Maine’s
Competitive
Electricity
Market Rules
April 2006
1
T&D Utilities:
• Cannot own generating assets
• Cannot participate competitively in
the electric power market
• Affiliate participation is limited
(CMP has no affiliate. BHE and MPS have no affiliate
activity.)
April 2006
2
Competitive Electricity
Providers sell electricity
T&D Utilities deliver
electricity
April 2006
3
Who Sells Electricity in Maine:
Competitive Electricity Providers (CEPs)
• Suppliers sell electricity to retail
customers. A supplier may be a generator
selling its own electricity or a marketer
purchasing and reselling electricity.
• Aggregators & Brokers
intermediaries who do not sell electricity
April 2006
4
Rules and Business Processes
• Business operations generally
consistent with other states
• Business operations run smoothly
• Minor tinkering with rules occur,
but consistency remains
April 2006
5
Providers Licensed in Maine
• Approximately 35 licensed suppliers
• Approximately 25 licensed
aggregators or brokers
• Extent of activity in Maine varies
April 2006
6
Green Power
• A green market exists, for residential and
business customers.
• Green market supply includes hydro,
biomass, landfill gas, wind, and solar.
Supply or certificates may be purchased.
April 2006
7
Load Served by Competitive
Providers in March 2006
Resid’l/Small C/I
Medium
Large
Total
CMP
<1%
35%
84%
39%
BHE MPS
<1%
7%
33% 46%
66%
90%
27%
41%
State load served by competitive providers: 37%
April 2006
8
Migration to Standard Offer – CMP and BHE Medium and Large Customers
Migration to the Retail Electricity Market
Medium and Large Commercial and Industrial
Statewide Totals
100%
% of Load
80%
60%
Medium C&I
Large C&I
40%
20%
0%
Jun 00
Dec 00
Jun 01
Dec 01
Jun 02
Dec 02
Jun 03
April 2006
Dec 03
Jun 04
Dec 04
Jun 05
Dec 05
9
T&D Service Areas
April 2006
10
Consumer-Owned Utilities
• 6% of Maine’s load
• Do have retail access
• Rules are simpler, might be different
April 2006
11
ISO-NE
• The bulk power system administrator in
New England
• To serve load within ISO-NE territory,
you must:
– Be an ISO-NE participant or
– Contractual arrangement with ISO-NE
participant
April 2006
12
Northern Maine
• Part of Maritimes Control Area
• Transmission entry through New
Brunswick
• Northern Maine ISA does settlement and
transmission scheduling
• Must be a participant or have a
contractual arrangement with a
participant in NMISA administered
market
April 2006
13
Information:
Can be found on the MPUC web page,
www.maine.gov/mpuc
April 2006
14
Standard Offer
Chapter 301
April 2006
15
Standard Offer Service
• Maine’s only default service
• Provided by a competitive electricity
provider(s)
• At a rate determined by competitive
bid
April 2006
16
Customers in Standard Offer
Customer makes no choice
Standard Offer Providers
Customer drops provider
Provider drops customer
April 2006
17
General Model
• S.O. provider does not enroll or interact with
individual customers
• T&D reads meters, bills, collects for S.O. provider
• T&D informs each S.O. provider of its S.O. sales
• S.O. provider is paid its bid amount times its sales,
less a pre-defined percentage for uncollectibles
April 2006
18
Number of Providers
• More than one provider may provide
standard offer service
• Total load for a customer class is
apportioned among multiple
providers based on the percentage of
load won in the bid
April 2006
19
Term of SO Rates
• Terms described in RFPs issued by the PUC
• Length currently 6 months for medium and
large classes. Thus the rate for these
customers tracks the market.
• 1/3 of total residential and small commercial
requirement purchased annually. This
mitigates volatile wholesale prices.
April 2006
20
Standard Offer Rate Classes
There is one Standard Offer Price for each customer group.
Residential &
Small Commercial
( PRICE “A” )
Large
Commercial
& Industrial
( PRICE “C” )
Medium
Commercial & Industrial
( PRICE “B” )
April 2006
21
How Rate Classes are Served
•A provider may serve one or
more classes.
20%
20%
20%
•Provider will serve in 20%
increments in a rate class.
