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The GreeneHurlocker Blog

Maryland to Implement Supplier Consolidated Billing

Finding that supplier consolidated billing (SCB) represents the next logical step for Maryland to fully implement customer choice, the Maryland Public Service Commission on May 7, 2019 issued an order authorizing SCB for retail electric and natural gas service in Maryland. In this historic order, the Commission found that SCB could support the growth of retail competition in Maryland and is consistent with the Commission’s policies to promote competition. SCB, by augmenting the existing billing arrangements, should assist suppliers in establishing brand identity and clarifying the products available to customers. At the same time, SCB should facilitate the development of new and innovative products and services and increase the number of Maryland households that shop for electricity and natural gas. Based on these and other conclusions, the Commission found that “it is now appropriate to proceed with the development of SCB.”

The case was initiated by five retail suppliers – NRG Energy, IGS Energy, Just Energy Group, Direct Energy and ENGIE Resources – and the Commission held a hearing in February 2018. We’ve blogged about this case here and here and also posted a video blog here.

In the order, the Commission established the SCB Workgroup and immediately tasked it with developing an implementation timeline within the next 60 days. The timeline, filed in early July 2019, calls for full-on SCB implementation by September 1, 2022.

To guide the SCB Workgroup, the Commission addressed numerous substantive elements of the SCB program, the highlights of which include:

Supplier Qualifications to Provide SCB:

The Commission held: “any proposed regulations should comprehensively address the capabilities necessary to ensure that these functions are performed on par with existing utility offerings. Further, the regulations should be tailored to demonstrate that a supplier can meet the rigorous demands of increased customer service and dispute resolution functions, complex billing requirements, and the quality assurance and record keeping necessary to handle utility charges that may contribute to potential utility disconnections.”

Authority of SCB Providers to Disconnect Customers for Nonpayment:

The Commission rejected the petitioners’ request to allow SCB suppliers to initiate disconnects for non-payment. This had been a central element of the petitioners’ case because it is necessary to manage bad debt, similar to the utilities. In response to those concerns, the Commission will require that utilities purchase the outstanding distribution charges of a delinquent customer account upon the customer’s return to standard offer service (SOS), as further discussed below. For other charges, the SCB provider must resort to the traditional remedies of other non-regulated businesses, including reporting to credit agencies, seeking monetary judgments in court, and pursuing collection activities.

Purchase of Receivables (POR) and Supplier Bad Debt:

The Commission held that SCB suppliers must provide POR to the utili8ty on substantially the same terms as provide in utility consolidated billing (UCB). The Commission directed the workgroups, including the SCB Workgroup, to identify and propose an equitable payment posting priority system and other protections that may be necessary to ensure that any charges contributing to a disconnection are properly handled. Additionally, the Commission agreed with the petitioners that suppliers need some ability to protect themselves from the risk of non-payment. The Commission held that, after reasonable efforts to collect, the supplier should not be required to hold any debt attributable to the customer’s distribution charges paid under POR. Where a supplier can demonstrate the amount of unpaid distribution charges, the utility should repurchase those charges at a zero discount rate unless the SCB Workgroup can provide alternative calculations which are supported by a compelling analysis.

Customer Protection and Customer Education:

The Commission held that a supplier that offers SCB is required to provide all the same consumer protections, disclosures (including the utility’s price to compare), notices,
and billing information required of a regulated utility. This includes providing all surcharge line items and compliance with all current COMARs related to consumer protections. The Commission directed the SCB Workgroup to identify and justify any deviations from or additions to existing consumer protection standards. The SCB Workgroup should consider new disclosure and notice requirements for how utilities and SCB suppliers communicate the varying relationships to the customer, the content of past due notices by SCB suppliers, and the utility notices for customers selecting SCB.

Cost Recovery:

The Commission made no findings regarding cost recovery. The Commission directed the SCB Workgroup to identify and estimate, with as much detail as possible, these and any other costs and benefits related to SCB. The Commission directed the SCB Workgroup to consider varying cost recovery mechanisms and present either a consensus approach or options for Commission consideration. The Commission recognized that the SCB Workgroup might not reach a consensus on cost recovery but said, “this should not delay progress towards proposing regulations in other areas.”

If you have questions about SCB or electric or natural gas retail service in general, please contact one of GreeneHurlocker’s energy and regulatory lawyers.

