ENERGY/UTILITIES
Can Energy Service Credits Program
Jump-start Competitive Electricity Market?
December
2003
By Heidi L. Kroll,
Market and Policy Analyst
On November 21, 2003 the New Hampshire Public Utilities Commission (PUC) approved an experimental program designed to encourage PSNH’s largest customers to buy their electricity from competitive suppliers. The pilot Retail Energy Service Program was jointly proposed by PSNH, the NH Office of Consumer Advocate, the NH Business and Industry Association, Freedom Partners LLC, and Competitive Energy Services LLC. To date, competitive suppliers have been shut out of the market by PSNH’s below- market Transition Service rates. If successful, the Program could help jump-start the State’s emergent competitive electricity market.
Under this Program, large commercial and industrial customers who leave transition service to purchase electricity from a competitive supplier will receive an “energy service credit” from PSNH. This monthly credit will equal the difference between PSNH’s transition service price, currently set at 4.67 ¢/kWh,1 and the monthly forecasted spot market price, less 0.1 ¢/kWh. PSNH will post monthly credits on December 15th for the period February through July, and on June 15th for the months August through January. This advance notice will help customers that are considering participating in the program to evaluate competitive offers.
The Program is open to Large General Delivery Service customers and to certain Primary General Delivery Service customers with multiple accounts. Customer enrollment in the Program will be on a first-come, first-served basis, and is initially capped at 100 megawatts of load. The Program will be open for enrollment for an initial period of 2 years, and customers in the Program will receive the credit for up to 12 months after the end of the 2-year term. Any customer that participates in the Program and then returns to PSNH for their energy supply will be required to take Default Service, as they will no longer be eligible for Transition Service.
Certain safeguards have been built into the Program in order to minimize potential abuse by participants, and to ensure that the rest of PSNH’s customers are not financially harmed. Customers who decide to participate in the Program must do so for at least six consecutive months, and those who drop out of the Program will only be able to return under certain conditions. In addition, if the forecasted spot market price in a given month is less than the transition service price, the monthly credit could in fact be negative, meaning that Program participants will pay a surcharge in that month.
Competitive suppliers have consistently pointed to PSNH’s Transition Service price as one of the primary barriers to their entry into the NH electricity market. Now, with the PUC’s approval, the Retail Energy Services Program provides a new opportunity for a competitive market to begin developing in NH and start delivering value-added services to the State’s business customers.
Notes
1. This transition service price is effective until February 1, 2004.
Return to top of page
Return to Energy/Utilities
Articles
Return to Firm Publications
