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PUC Approves Plan For Use Of ISO Markets For Portion Of Default Service Load, Pricing Addressed
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The New Hampshire PUC has approved a plan filed by
Public Service Company of New Hampshire d/b/a
Eversource Energy (PSNH or Eversource), developed in response to a PUC
directive, for the introduction of an ISO-New England market-based procurement
tranche for 12.5% of the Energy Service (default service) supply needs of PSNH's small customer group
The use of the tranche procured from the ISO-NE markets is to be implemented for the August
1, 2024 to January 31, 2025 default service period, and, "is expected to provide cost
savings for Energy Service customers," the PUC said
"Given the ongoing broad differential between the
ISO-New England prevailing monthly market prices, including all components, and the
requirements-contract prices being paid by Eversource, we expect that this approach
will offer savings for Eversource energy service customers, and offer a valuable process
for a market-based procurement approach," the PUC said
Under the plan approved by the PUC, PSNH is to conduct its requirements-contract bidding
solicitation, through the May 2024 Request For Proposals (RFP) process, for
all eight tranches of its Small Customer Group default service load (12.5 percent each).
When the RFP bidding results are received, PSNH is to select the seven lowest bids
as the winning bids for the 87.5 percent of Small Customer group load to be served by
requirements contracts.
To develop a single six-month rate for the upcoming
August 2024 through January 2025 default service rate period for the Small Customer
Group, the single lowest-cost bid price would be used as replacement for the eighth
bid to develop an average proxy price.
During the actual rate period, PSNH will obtain a daily load forecast for its
12.5 percent market-procurement tranche from a third-party software vendor, and
procure that portion from the Day-Ahead ISO-New England market. Any load amounts that deviate from this forecast would be sold
into or purchased from the ISO-New England Real-Time market.
Any over or under-collections resulting from deviations between the actual market costs and
loads, and the forecasted costs and loads, is to be recovered through PSNH's
existing default service reconciliation process.
During the proceeding, PSNH reported that Eversource corporate-developed
proxy prices applied in market-based procurement programs at
Eversource's Connecticut and Massachusetts affiliates were roughly three times higher
than the actual ISO-New England market costs incurred through the relevant rate
periods.
The PUC noted that, "Having reviewed the record request response presented by Eversource (Hearing
Exhibit 11), we note the broad differential between the Eversource corporate-developed
proxy prices and the actual ISO-New England market-based procurement prices
returned during the relevant Connecticut and Massachusetts rate periods. This
roughly 3-to-1 ratio, where the proxy prices ended up being three times as high as the
actual market prices, indicates to the Commission the advisability of Eversource's
presenting an alternative proxy-price development methodology that, like its other New
Hampshire peer utilities (Unitil and Liberty), applies a market-developed pricing
forecast element for the market-based procurement tranche. This method uses
NYMEX futures prices for the upcoming rate period (in this case, August 2024 through
January 2025) to develop the proxy price for the market-based procurement tranche."
"We will therefore order Eversource to present such an alternative NYMEX
methodology as part of its upcoming Energy Service filing (for June 2024 hearing). The
Commission also reserves the right to explore questions at the upcoming June
hearing, and through record requests, regarding other technical aspects of the direct
market-procurement process, including, but not limited to, the potential future
expansion of direct market procurement, NYMEX forecast data of ISO-New England
energy market conditions, and other potential alternative proxy-price development
methodologies. Also, the Commission may establish further proceedings, with a
hearing in early September of this year, to explore such matters," the PUC said
DE 23-043
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April 15, 2024
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Copyright 2010-24 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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