20%
20%
April 2006
20
22
Rate Structure
• Residential & Small C/I must be a
flat per kWh rate
• Medium may have seasonal rates,
demand charge
• Large C/I may have monthly or
time-of-day rates, demand charge
April 2006
23
Pricing Examples
Standard Offer Prices:
T&D Rate
$.05 per kWh
$ 10.00 Customer Charge
$ 5.00 Winter kW
$ 2.00 Summer kW
$
$
$1.00 per kW
$ .05 per kWh
.10 Winter kWh
.05 Summer kWh
$ .06 Winter kWh
$ .03 Summer kWh
April 2006
24
Standard Offer Bid Process
Residential/Small Commercial Rate Class
ABC Co
LMN Co
RST Co
Bid 4.4
Bid 4.7
Bid 4.8
40%
40%
20%
Providers receive the price they bid
$$$
The customer is billed one
Standard Offer Rate: 4.6
April 2006
25
Collections
• T&D will bill and handle all credit
& collection for SOP
• Uncollectibles will be provided for by retaining
a pre-determined percentage of revenues
• Consumer protection rules that apply to T&D
will apply to Standard Offer (eg, payment
arrangements, disconnect for non-payment)
April 2006
26
Treatment of Uncollectibles
Let’s Say:
• Bid price: 4 cents
• Actual kWh sales: 100,000
• Pre-set uncollectibles percentage: 1%
Then:
100,000 x .04 = $ 4,000
$4,000 x .01 = $
40
SOP receives $ 3,960
April 2006
27
Leaving Standard Offer
• Res’l and small C/I - may leave and re-enter SO
as often as they like
• Medium and Large customers - opt-out fee
applies if customer was in competitive market and
then went onto standard offer service
• Aggregates with load >50 kW - subject to opt-out
fee
April 2006
28
Opt-Out Fee
• Opt-out fee = 2 times the highest standard
offer bill for the most recent period customer
took standard offer
• Paid if customer leaves standard offer after
less than 12 months
• No opt-out fee in Northern Maine
• PUC may waive fee
April 2006
29
Licensing
Chapter 305
April 2006
30
3 Steps to Provide Electricity
Service In Maine
1)
2)
3)
Obtain Maine License
Contract with T&D company for
billing and metering services
EBT Training/Testing
April 2006
31
Consumer Protection –
Two Groups of Customers, with different consumer
protection requirements
“Small” customers
- In T&D’s rate class that has no demand charge (<20
kW, 25 kW or 50 kW depending on T&D)
- More stringent consumer protection rules apply
Larger customers:
- All others
- Less stringent rules apply
April 2006
32
Licensing Requirements
Financial Capability
• Most recent financial disclosures or that
of corporate parent
• Additional documentation to
demonstrate ability to refund customer
deposits if deposits will be held
April 2006
33
Licensing Requirements
Technical Capability
• Description of industry experience with
electricity or natural gas markets
• Document that applicant is a participant in
ISO-NE or NMISA market or has a
contractual arrangement with a participant
April 2006
34
Licensing Requirements
Financial Security
• Applies to CEPs serving residential and
small commercial customers
• Initial amount - $100,000
• Subsequent – 10% of annual revenues
from Maine sales
• Letter of credit or cash
April 2006
35
Licensing Requirements
Enforcement Proceedings and Customer
Complaints
• Disclose enforcement proceedings against
applicant or associated entities within last 6
years
• Disclose customer complaints against
applicant within last 12 months
April 2006
36
Licensing Requirements
Miscellaneous
• Ability to satisfy portfolio requirement
• Disclosure of affiliates in retail electricity business
• Evidence of tax registration
• Contact persons
• List of jurisdictions in which applicant or affiliates
engaged in electricity sales
• List of jurisdictions in which applicant or affiliates
applied for license and disposition of application
April 2006
37
License Application
• Available electronically on MPUC
Supplier Web Page
• Fee: $100
• MPUC will approve, deny or investigate
within 30 days of application
April 2006
38
Licensing Conditions
• Comply with Maine laws and regulations
• Update for substantial changes in circumstances
• Reasonable efforts not to conduct business with
unlicensed entities
• Submit to jurisdiction of Maine courts and MPUC
• Contracts for service to residential and small
commercial customers interpreted according to
Maine law and maintained in Maine courts and
agencies
April 2006
39
Annual Reports
• File on or before July 1
• Average prices, revenues, sales by customer
