On April 19, 2000, The Massachusetts Supreme Court upheld the authority of the state to impose a system benefit charge. Intervenors had challenged the charge as an impermissible tax. The tax is expected to generate about $150 million over 5 years.
Renewable Energy Resources
Each distribution company must collect the following surcharge devoted to renewable energy: $.00075/kWh in 1998, $.001 in 1999, $.00125 in 2000, $.001 in 2001, $.00075 in 2002 and $.0005 each year thereafter. The funds will be remitted to the Massachusetts Technology Park Corporation. In addition, the new law requires a renewable portfolio standard be adopted for all energy sold in Massachusetts. One percent new renewables above the existing 6 percent is required by 2003. This percentage increases by 0.5% each year until 2009. Hydropower is considered an acceptable renewable source.
To support renewable energy resources, the Massachusetts Department of Public Utilities (MDPU) intends to require suppliers, when they register with the state, to provide information on the sources and environmental impacts of power they propose to sell. In the future, all suppliers will be required to report on a quarterly basis information related to the fuel sources and emissions characteristics of their supplies on a portfolio-wide basis.
Energy Efficiency
Distribution companies must collect the following surcharge devoted to energy efficiency programs: $.0033/kWh in 1998, $.0031 in 1999, $.00285 in 2000, $.0027 in 2001 and $.0025 in
2002. At least 20% of these revenues must be used for programs targeted toward low income customers.
Low Income
Distribution companies are required to continue to offer a Low Income Customer Tariff based on income eligibility. These tariffs offer discounted electric rates.
RELIABILITY
The Department of Energy Resources (DOER) must issue an annual report on all issues of electricity system reliability, including generation & transmission data detailing load and capacity, for the prior calendar year and forecasting potential future capacity excesses/deficits for the next 5 calendar years. The DOER must use any and all information available to forecast potential capacity excesses or deficits, including analyses by the ISO and other such data collected by the DOER.
The Massachusetts DTE will continue to license energy service providers in the state. These entities may or may not own generation facilities. In addition, the DTE has the authority to coordinate the bulk power system operation and is authorized to pursue the formation of a regional oversight committee to monitor the ISO.
The current requirements for a government "determination of need" and for the evaluation of alternative sites has been eliminated. However, analysis of alternative technologies is still required for plants that do not meet certain "clean" standards. An energy facilities siting board was created to implement the energy siting statutory provisions, so as to provide a reliable energy supply for Massachusetts with a minimum impact on the environment at the lowest possible cost. To streamline its review of petitions to construct generating facilities which have state of the art environmental performance characteristics, the EFSB periodically must conduct a rulemaking to establish a technology performance standard generating facilities emissions, including, but not limited to, emissions of sulfur dioxide, nitrogen oxides, particulate matter, fine particulates, carbon monoxide, volatile organic compounds, and heavy metals.
ISO New England Inc. was established as a not-for-profit, private corporation on July 1, 1997, following its approval by the Federal Energy Regulatory Commission (FERC). The organization immediately assumed the responsibility for managing the New England region's electric bulk power generation and transmission systems and administering the region’s open access transmission tariff. The New England ISO either assumed or is in the process of assuming all the functions formerly performed by the New England Power Pool (NEPOOL). As the control area operator, NEPOOL had responsibility for all aspects of the minute-to-minute operation of the region's bulk power system, including: regulating system frequency; maintaining system voltage; managing interchange between NEPOOL and neighboring power systems; dispatching NEPOOL generating capacity to meet NEPOOL load obligations and reserve requirements; managing the dispatch of the NEPOOL transmission system; and coordinating daily transmission and generation outages. NEPOOL also provided many operational planning services in support of central dispatch
(e.g., coordination of annual generator maintenance schedules, transmission facility outage scheduling, administration of bilateral contracts between NEPOOL Participants and non-NEPOOL entities, and short-term and long-term load forecasting).
The ISO does not have authority to construct new transmission facilities. This responsibility remains with the individual utilities. In addition, ISO-New England systematically assesses each new electric generation facility requesting connection to the electric grid for transmission system reliability.
PUC ROLE AFTER RESTRUCTURING
Massachusetts’s restructuring legislation requires the Department of Telecommunications and Energy (DTE) to perform the following recurring activities in response to electric restructuring: 1. Impose a system benefit charge on a per kWh for energy efficiency programs.
2. Undertake consumer education functions including establishing a toll free number.
3. Issue licenses to all marketers, aggregators, and energy brokers in the state of Massachusetts. 4. Track the incidences of slamming.
5. Coordinate with other states and regulatory bodies to ensure the successful operation of bulk power systems such as the ISO. The DOER has a monitoring function over the ISO. The DOER also has responsibility for issuing an annual report on electric reliability.
6. Issue, in conjunction with the Division of Energy Resources, an annual report describing pricing differentials between rate classes in Massachusetts and other states.
FOLLOW-UP
Massachusetts’s restructuring legislation requires the Department of Telecommunications and Energy (DTE) to perform the following, non-recurring activities in response to electric restructuring:
8. Develop rules for the provision of default service and standard offer service;
9. Is authorized to establish performance based rates and to establish quality of service standards for distribution and transmission companies;
10. Establish rules governing the responsibilities of the generators, marketers, aggregators, etc., with respect to complaints, disconnections, contractual terms, and disclosure of information in the service agreements;
12. Prior to the end of standard service contracts, the DTE shall perform an analysis and provide a report on the effects of competition on low income customers;
13. Establish disclosure requirements for generation providers and provide uniform bill disclosure information;
14. Establish rules governing the confidential treatment of customer information and develop a code of conduct for marketers; and,
15. In conjunction with the Division of Energy Resources, the DTE shall report by January 1, 2000, if metering and billing services should be unbundled.
RESTRUCTURING AUTHORITY Law
The Michigan Commission initiated retail competition in June of 1997, issuing its initial order in Case U-11290, outlining the framework of its restructuring plan. Subsequent orders were issued in this docket providing additional clarification. The state supreme court overruled the Commission’s authority to restructure without legislation. Absent legislation, the states two largest utilities, Consumer’s Energy and Detroit Edison (together both serve 90% of Michigan’s electric customers) agreed to voluntarily implement retail choice based upon the structure outlined in the Commissions orders. On June 5th, 2000 comprehensive restructuring legislation became effective. Senate Bill 937 outlines restructuring and Senate Bill 1253 deals with securitization of stranded costs. The legislation specified that all previous restructuring orders remain in effect.
Applicability
Municipal utilities are not required to restructure. However, if they provide primary power supply to customers outside their service area, they must offer reciprocity for the same type and amount of service. To do so, the municipality must become a licensed alternative supplier and allow all of its customers outside the municipal boundaries to choose and alternate supplier. Except for large customers, cooperative utilities have until January 1, 2005 to provide retail choice.
MARKET STRUCTURE Affected customers
Based upon Commission orders, customer selection is through a bid process, for both Detroit Edison and Consumers Energy. Customers bid on what they will pay per KW for stranded cost through a transition fee. Customers will be chosen by an independent arbitrator. These customers may then choose alternate sources of generation.
Phase-in
Based upon Commission orders, beginning September 20, 1999, both Detroit Edison and Consumers Energy will make available 2.5% of its load for competition. An additional 2.5% will be added each 6 months. Pursuant to the legislation, by January 1, 2002, the PSC shall issue orders establishing rates, terms and conditions of service allowing all electric utility customers to choose an alternative supplier