Delaware Implementing Purchase of Receivables Program for Electricity Suppliers

At long last, the Delaware Public Service Commission entered an order adopting Delmarva Power’s proposed purchase of receivables (“POR”) program effective July 1, 2019. We previously blogged on this issue when Delmarva initially filed its proposal. The effective date was delayed by one month, but Delmarva will purchase suppliers’ receivables effective the end of May so that suppliers are not harmed by the delay.

The going-in rates for the first year of the program are in the table below. These are important because they represent the “haircut” that suppliers must accept when Delmarva purchases their receivables.

Residential Small commercial Large commercial Hourly Priced (LGS, GSP, GST)
Payment factor 99.3833% 99.6591% 99.8818% 100.00%
Discount factor 0.6167% 0.3409% 0.1182% 0.0000%

For more information, please contact one of our energy lawyers.

Knowing Where to Start

Clients wonder sometimes what they are getting into when they ask a lawyer to draft a contract. Maybe their fear is that their attorney will sharpen up his metaphorical pencil, lean his chair back to think deeply on life and law for an hour or two (on the clock), and then pull out the laptop and sit down to drafts things up from scratch, like a composer writing out each note to a (very boring) symphony. The client may fear that the lawyer views every deal is different, that everything about every deal is new every time, that everything needs to be tailored like a bespoke suit.

Every deal is different, it’s often said – I’ve heard myself say it a hundred times. That’s because the facts are different, and that’s because no two people and no two companies are alike or have the exact same priorities. But that doesn’t mean that two deals – say, two leases of refrigerated warehouse space, or two agreements for the purchase of the assets of small businesses — happening 500 miles apart (or 5000 or 5) — can’t be done with forms of contract that are 90% the same.

In fact, they probably should be done that way.

And your attorney shouldn’t be spending a whole lot of time going for the Pulitzer Prize for creative nonfiction and drafting that 90% (just a percentage used for illustration purposes) from scratch.

Unless we are speaking of some sort of business deal where the industry is utterly new, the parties are utterly idiosyncratic, and the risk tolerances are off the charts (one direction or the other), or all of the above, the same basic forms work across the board. I remember Internet 1.0 – the days of AOL and Pets.com — and the ways that lawyers were trying to draft “application service provider” contracts that expressed the concept of software programs being accessed over the Internet (what we now call Software as a Service (SaaS)). But even in that time, when the Internet was beginning to utterly change the way the world operated, the contracts were pretty much built right on top of software, consulting, joint venture and financing contracts that had been around for decades before that.

The majority of the text in a contract from 1975 (the year of the room-sized computer) – for example, events of default, remedies on default, representations and warranties, indemnification, assignment, the boilerplate at the end, and the general flow and sequence of the document — was essentially the same as the text in a contract drafted in 2000 (the year of the Pets.com sock puppet). The same is even more true for commercial real estate contracts, and even holds true for many types of intellectual property agreements.

And it goes without saying that 90% of the text in an accounting SaaS services agreement from 2017 is going to be the same as a payroll SaaS services agreement from 2019.

Anyone who tells it differently is trying to create mystery where there really should be none.

That’s my candid and honest observation How does this insight relate to you?

As outside corporate general counsel, under our OPENgc service offering, GreeneHurlocker is keenly focused on saving a client time and money while still delivering the legal assistance a client needs, when they need it. We avoid reinventing wheels. We’ve been practicing enough years, in widely varying industries and for companies of all sizes, to have an experienced, intuitive sense of what works and what doesn’t, and how the work we’ve done before may apply to the work we are doing for a client now. When a client picks up the phone and asks for an individual contract to be done or an entire deal to be quarterbacked, the client can rest assured we are not starting from scratch. Instead, we’re applying all the knowledge and work we have already done.

We’re here to guide you to the end of your deal. But we also know where to start.

Comments filed on Draft Maryland Retail Supplier Load Shaping RFP

In late March, we posted about the Maryland Public Service Commission’s request for comments on a draft “Retail Supplier Load Shaping RFP” in the Public Conference 44 proceeding. In early April, comments were filed by the Maryland Energy Administration, the Retail Energy Supply Association, Direct Energy Services, Inc., Staff of the Maryland Public Service Commission, Baltimore Gas and Electric Company/Potomac Electric Power Company/Delmarva Power & Light Company, the Maryland Office of People’s Counsel, and CleanChoice Energy, Inc.

