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PUC Defers Consideration Of Adding Hedging To Default Service Portfolio
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The New Hampshire PUC will not consider potential hedging of default service electricity supplies in an upcoming adjudication of default service issues at Granite State Electric (Liberty Utilities) for the six-month delivery period beginning August 1, 2025, as the PUC will instead defer consideration of hedging until the next default service cycle, that is, adjudication of default service for the period February 1, 2026 to July 31, 2026
During consideration of Granite State Electric's default service for the period starting February 1, 2025, as well as in a generic default service proceeding, certain stakeholders have raised potential new hedging solutions, in light of the PUC's movement towards a greater use of ISO-NE market purchases for mass market default service (50% ISO-NE market purchases effective Feb. 1, 2025) and a decreased reliance on full requirements contracts
However, while parties have generally raised potential hedging strategies, no party has offered a specific hedging proposal for GSE
That prompted concern from the state's Office of Consumer Advocate, and separately the state's Department of Energy, when the PUC, in a supplemental order of notice concerning the GSE default service proceeding, said that the PUC would consider, in a future March 2025 adjudication, whether any hedging "proposals", for default service starting August 1, 2025, are just and reasonable
OCA and DOE argued that no specific hedging proposal was offered by any party (with GSE only providing an "illustrative" tariff change concerning the recovery of hedging costs to the extent hedging were adopted), and argued that any "proposal" is not "reviewable" (as stated by DOE) -- that is, the proposal cannot be acted upon by the Commission under the Administrative Procedure Act because any proposal lacks the sufficient specificity needed to allow parties to respond and to present evidence and argument on all issues involved
The PUC said that it had anticipated that more specificity regarding hedging would have been developed through scheduled live testimony and questioning by Commissioners during a March 2025 adjudication
However, in response to the OCA and DOE concerns on specificity, the PUC has deferred consideration of default service hedging at GSE until the February 1, 2026 default service period, and directed that, if GSE wishes to make a proposal concerning hedging at such time, then GSE shall do so with specificity, and with supporting pre-filed testimony
Furthermore, the PUC ordered GSE to file a specific proposal on the level of ISO-NE market purchases that GSE seeks to use for the August 1, 2025 to January 31, 2026 default service period, with the PUC setting a minimum of 50% ISO-NE market purchases for mass market SOS (the current level), and the PUC requiring 100% ISO-NE market purchases for large customer SOS. The level of ISO-NE market purchases to be used for the upcoming August 1, 2025 to January 31, 2026 SOS period will be adjudicated by the PUC in the upcoming March 2025 hearing process.
As previously reported, GSE also recently proposed a change in default service reconciliation, given the increasing migration to opt-out municipal aggregations
Rather than making default service reconciliation nonbypassable, as proposed at PSNH, GSE has proposed to amortize default service under-collections over a longer period of time, while keeping the reconciliation factor bypassable (see story here)
The PUC directed that any SOS reconciliation proposals should be filed in GSE's forthcoming 2025 Retail Rate Adjustments filing, and addressed in such proceeding
The OCA had also moved to disqualify all three PUC Commissioners from the GSE default service proceeding, and moved to require the recusal of Hearing Examiner Alexander Speidel, alleging that testimony from Speidel before the state's legislature on behalf of the PUC, regarding a bill addressing default service, demonstrated, as alleged by OCA, that the PUC, "has
already decided this matter," concerning default service
Among other testimony, the OCA alleged that Speidel's following statement before lawmakers indicates that the PUC has
already decided the appropriate source for default service and the appropriate level for ISO market purchases. Speidel had stated in legislative testimony: "There is volatility in the markets but
because we have proxy prices that build in NYMEX futures and other
expected outcomes, over the years it’s had to beat the wholesale markets. It’s
impossible to beat the wholesale markets because that’s the 'no-middle-man,
lowest price' option."
The OCA also cited the following testimony from Speidel as allegedly showing that the PUC was relying on pricing or market data from outside of the default service adjudicative proceedings. Speidel had stated: "Based on the data that I’ve seen -- that we developed at the Commission -- the
proxy prices that are being built into the market program are such that you
would always see, in 99 out of 100 instances, an over-collection. That means
you get a refund to the ratepayers. So that’s a benefit for the ratepayer to
have it brought to the entire distribution community. This is information
that we’ve developed internally and we’re looking at."
