The Authority issued a final interim decision in its inquiry into whether the current 25% allocation of capacity to competitive suppliers should be modified. The decision differs from the proposed decision issued last week in its willingness to consider virtual capacity as an interim solution. The final interim decision pertains solely to the percentage of allocation capacity release available to competitive suppliers for the winter of 2015/2016. The timing of the decision is intended to address the need for competitive suppliers to procure supply and assets to serve customers for winter 2015-16. The Authority noted its concern that, "under the Competitive Suppliers proposal to increase the retail capacity allocation to 100%, the LDCs may not have the assets available to provide the SOLR function if Competitive Suppliers do not deliver gas because of an intraday cut in supply or a failure to deliver." The Authority said further evidence and study would be required before a change in the allocation methodology should be made and it plans to issue a decision addressing capacity issues on a permanent basis.

However, in the near term, the Authority wants to develop a further record on Virtual Service as a means to maintain a competitive market in Connecticut in the short run and the possibility of implementing Virtual Service for winter 2015/16. The Authority requests comments on the following questions on the use of Virtual Service as a substitute for capacity release:

"1. Define Virtual Service and explain how it could work.
2. Explain how a Virtual Service would be structured.
3. What are the steps required to implement Virtual Service and could these steps be accomplished by the winter of 2015/16?
4. What date would the Suppliers need to begin hedging their portfolio so that a Virtual Service could be implemented for the winter of 2015/16?
5. What tariff provisions would need to be created? How should these provisions be determined and how long would it take for the tariff provisions to be agreed to by all Parties?
6. What operational issues, if any, need to be addressed prior to the implementation of a Virtual Service?
7. Would implementing a Virtual Service for the winter of 2015/16 impact the ability of the LDCs to obtain non-firm margins? Can this impact be mitigated through the pricing of Virtual Service? What affects if any would a reduction in non-firm margins have on the Comprehensive Energy Strategy?"

Comments are due June 19, 2015. The full text of the Final Interim Decision is available on the NEM Website.

Governor Malloy signed SB1078, which is intended to address concerns with winter electric price spikes and system reliability. SB1078 authorizes the Commissioner of Energy and Environmental Protection to issue solicitations for long term contracts from providers of 1) natural gas pipeline capacity constructed on or after January 1, 2016, 2) LNG, 3) Class I renewable energy sources, 4) active demand response resources, 5) distributed generation, or 6) verifiable large-scale hydropower. Any agreements entered into as a result of the solicitations would be subject to PURA approval. With regard to cost recovery, “The net costs of any such agreement, including the electric distribution companies' costs incurred under the agreement and reasonable costs incurred in connection with such agreement, shall be recovered through a fully reconciling component of electric rates for all customers of electric distribution companies.” SB1078 permits the electric utilities to seek cost recovery in their rate application filings “for the costs of purchasing new natural gas capacity either through procuring contracts for new pipeline capacity or otherwise.” The full text of SB1078 is available on the NEM Website.