission’s environmental disclosure program requirements, at a premium to utility service"; and customer aggregations through "a Not For Profit (NFP) or municipal entity or Community Choice Aggregation (CCA) utilizing a professional energy buyer acting as a fiduciary to the CCA and independent of the ESCO."

Staff offered additional recommended market changes including:
1) require mass market customer bills to disclose a relative bill comparison between the current bill charges and what the customer would have paid if the customer took both delivery and commodity service from the distribution utility;
2) utilities should only offer ESCOs POR with recourse;
3) require ESCOs to provide written reports on a calendar year basis for the purpose of allowing the Commission to monitor mass markets, including ESCO compliance with requirements that customers be provided with 100 percent green energy or realize savings on their commodity compared to the default utility’s offering;
4) prohibit ESCOs from using door-to-door, point of sale, telephonic sales, or similar marketing practices and limit ESCO marketing to direct mail, electronic communications, or similar forms of marketing where the potential ESCO customer would respond to such marketing and otherwise initiate direct contact with the ESCO; and
5) require ESCOs to ensure the protection of customer data, confidentiality and cybersecurity through compliance with UBP Section 4 and consistent with the NIST Cyber Security Framework or the applicable cyber security requirements of NERC.

NEM's brief addressed the "highly flawed, inaccurate analysis that generated what the hearings showed to be plainly unreliable, false, and almost inscrutable conclusions." First, "the record is devoid of any real evidence that ESCOs 'overcharge' as that term is traditionally understood." Second, there is no meaningful mechanism for comparing bill prices using the data that Staff used because ESCOs sell different products than the local utility. Third, Staff’s analysis compared ESCO fixed rate agreements to the variable rates that the utility charged and changed on a monthly basis. In addition, Staff's analysis did not include actual ESCO pricing, i.e., pricing net of discounts, rebates, and promotions that ESCOs offer. Plus, the Staff analysis does not include actual final utility pricing, which is adjusted after the fact. Indeed, the comparison of ESCO and utility pricing is fundamentally flawed because of the failure to unbundle commodity costs from utility delivery rates and because of utilities ability to retroactively adjust their rates.

NEM rejected suggestions that ESCOs be restricted from making their current product offerings available to mass market customers. NEM argued that improvements to the Department’s Power to Choose website would constitute a properly tailored and effective mechanism for addressing the identified root of Staff's concern about consumer choice in New York - transparency.

UIU/AG argued in their brief that "the evidence in this proceeding shows that energy service companies (ESCOs) repeatedly have engaged in deceptive business practices; overcharged consumers for their energy; and failed to provide evidence of services or products of sufficient value to offset the premium paid by residential and small commercial consumers (mass market consumers)."

UIU/AG therefore recommended "that the Commission place a prohibition on ESCOs’ service to mass market customers, effective immediately, unless and until additional consumer protection measures are implemented. UIU/AG recommended that the Commission allow an opportunity for ESCOs to petition for a waiver of the prohibition of service to mass market customers if they can offer a guarantee that customers will save money compared to what they would have paid with full default utility service."

UIU/AG additionally recommended:
1) affirmative consent should be required before re-enrolling customers, at the expiration of their contracts, into contracts that have materially different terms;
2) ESCOs should be prohibited from engaging in any door-to-door solicitation or telemarketing for mass market customers;
3) ESCOs should be required to disclose all investigations and complaints against them and their agents in New York and other jurisdictions;
4) ESCOs should be required to post performance bonds before being deemed eligible to participate in the New York retail energy market;
5) ESCOs should be required to use standardized contracts for energy commodity service to mass market customers;
6) ESCOs should be required to substantiate any savings claims; and
7) ESCOs should be required to pay monetary penalties imposed by the Commission for any instances of violating the UBP.

PULP argued in its brief that "the Commission should prohibit ESCOs from serving individual residential customers." If ESCOs are permitted to serve individual residential customers, PULP recommended that:
1) ESCOs be prohibited from serving low-income households;
2) POR should be terminated; and
3) “Negative option” renewal contracts that transition a customer from a fixed-rate to a variable rate contract should be prohibited.

The full texts of the Staff Brief, NEM Brief, UIU/AG Brief and PULP Brief are available on the NEM Website.

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En Banc Hearing on Supplier Consolidated Billing

The Commission will convene an en banc hearing on June 14, 2018, to gather information from stakeholders on the issues associated with the implementation of electric generation supplier consolidated billing (SCB) in Pennsylvania. The Notice of the hearing specifically noted that the Commission is seeking information regarding the legality of SCB; the appropriateness of SCB and whether it is in the public interest; and whether the benefits of SCB implementation outweigh its costs. The Commission issued an extensive list of questions for comment in this regard. The questions relate to the legal issues associated with SCB; the impact of SCB on the market; mechanics of SCB; collections and termination; EGSs offering SCB to low income and assistance program customers; and possible alternatives to SCB. Comments are due May 4, 2018. The full text of the Notice of En Banc Hearing is available on the NEM Website.

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