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Integrys Energy Services, Direct Energy Protest SECA Assignment Filing by Midwest TOs
October 4, 2011
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A filing from the Midwest ISO Transmission Owners which purports to identify replacement suppliers for CMS Energy Resource Management Company load, for purposes of assigning Seams Elimination Charge Adjustment costs after FERC ruled that CMS was not responsible for such load, "is simply inadequate and deficient," and must be rejected by FERC, Quest Energy, LLC, Integrys Energy Services, Inc., and Direct Energy, LLC said in a protest (ER10-2283).
The filing is intended to assign responsibility for SECA costs for load that CMS ERM allegedly did not serve in the SECA transition period at the sink code MECS.DECO.CMSZ. The filing identifies the following suppliers as serving the relevant load: Commerce Energy, Constellation NewEnergy Inc., Detroit Edison, Direct Energy Business, LLC, FirstEnergy Solutions Corp, MidAmerican Energy Company, Nordic Marketing of Michigan, LLC, Premier Energy Marketing, and Quest.
However, Integrys and Direct said that, "the evidence submitted in the compliance filing is simply inadequate and deficient to show that the allocations to the customers are correct." The TOs' witness, "does not support the calculation at all. He merely testifies to an arithmetic methodology, apparently relying blindly on information provided by a third party," the retail suppliers said.
The TOs' witness, "testifies that he calculated each LSE's share of the CMS ERM SECA 'using their relative kWs supplied to the CMS ERM subzone during the transition period.""
"What [witness] Mr. Heintz does not state is striking -- he does not state that he confirmed or otherwise reviewed this information to ensure that the information provided by Detroit Edison is accurate ... He does not state that he used OATi tag data, which is the method by which the SECA was determined in the first instance. The filing is deficient, is not supported by substantial evidence and must be rejected," Integrys and Direct said.
"Confirmation of relevant information is critical here when the provider of the information, the incumbent LSE, has every incentive to shift as many costs as possible to other LSEs," Integrys and Direct argued.
Integrys and Direct reported that they are "highly doubtful" that they should be the proper replacement suppliers for the CMS ERM load served at sink MECS.DECO.CMSZ. From the MISO TOs' filing, however, "it is impossible to verify the veracity of the information or the conclusions made," Integrys and Direct said.
Integrys and Direct noted that, throughout the FERC proceeding, the SECA was not assessed on end use customers individually. "Rather, it was assessed on aggregate of transactions to a specific sink. It is possible that [in the TOs' compliance filing] the identified LSEs were tracked by individual customers served, which would be an inconsistent method to assess SECA. Another clear discrepancy is that the Michigan Public Service Commission ('MPSC') reports submitted annually to identify retail activity in Michigan, indicate that CMS ERM did continue to serve 11 customers and 261 MW of load during the transition period, the same as was reported for the 2002-2003 test period," Integrys and Direct added.
Finally, Integrys and Direct reiterated that, "[t]he SECA proceeding has and remains a travesty to LSEs like Quest/Integrys and Direct Energy. Retail LSEs were disproportionately affected adversely by the SECA."
"Retail LSEs imported more power than incumbent utilities because they were competing with the incumbent utilities and their vertically-integrated generation. When the SECA was assessed on past load, not only did the retail LSEs have no way to avoid the charge -- they didn't know that their activities in 2002-2003 would form the basis of a charge that was assessed in 2004-2006. Retail LSEs could not plan for this charge and, without regulatory deferral mechanisms found themselves often unable to flow the charges through to their customers. While incumbent utilities serving as LSEs paid some SECA charges, they also received revenues as transmission owners," Integrys and Direct noted.
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