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PSNH Files Proposal for Alternative Default Service Rate for Returning Customers
September 28, 2011
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Public Service of New Hampshire has filed a proposal to implement an alternative default service rate for customers returning to PSNH after taking service from a competitive supplier.
Rate ADE, Alternate Default Energy Service, would be priced at PSNH's marginal cost of serving returning customers, plus an adder for certain fixed costs.
The filing, and marginal cost pricing, was directed by a prior PUC order (See 7/28)
Rate ADE would be applicable to large customers who take delivery service from PSNH under Primary General Service Rate GV, Large General Service Rate LG, or Backup Service Rate B who return to PSNH energy service after taking service from one or more competitive suppliers for at least 12 consecutive months.
Once a large customer terminates service from a competitive supplier following at least 12 consecutive months of such service, energy service taken from PSNH during any of the next 24 months must be taken under the Rate ADE. Default Energy Service Rate DE (PSNH's standard energy service rate) will no longer be available to such customers during this 24 month period
The commencement of service under Rate ADE starts a 24 month clock during which the customer may take service either under Rate ADE or from a competitive supplier, with no restrictions for transferring from PSNH to the competitive market, or vice versa.
Rate ADE will only be available to customers who have spent at least the last 12 months on competitive supply. PSNH said that under the marginal cost-plus pricing, Rate ADE will initially be lower than its standard energy service rate, which reflects average costs. Accordingly, the 12-month provision is designed to prevent customers from leaving standard default service solely to take advantage of Rate ADE.
Pricing under Rate ADE will be determined annually, in the same time frame that PSNH's standard Rate DE is determined. Rate ADE will be effective January 1 for up to 12 months, but will be subject to change on July 1 to the extent that forward market prices for the second half of the year are materially different than they were at the time that the rate was initially calculated.
The Rate ADE price will be a forecast of the marginal cost to provide full requirements service to the New Hampshire load zone, plus an adder.
The forecast of the marginal cost will include forward energy market prices, forward capacity market prices, forecasted ancillary service costs, forecasted ISO-NE market administration costs, and forecasted renewable portfolio standard compliance costs, all of which will be determined in a manner consistent with that utilized in filings for Rate DE.
In practice, the marginal cost to provide full requirements service to the New Hampshire load zone will be calculated as the change in cost to serve energy service load divided by the change in energy service sales resulting from the removal of migration from the energy service rate forecast.
The Rate ADE adder will be equal to the non-operating costs of the wet flue gas desulfurization system (scrubber) divided by forecasted energy service sales under Rate DE. Non-operating costs include depreciation, return on rate base including income taxes and any incremental property taxes.
A reconciliation of Rate ADE costs and revenues will be performed as part of the standard Energy Service reconciliation. The cost associated with serving the load will automatically be included in standard Energy Service costs. The revenue received by PSNH from customers served under Rate ADE will be added to the standard Energy Service revenue in the reconciliation of revenue and expense. Any over- or under-recovery associated with load under Rate ADE will flow through to all customers served under PSNH's standard Energy Service Rate DE.
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