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May 10, 2019
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Retail Electric Competition

At a workshop last week to examine revisions to certain other energy rules, Commission Staff announced that it intended to file revised draft rules to include retail electric competition on June 29th. Staff tentatively announced a workshop on energy rules, including retail electric competition, will be held July 30th, pending Commissioner availability on that date.

In anticipation of the workshop, Chairman Burns identified issues for discussion pertaining to retail electric competition. He asked stakeholders to explore the idea of Community Choice Aggregation in a scale larger than political subdivisions, i.e., "any group of individuals and/or businesses (even if the individuals and/or businesses are not contiguous geographically) that could comply" with applicable rules. Chairman Burns also asked stakeholders to address how retail electric competition rules can ensure for the safe, reliable and economic operation of microgrids and the interconnected grid.

With respect to retail electric competition itself, Chairman Burns asked stakeholders "to describe, in as much detail as possible, what they believe retail competition should look like in Arizona, eg., would there need to be some type of Independent System Operator/Regional Transmission Organization, would today's regulated utilities be allowed to own generation Of be wires-only, should it be full retail competition or certain customer classes only, how would the system physically operate, how would reliability and resiliency be ensured, etc. (this is by no means an exhaustive list). For this exercise, I am not looking for a discussion of the legal impediments that may or may not exist, nor I am wanting the answer to be - "retail competition in Arizona is a bad idea". All these type issues will be and must be discussed, but not for this exercise. For this exercise, I am asking all responding parties to assume that electric retail competition is legal and that it will occur, therefore, what should it look like in Arizona. For the electric utilities, I would also request that they be prepared to discuss how they plan to transition to the retail electric competition model they envision for this exercise."

The full text of Chairman Burns Letter is available on the NEM Website.

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Commission Authorizes Supplier Consolidated Billing

The Commission issued an Order authorizing supplier consolidated billing (SCB) for retail electric and natural gas customers in Maryland. The Commission found that "SCB represents the next logical step for Maryland to fully implement the Electric Choice Act and the Natural Gas Act. A direct relationship between retail suppliers and their customers resulting from direct billing could support the growth of retail competition in Maryland." SCB will augment existing utility consolidated billing and dual billing options.

The Commission ordered that:

“(1) That supplier consolidated billing for retail electric and gas supply customers is authorized in Maryland;
(2) That Petitioners’ request for authority to direct utilities to terminate customer service for nonpayment is denied;
(3) That the SCB Workgroup, which will include a separate, technical implementation work group, both of which shall be led by Commission Staff, is established that will address supplier consolidated billing implementation issues, consistent with the guidance in this Order, including the following:
(a) Qualifications for supplier consolidated billing providers;
(b) Purchase of receivables and bad debt;
(c) Consumer protection;
(d) Customer education; and
(e) Cost recovery;
(4) That the SCB Workgroup will have 60 days from the date of this Order to file a timeline for implementing supplier consolidated billing, including a procedural schedule with deliverables for Commission review;”

Without addressing the legality of the issue, the Commission declined to allow suppliers to terminate service for nonpayment. "At least at this time, while the SCB Workgroup addresses the implementation details of how to achieve SCB, the Commission finds it is not appropriate to extend termination authority to suppliers. However, in response to the concerns raised by the suppliers, including management of bad debt, the Commission will require that utilities purchase the outstanding distribution charges of a delinquent customer account upon the customer’s return to standard offer service, as further discussed below. For other charges, the SCB provider should resort to the traditional remedies of other non-regulated businesses, including reporting to credit agencies, seeking monetary judgments in court, and pursuing collection activities."

With respect to POR, the Commission decided that "suppliers should provide purchase of receivables to the utility on substantially the same terms as provided under UCB." However, the Commission recognized that "suppliers that offer SCB need some ability to protect themselves from the risk of non payment of distribution-related debt. When a supplier is no longer serving a customer, after reasonable efforts to collect, the supplier should not be required to hold any debt attributable to the customer’s distribution charges paid under POR. Where a supplier can demonstrate the amount of unpaid distribution charges, the utility should repurchase those charges. The discount rate when a utility re-purchases distribution-related debt should be at a zero discount rate unless the SCB Workgroup can provide alternative calculations which are supported by a compelling analysis. . . . The supplier would retain any debt related to its own supply charges and any non-utility costs, and the supplier can use any legal collection methods available."

The Commission found that it "does not have sufficient information to determine either the costs or the appropriate cost recovery mechanism for SCB implementation at this time" and charged the SCB Workgroup with developing and submitting detailed cost estimates and cost recovery proposals.

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

New York
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Court of Appeals Decision on Commission Authority on ESCO Rates

The New York Court of Appeals issued its decision in NEM v. NYPSC finding that the NYPSC does have authority to impose a price cap on ESCO rates as a condition of eligibility.

While the Court found that ESCOs are not within the statutory definition of “gas corporation” and “electric corporation” and therefore not subject to the NYPSC’s direct ratemaking authority under Public Service Law Article 4, the Court found that the NYPSC under its authority to regulate utilities’ transportation of ESCOs’ gas and electricity, may condition access to utility infrastructure upon ESCOs’ compliance with a price cap on gas or electricity.

“Because the PSC is empowered to regulate utilities’ transportation of gas and electricity and created the ESCO markets for the benefit of consumers, and because the legislature has delegated to the PSC the authority to condition ESCOs’ eligibility to access utility lines on such terms and conditions that the PSC determines to be just and reasonable, it follows that the PSC has authority to prohibit utilities from distributing overpriced products by conditioning ESCOs’ access on a price cap. That is, the statutory framework permits the PSC, pursuant to its authority to regulate the energy market, to impose a price cap on ESCOs as a condition of eligibility. Therefore, although the PSC has no direct ratemaking authority over ESCOs, it did not exceed its statutory authority in determining that public utility transportation of energy sold by ESCOs is not “just and reasonable” if ESCOs are charging consumers more than that charged by public utilities. Thus, the courts below should have issued a declaration to the effect that the PSC did not exceed its authority under the Public Service Law or violate petitioners’ constitutional rights in issuing the Reset Order.”

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

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