The OCA alleged, "The Commission’s activities, as delineated by Hearings Examiner Speidel in
his legislative testimony, describe an agency that is conducting contested
adjudicative proceedings by apparently developing its own body of evidence and
then meting that evidence out for public disclosure, if at all, based upon what is best
calculated to support predetermined conclusions made by agency decisionmakers."
Prior to the PUC ruling on OCA's motion for disqualification, PUC Commissioner Mark W. Dell’Orfano withdrew from the proceeding on his own initiative
The PUC denied the OCA's motion for disqualification and recusal, stating that Speidel provided lawmakers with a general informational update on PUC activities, including previously adopted decisions and record findings with respect to wholesale market prices and Speidel's previously issued public examiner's report, with the PUC also stating that the pricing data relied upon by the PUC is part of the case record and available to OCA
The PUC said, "With regard to the OCA’s burden of proof regarding Attorney Speidel’s disqualification, the OCA has failed to meet this burden. Attorney Speidel provided the Legislature with informational testimony necessary for its assessment of HB 760 regarding a summary of past Commission findings in this area, and a summary of his own reports and recommendations to the Commission that are publicly accessible and known to the parties. No evidence has been provided that Attorney Speidel has impermissible bias in these matters, nor undue influence over the Commission’s decision-making processes."
The PUC said, "Attorney Speidel’s remarks were unscripted and extemporaneous, and in his direct testimony provided at the outset, were meant to provide a general overview of the Commission’s past recent Orders regarding Default Service, the findings and rulings presented therein, and a summary of the parties’ positions (including the positions of the utilities) regarding the question of reconciliation treatments, for the benefit of the Legislature in assessing HB 760. Further information, with an emphasis provided by Attorney Speidel on the Commission not having pre-judged the matter in his remarks, regarding reconciliation treatments was provided by Attorney Speidel in response to direct questioning by members of the Committee."
The PUC said, "In doing so, Attorney Speidel emphasized that the Commission saw value in the past, completed steps of a process of gradual expansion of the ISO-New England, market-based procurement program for the investor-owned electric utilities regulated by the Commission in this State, namely, Liberty, Unitil, and Eversource. This finding, based upon the periodic (monthly) reporting of each electric utility, including Liberty, of a comparison of ISO-New England market electricity prices with the utilities’ default service requirements-contract prices and overall Default Service rates, is a matter of public record, clearly cited as findings in the Commission’s past decisional Orders on Default Service." [emphasis by PUC]
The PUC said, "Furthermore, this supporting data is also a matter of public record, filed into this instant docket, and other recent Default Service dockets for Liberty and the other electric utilities, to which the OCA has full access (including confidential contract-pricing elements)."
The PUC said, "Insofar as the OCA’s allegations of the Commission (and specifically, Chairman Daniel Goldner and Commissioner Pradip Chattopadhyay) having 'pre-judged' the issues in this proceeding, they are derivative of the OCA’s speculative assertions relating to Attorney Speidel’s Legislative testimony. The OCA has presented no evidence of the Commissioners in this matter having had pre-judged the issues at hand, or having impermissible bias in this proceeding. Therefore, the OCA Motion to Disqualify Chairman Daniel Goldner and Commissioner Pradip Chattopadhyay from this proceeding is DENIED, and the Motion to Appoint a Special Commissioner in this proceeding is rendered MOOT and therefore DISMISSED."
HB 760, among other things, would provide that default service reconciliation balances must be recovered through future default service rates (ostensibly prohibiting nonbypassable recovery), with recovery occurring within 12 months
HB 760 would also amend the policy of default service to additionally provide that default service shall, among other things, "minimize customer risk, not unduly harm the development of competitive markets, and mitigate against price volatility without creating new deferred costs."
GSE default service: Docket DE 24-061
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PUC Addresses Call For Disqualification Of All 3 Commissioners, Recusal Of Hearing Examiner
March 18, 2025
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Reporting by Paul Ring • ring@energychoicematters.com
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