Parties encouraged the Commission to adopt an RFP process to maximize supplier participation, protect trade secrets, provide suppliers flexibility in their load shaping pilot proposals, and allow expanded billing options to enable suppliers to bring innovative proposals to the table. Some parties specifically pointed to supplier consolidated billing and on-bill financing as important tools to pair with supplier time-of-use electricity supply offerings within the pilot. Commenting suppliers noted some key improvements to the RFP structure as compared to a prior retail supplier time-of-use pilot design. However, suppliers also recommended that the Commission add options for marketing support for the retail supplier load shaping pilot offering to help get the word out about the program and encourage customer participation.

Additional recommendations addressed promoting use of renewable energy, access to historical usage data, expanded opportunities for net metering customers, and modifications to other program criteria. Suppliers also raised concerns about certain requirements that may discourage some suppliers from submitting bids to participate in the pilot program. The Office of People’s Counsel commented on the importance of minimizing the costs to both participating and non-participating consumers, ensuring adequate consumer protections, incentives structures, billing, and other issues. All of the comments were filed on April 9, 2019, and as of this post, we are waiting for further action from the Commission in response to the comments.

If you have questions or would like more information about Maryland Retail Supplier Load Shaping RFP or other regulatory issues, please contact Eric Wallace or any of our mid-Atlantic energy lawyers.

Delmarva Power Files Proposed DE Purchase of Receivables

transmission towers for electricityAfter years of proceedings at the Delaware Public Service Commission, the end – or the beginning – is in sight. In late March, Delmarva Power filed its proposed Purchase of Receivables (POR) program, including the going-in discount rates, with the Delaware Commission. With a POR program, the utility purchases the receivables of the retail electric supplier operating on the system, which helps to level the playing field between suppliers and the utility which has the right to disconnect service for non-payment.

Delmarva recommends that the program take effect for service rendered on June 1, 2019, as the Commission has previously directed. The discount rates are important because those are the “discounts” that retail suppliers must accept in allowing the utility to purchase the receivable. Delmarva proposes the following discount rates for the first year of the program:

Class Discount Rate
Residential 0.6167%
Small C&I 0.3409%
Large C&I 0.1182%
Hourly Priced Service 0.0%

 

It is expected that the Commission will consider the POR proposal at one of its May administrative meetings, in time for the program to being June 1, 2019. For more information, please contact one of our energy lawyers.

Good for the Earth

Back in 1970, few who celebrated the first Earth Day could have imagined the many ways that our world would have changed in the nearly five decades since. One good change is the increasing use of renewable energy, something we have a firm interest in since many of our clients are developing, financing and servicing the industry. And the fact that it has become an industry and grows stronger every year is definitely good for the earth. So, Happy Earth Day!

If you have a question about renewable energy in Virginia or the mid-Atlantic, simply contact any of our energy lawyers.

Maryland PSC Requests Comments on New RFP for Retail Suppliers

The Maryland Public Service Commission issued a Notice of Opportunity to Comment seeking comments on a new “Retail Supplier Load Shaping RFP.” The Commission want to consider “programs designed to demonstrate the ability to shape residential load profiles using innovative business models.” Comments on the RFP, a copy of which is attached to the Notice, are due April 9, 2019.

The RFP states that:

“The primary goal of this RFP is to identify pilots that demonstrate an ability to shape customer load profiles through load shifting, peak shaving, and energy efficiency. Applicants can propose any mechanism for load shaping such as sending appropriate price signals (real time rates), using technology to control usage (controllable thermostats), payment of rebates or behavioral modification treatments. A secondary goal is to test whether load shaping can lower customer bills or reduce the customers’ overall effective rate for electricity by avoiding energy usage during high cost periods. Customer satisfaction will be surveyed at the pilot’s conclusion.”

There’s some background here. In early 2017, the Commission established Public Conference 44 with various working groups. Three working groups involved areas where the retail supply market could be improved or could expand to provide additional services to Maryland customers. One of those working groups involved rate design issues and sought to develop TOU pilot programs. The Commission approved TOU programs for the utilities, which are now being marketed to customers. The Commission also approved an RFP to establish retail supplier programs. However, and the Commission in November 2018 issued a letter order holding that the bids received were not compliant and directed the utilities to reject them.

