STATE OF NEW JERSEY
DIVISION OF THE RATEPAYER ADVOCATE

RATEPAYER ADVOCATE’S RESPONSE TO THE GUIDELINES

 

  1. BGS proposals may be submitted separately for specific customer classes, such as residential and small commercial customers, and large commercial and industrial customers.

BGS service should be divided along broad customer class lines.  Residential and small commercial customers should constitute one category of BGS service. The supply for each class of small customers, including residential and small commercial, would be bid as one or more tranches of supply. (Classes with little load may be combined with a larger class with a similar load profile.) Small customers should pay rates determined by the cost of BGS service acquired at auction for a multi-month period. Rates should be set for each rate class, to reflect its load shape and losses, and to allow classes with more complex metering (time-of-use or demand metering) to be billed in the most appropriate manner for BGS. Large customers should constitute another, separate category of BGS service.  (See Guideline #3, below.)

  1. There appears to be a consensus that future BGS schedules should be consistent with the PJM planning period (beginning June 1 of each year). The proposals should address the issue of whether the initial post-Transition Period program should be for 10 months or 22 months.

The first post-transition BGS planning period should extend for 10 months in order to coincide with PJM’s planning period, with subsequent BGS planning periods extending no less than 6 months and no more than 12 months in duration.

  1. Indicate how large customers should be priced (i.e., hourly or monthly). Provide the necessary calculations, and suggestions as to how to implement the proposal.

Large customers should be moved toward real-time prices.  Customers large enough to justify hourly metering and large enough to efficiently procure hedges or alternative supplies should be billed hourly at the PJM zonal price. During the early post-transition period, large customers should have the option of utilizing utility-facilitated hedging through the purchase of forward contracts or futures. For large customers, the incumbent utility can procure energy, capacity and ancillary services directly from the PJM markets.

  1. Indicate whether there should be a separate category for medium-sized customers. If so, how should such customers be priced (hourly, monthly)? Provide the necessary calculations and explanations as to how to implement the proposal.

If a medium-sized BGS customer is willing to install interval-metering capabilities at its own expense, then that customer should be permitted to take service in a manner similar to large BGS customers. Any customer that currently has interval metering should also be placed on real-time large customer BGS. 

  1. Indicate what constitutes large vs. small commercial customers, and whether this should be implemented on a statewide basis.

The utilities should perform analyses, comparing the cost of the interval meters to the savings achievable from customer response to real-time prices, to determine the minimum size (in mWh/year) for customers to be put on real-time pricing. The utilities are the logical parties to conduct these analyses, since they have access to manufacturer pricing for utility-scale purchases of the necessary equipment. Any customer that currently has interval metering should also be placed on real-time BGS.  The large customer group would probably include those customers on PSE&G rate schedules LPL, HTS, HTS-C, and the PSE&G customer on Hourly Energy Pricing; Atlantic City Electric rate schedules AGS and TGS; JCP&L rate schedules GST, GTX, GP, and GT; and Rockland Electric rate schedule #7. 

  1. If interval meters must be installed for hourly pricing, who should pay for them? Provide estimated costs for such meters, and installation costs.

The BGS customer should pay for interval meters, pursuant to a tariffed charge.   

  1. Address switching requirements, if any, for commercial and industrial customers.

Small customers should have the ability to switch between BGS and competitive service without penalty.  Similarly, large customers should be able to switch between BGS and competitive service without penalty, if the hourly pricing proposal for large BGS customers is adopted.

  1. Any party that proposes a retail BGS plan should address compliance with applicable regulations such as licensing requirements and/or affiliate standards, and discuss any modifications or revisions that may be required.

BGS suppliers should be licensed.  For BGS suppliers operating only as wholesale suppliers, specific regulations and licensing requirements for wholesale BGS suppliers should be developed.  However, all BGS suppliers who opt to have their logo appear on customer bills under the virtual retail BGS proposal (see Guideline #9, below) should be required to have a separate retail supplier license. 

  1. Any party proposing a retail BGS plan should address customer assignment issues, including, if necessary, changes to statutory regulations that may be required.

BGS customers should be assigned on a utility basis.  However, under the Ratepayer Advocate’s “Virtual Retail BGS” proposal, the logo of a participating BGS supplier will appear on customer bills on a random basis, in proportion to the percentage of load supplied by the BGS supplier.  Only BGS suppliers who wish to have their logo appear on bills will be included in the virtual retail BGS program. Under the virtual retail BGS program, if participating BGS supplier “XYZ Energy” supplies 20% of the BGS energy needs of “ABC Electric Company's” BGS customers, XYZ Energy's logo would appear in a designated location on the printed monthly bills of 20% of ABC's BGS customers, selected at random from ABC's list of BGS customers.   If, for example, another participating BGS supplier supplies 30% of the BGS needs, its logo would appear on 30% of the BGS customers' bills, and so on.  For the BGS supplier who does not opt to have its logo appear on customer bills, the customers associated with that supply would have another BGS supplier’s logo identified on their bills, in proportion to the shares of other BGS suppliers’ loads.  In this way, all BGS customers will have some supplier identified on their bills.

  1. Parties should also address the renewable portfolio obligations, as well as committed supply (NUGs), and uncommitted supply.

Utilities should sell their committed supply (NUGs) into the market, using the revenues to reduce stranded costs.  All BGS services should comply with the applicable renewable portfolio obligations. For BGS supply procured through real-time purchase of PJM energy, the utility may meet the renewable portfolio by contracts for simultaneous purchase of qualifying renewable energy and sale of non-qualifying energy. 

  1. Any party proposing multiple BGS providers should address EDI implementation issues.

The utilities and GS suppliers are the appropriate entities to address Electronic Data Transfer issues as they are directly involved in electronic interface issues.  The Ratepayer Advocate will review the EDI proposals and comment, if necessary. The EDI proposals presented by the parties should be ultimately be subject to Board approval.

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