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					  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
                    CMP           BHE MPS
Resid’l/Small C/I    <1%          <1%  7%
Medium               35%           33% 46%
Large               84%           66%  90%
Total                39%           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%



            80%
% of Load




            60%                                                                                Medium C&I

                                                                                               Large C&I
            40%



            20%



             0%
                   Jun 00   Dec 00   Jun 01   Dec 01   Jun 02   Dec 02   Jun 03   Dec 03   Jun 04   Dec 04   Jun 05   Dec 05




                                                                 April 2006                                                    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%    •Provider will serve in 20%
       20%    increments in a rate class.
      20%
      20%




                                      20
               April 2006                  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                        $1.00 per kW
$ 2.00 Summer 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)   Obtain Maine License
2)   Contract with T&D company for
     billing and metering services
3)   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   Geothermal
    Tidal        Hydro
    Solar        Biomass
    Wind         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 ISO-
  NE 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

				
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