The Commission has now proposed changes to the prior RFP and has issued the current Notice to elicit more involvement from retail suppliers in a rate design program. The Commission seems determined to engage the retail supplier community in this effort, stating that, “[a]s Maryland moves forward with grid modernization, the retail supply community can play an important role in supporting policy goals, including more active efforts to shape load profiles.”

If you have questions or would like more information about community solar projects or other regulatory issues, contact Brian Greene or any of our mid-Atlantic energy lawyers.

Maryland Solar Groups Seek Community Solar Utility Consolidated Billing

On March 20th, the Climate Access Fund and Solar United Neighbors of Maryland filed a petition asking the Maryland Public Service Commission to require Maryland utilities to provide consolidated billing for subscriber organizations participating in Maryland’s Community Solar Pilot Program. The petitioners want utilities to include community solar subscription charges on customer bills. Today, subscriber organizations have to separately bill community solar subscribers. The stated objective of the petition is to make consolidated billing available for low and moderate income customers, helping to improve the economics of participating in the program. Two alternatives are proposed in the petition: (1) consolidated billing for all subscriber organizations or (2) consolidated billing for low and moderate income-focused community solar projects only.

We will be on the lookout for a response from the Commission and opportunities to comment on the community solar consolidated billing proposal. If you would like to review the filing, a copy of the petition is available on the Maryland Public Service Commission’s website: Mail Log # 224384.

For more information about Maryland’s Community Solar Pilot Program, check out our previous blog posts:

Maryland Proposes Community Solar Pilot Program Regulations
Community Solar Growing in Mid-Atlantic
Continued Progress for Community Solar in Maryland

If you have questions or would like more information about community solar projects or other regulatory issues, contact Eric Wallace or any of our mid-Atlantic energy lawyers.

Virginia Commission Denies Walmart’s Request to Shop for Electricity

On February 25, 2019, the Virginia State Corporation Commission entered a Final Order denying Walmart’s petitions seeking permission under Va. Code § 56-577(A)(4) (“Section A 4”) to aggregate or combine the demands of certain electricity accounts. Walmart had filed a petition to aggregate 120 accounts in the Dominion service territory and 44 accounts in the Appalachian Power service territories. Had the petitions been approved, Walmart intended to enter into a contract to purchase electricity from its affiliate, Texas Retail Energy, but would remain as a distribution customers of the utilities. But, the Commission denied both petitions.

Under § 56-577(A)(4), nonresidential customers can aggregate their load to hit the 5 MW floor needed to switch electricity supply from the customer’s utility to a competitive service provider (“CSP”). Section A 4 requires the customers to seek Commission approval to aggregate. A company like Walmart must seek permission because the Code treats non-contiguous sites that are under 5 MW as separate customers. The Commission may approve the petition if it finds that: (1) “neither such customers’ incumbent electric utility nor retail customers of such utility that do not choose to obtain electric energy from alternate suppliers will be adversely affected in a manner contrary to the public interest by granting such petition,” and (2) “approval of such petition is consistent with the public interest.”

In the Final Order, the Commission found that remaining customers would be adversely affected in a manner contrary to the public interest. The Commission cited to alleged costs that would be shifted to remaining customers attributable to the loss of Walmart’s load. The Commission also cited to the alleged bill impacts that the utilities presented in the cases which purported to show the increases to an average residential customer’s monthly bills in the event Walmart was allowed to shop. The Commission also cited to the potential for lower earned returns for the utilities and found that the potential for load growth in a utility service territory did not matter.

The Commission determined that “the harm to customers who do not, or cannot, switch to a CSP is contrary to the public interest.” The Commission noted that the vast majority of Dominion and APCo customers have no ability to shop for solely lower prices. The Commission discussed that since 2007, the average Dominion and APCo residential customer has seen monthly bills increase by $48 (73%) and $26 (29%), respectively, and that with the mandates in Senate Bill 966, passed in 2018, more increases are likely to come.

Of course, there were numerous arguments presented by Walmart and other parties in the proceedings that addressed and countered the Commission’s findings summarized above.

The Commission concluded that if Walmart believes the current statutory structure results in rates that are too high, or that the public policy of Virginia should be to institute retail choice on a far more extensive scale than required under current law, “its potential for recourse may be found through the legislative process.” That process would begin with the 2020 legislative session because the 2019 sessions ended on Sunday, February 24 — the day before the Commission entered the Final Order.