class and T&D territory
• Resource mix (ISO-NE territory use GIS
certificates)
• Enforcement actions
• Compliance portfolio requirement
April 2006
40
Consumer Protection
Chapter 305
April 2006
41
Consumer Protection
All Customers
• Obtain customer authorization
• No release of customer information
• Comply with Unfair Trade Practices Act
• No unreasonable collection costs
• Comply with Equal Credit Opportunity Act
• Comply with telemarketing limitations
April 2006
42
Consumer Protection
Small Customers – Terms of Service
• Send Terms of Service within 30 days of
contracting w/customer
• Annual notification of Terms
• Include Uniform Disclosure Label with
Terms
April 2006
43
Terms of Service
Price structure
Contract length
Estimated bill method
Warranties
Late payment terms
Do not call list
Deposits
Rescission rights
Fees & penalties
Standard Offer
Toll-free number
Credit agency procedures
April 2006
44
Consumer Protection
Small Customers - Verification of Choice
Supplier must receive verification that
customer chose supplier:
Written -- Strict Rules
Third Party Verification
April 2006
45
Consumer Protection
Small Customers - Rescission Period
• Tell customers orally and in Terms
• Customer’s rescission may be oral,
written or electronic
• Rescission Period
– 8 days by mail
– 5 days if sent electronically or by hand
April 2006
46
Consumer Protection
Small Customers - Slamming Complaints
• Customer can file a complaint
• MPUC will investigate
• Provider must refund customer money
plus expenses
• Penalties are determined by the MPUC
April 2006
47
Consumer Protection
Small Customers - Changes
• Provide customer with 30-day notice
of change to Terms
• Provide customer with 30-day notice
of contract termination
April 2006
48
Consumer Protection
Small Customers - Generation Bill
Content
• Consumption, price, charge
• Average cent/kWh charged this month
• Itemized list of products billed
• Payments applied, arrears, late payment
information
April 2006
49
Consumer Protection
Small Customers - Generation Bill
Format
• Plain Language
• Separation, Definitions, Understandable
April 2006
50
Consumer Protection
Market Risk Disclosure
• Applies to real time products (prices vary with
energy prices or indices)
• Written disclosure prior to or at time of contracting
• Separate document or in contract acknowledged by
signature or initials
• Language specified by MPUC (alternative language
may be allowed)
April 2006
51
Consumer Protection
Market Risk Disclosure
• Volatility risk
• Future performance
• Additional costs
April 2006
52
Resource
Portfolio Requirement
Chapter 311
April 2006
53
30% of annual kWhs sold to
customers in Maine
(calendar year)
April 2006
54
Portfolio Requirement
30% Eligible
Eligible
Other
April 2006
55
Eligible Resources
• Small Power Production
• Efficient Cogeneration built before 1/1/97
• Renewable Generation < 100 MW
Fuel Cells
Tidal
Solar
Wind
Geothermal
Hydro
Biomass
Municipal Solid Waste
April 2006
56
Cure Period
• If 20% in one year,
can cure over next year
• MPUC may extend
April 2006
57
Compliance
• Use ISO-NE GIS system to comply with
Maine’s RPS requirement for sales in ISONE territory
• Use settlement data or other documentation
to comply with RPS for sales in northern
Maine
• Verify compliance in annual report
April 2006
58
Uniform Information
Disclosure
Chapter 306
April 2006
59
Label Content - Fuel & Emissions
• Resources used to meet load obligations in NE
over most recent 12 month period
• Verified through NEPOOL GIS data for sales
in ISO-NE territory or through settlement data
or other documentation for sales in northern
Maine
• Conform visually to MPUC sample label
April 2006
60
Label Content - Fuel & Emissions
• Fuel sources of resource portfolio -biomass, MSW, fossil fuel cogen, fuel
cells, geothermal, hydro, solar, tidal,
wind, nuclear, gas, oil,coal
• Emissions from generation resources -CO2, NOX, SO2
• Must compare emissions to a NE average
emissions
April 2006
61
Product Offerings
• Separate label for each product
offering
April 2006
62
Label must be:
• Mailed quarterly to “small”
customers
• Available to all customers on request
• Sent with Terms of Service to small
customers
April 2006
63
Compliance
• Provide labels and evidence of validity with
annual report
April 2006
64