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News Digest

PUC Oversight: Panacea or New Problem?
Fortnightly Magazine - October 1 2000

comprehensive federal electric restructuring legislation. "We ought to do it, and we ought to do it this year," he said.

California PX Prices. The California Power Exchange asked the FERC to approve its proposed Tariff Amendment No. 19, which would impose a maximum price of $350 per megawatt-hour in the day-ahead and day-of markets administered by the PX, for as long as the $250-per-megawatt price cap should continue in effect in the markets administered by the California ISO for real-time energy and ancillary services.

The PX selected the $350 figure to match exactly the sum of ISO's $250 cap plus the $100 ISO price for replacement reserve capacity, which the PX said had created a de facto upper limit on bids offered to the PX for short-term energy. As the PX explained, "purchasers who know they can buy energy in the ISO's real-time market have no reason to bid more in the near-term forward markets operated by the PX."

Thus, the $350 cap was not intended to change behavior or affect prices or costs, but to prevent a "migration" of transactions from the PX to the ISO. The PX added, "when supply is tight, the migration of supply from the [PX's] forward markets to the ISO market limits... hedging opportunities for buyers." .


State PUCs

Standard Offers. The Maine PUC amended its rules governing standard offers for default bundled electric service provided by distribution utilities, hoping that the next set of bids, starting next March, will prove more fruitful than last year's solicitation, which produced "unacceptably high" price offers and led the PUC to reject winning bids for some classes and to kill the process for other groups because there were no bids at all.

The new rules give the PUC greater control over the bid process and remove requirements that seasonally differentiated rates must be compatible with the utility's rate structure, thus giving suppliers the option of charging higher prices in the summer.

"Allowing suppliers this flexibility may... help address the concern over 'gaming' the standard offer, which can occur if customers move onto standard offer service at times of relatively higher market prices," the PUC said. It added that it would consider restricting the number of yearly allowable rate changes to four in order to minimize customer confusion and dissatisfaction.

Also, the PUC increased the "opt-out fee" that customers must pay to leave standard offer service early, but at the same time made it easier for customers to avoid the fee-by reducing the time period that must elapse before the fee is waived on a change of service-and by eliminating the fee entirely in northern Maine, where load does not peak in the summer. .

Gas Retail Choice. Looking to draw upon the experience of the pilot programs implemented by the state's natural gas utilities, the Michigan PSC opened a collaborative process to develop uniform terms and conditions for customer choice programs, to be extended eventually to all residential and business customers in the state. .

Delivery Rates. The Maine PUC OK'd settlement agreements that will allow Bangor Hydro-Electric