The case numbers are PUR-2017-00173 (Dominion) and PUR-2017-00174 (APCo). Follow those links to see all the documents, including the Final Order, filed in each case. If you have questions about these cases, electricity purchases or rates, or need legal counsel regarding electricity regulation, please contact one of our Virginia regulatory lawyers.

MD PSC Approves Modified Electric Vehicle Portfolio

electric car iconThe Maryland Public Service Commission issued an order on January 14, 2019, approving Electric Vehicle (“EV”) Portfolio Programs for Maryland’s electric distribution utilities. The EV Portfolio Programs aim to increase EV usage in Maryland by expanding EV tariff options, furthering utility investment in EV charging infrastructure, and offering customer programs for EV owners.

The Proposed EV Portfolio Programs:

Case No. 9478 kicked off with a petition filed on January 22, 2018, by the Public Conference 44 Electric Vehicle Work Group Leader, with the support of the utilities and several other stakeholders, to implement a statewide electric vehicle proposal. The proposals for each participating utility are summarized below:

Baltimore Gas and Electric: BGE’s proposed program included installation of 18,455 EV chargers, costing $48.1 million. For residential customers, BGE proposed $9.7 million in rebate programs that could be pared with BGE’s existing “Whole-House Time-of-Use Rate” for customers with EV chargers. BGE also proposed $14.1 million in rebates and incentives, as well as a “Demand Charge Credit” program, for non-residential customers who install EV chargers for fleet use. In addition to these customer programs, BGE proposed a public network of 1,000 EV chargers, costing $17 million, and a grant program for 490 EV chargers, costing another $7.2 million.

Pepco and Delmarva: Pepco and Delmarva proposed similar programs, including a combined 3,038 EV chargers costing $41.9 million. The Pepco and Delmarva proposals also included residential rebate programs, off-peak charging credits, and expansion of Pepco’s “Whole-House Time-of-Use Rate” to Delmarva. The price tag for the Pepco and Delmarva residential programs was $5 million. For non-residential customers, Pepco and Delmarva proposed rebate and incentive programs for EV chargers, a demand charge credit program, for a combined cost of $10 million. Pepco and Delmarva also proposed installing 608 public EV chargers, costing $16.9 million. Pepco and Delmarva proposed $6.9 million in additional rebate and grant programs for installation of EV chargers. The proposed “DC Fast Charging with Energy Storage” demonstration project is aimed at minimizing adverse grid impacts from installation of fast charging stations, for another $2.8 million.

Potomac Edison: Potomac Edison also proposed rebates, incentives, public chargers, and EV tariffs, with a total of 2,259 EV chargers costing over $12.3 million.

The utilities proposed ratepayer financing for the $104.7 million investment in new infrastructure charging portfolios, meaning customers will pay for these programs through electric distribution rates or customer surcharges over a five year period. However, there are other state and local incentive programs available that may offset some of the costs for the new chargers. Some of the costs would also be recovered from charging customers that use public or non-residential chargers. As discussed below, the Commission did not approve these programs as proposed, reducing the program size and the cost to Maryland ratepayers.

The Commission’s Decision (Order No. 88997):

In its order, the Commission reduced the BGE and Potomac Edison residential rebate programs to a total of 1,000 each. The Commission also limited the rebate to $300 (compared to the proposed $500 rebate). The Commission approved the proposed Pepco and Delmarva residential rebate offerings. The Commission also approved continuation and expansion of utility “Whole-House Time-of-Use Rate” offerings for residential customers. Regarding the non-residential customer proposals, the Commission limited its approval to rebates and incentives for EV chargers installed at multi-unit or multi-tenant dwellings. The Commission also approved a limited number of rate-payer funded public charging stations: 500 for BGE, 100 for Delmarva, 250 for Pepco, and the full 59 proposed by Potomac Edison. The Commission rejected the proposed $14 million in innovation rebate and grant programs, as well as the proposed Pepco and Delmarva demonstration projects. The Commission also directed all the utilities to recover costs through traditional ratemaking in a future rate case (as proposed by BGE, Delmarva, and Pepco), rather than Potomac Edison’s upfront customer surcharge.

The next step is for the utilities to develop and submit tariff proposals to implement the EV programs approved by the Commission.

If you have any questions about the Maryland Public Service Commission’s decision on the Statewide Electric Vehicle Program or other regulatory issues, contact Eric Wallace or any of our mid-Atlantic energy lawyers.