Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts...
-
Upload
mary-hodge -
Category
Documents
-
view
223 -
download
2
Transcript of Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts...
![Page 1: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/1.jpg)
Retail Competition:Managing a Difficult Transition
David L. O’ConnorCommissioner
Massachusetts Division of Energy Resources
(DOER)
Presentation to
National Governor’s Association
Executive Policy Forum on Electric Restructuring
April 6, 2001
t:\pub_info\presentations\restructuring\NGA April 6, 2001.ppt
![Page 2: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/2.jpg)
Restructuring Goals
in Massachusetts
Reduce electricity prices to all customers
Provide choice of supplier to all customers
Maintain the reliability of the electric system
Maintain the quality of regulated services
![Page 3: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/3.jpg)
Settlements, then the Law
Roundtable Negotiations 1995
“Power Choice” 1996
MECo Settlement 1996
BECo & EUA Settlements 1997
Legislation 1997
Retail Access Day March 1, 1998
![Page 4: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/4.jpg)
Key Provisions of Massachusetts Act
10/15% Rate Reduction
Choice of Power Supplier
Stranded Cost Recovery
Standard Offer and Default Service
Public Benefit Programs
Consumer Protection and Education
Power Plant Siting
![Page 5: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/5.jpg)
Results So Far Consumers Saved at Least $1.5 Billion
Utilities Divested 90% of Plants
Stranded Costs Reduced by 30%
Consolidation of Distribution Companies
Many new Power Plants being Built
Retail Market Developing Very Slowly
Competitive Suppliers Focused on Large C & I
Municipal and Other Aggregation Groups Formed
![Page 6: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/6.jpg)
Standard Offer Service
Power supplied to eligible customers at “fixed” rates
Price at least 10% lower than pre-restructuring
Generation costs increase / stranded costs decrease
Customer may choose competitive supplier any time
Recent price increases due to fuel costs
Ends in 2005
![Page 7: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/7.jpg)
Massachusetts Standard Offer Prices Are Low But Going Up
Source: National Grid
Ce n
ts/k
Wh
![Page 8: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/8.jpg)
Default Service
Provides any customer with power at any time
New customers; returns from competitive suppliers
Through Dec. 2000: equal to Standard Offer price
January 2001: “average monthly market price”
Power supply purchases on 6 and 12 month basis
Continues indefinitely
![Page 9: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/9.jpg)
Default Service Prices Are Going Up Too
0
1
2
3
4
5
6
7
8
9
10
Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01
cen
ts/k
Wh
Source: WMECo 2000 Reconciliation Filing & DOER
Wholesale Generation
Default Service Retail (Residential)
![Page 10: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/10.jpg)
What Massachusetts is Trying to Do
Increase retail response to peak prices
Diversify utility power purchases to hedge price risk
Help retail suppliers reach default customers
![Page 11: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/11.jpg)
Energy Efficiency and Load Management Reduce Clearing Prices
$0.00
$200.00
$400.00
$600.00
$800.00
$1,000.00
$1,200.00
1 3 5 7 9 11 13 15 17 19 21 23
Hour
$/M
W ECP
ADJ_ECP
Source: ISO-NE, DOER Analysis
Wholesale Prices would have been considerably higher on June 7, 1999 without the benefits of Load Management and Energy Efficiency
![Page 12: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/12.jpg)
New England Demand Response ProgramSummer 2001
Up to 600 MW of reductions (2.5% of peak)
3,000 to 5,000 large C&I customers
Demand reduction or distributed generation qualify
ISO-NE pays Load Servers (LSE’s) who pay customers
LSE’s paid “reserves” price for all hours
LSE’s paid “energy” price for dispatched hours
![Page 13: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/13.jpg)
Differences in Utility Power Supply Purchasing
Summer 2000
Contracts, Own Generation
(%)
Spot Market
(%)
California 45 55
New England 80 20
Source: Anjali Sheffrin, Presentation: CMR-Global Market Power Mitigation, October 4, 2000
![Page 14: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/14.jpg)
Changes to Default Service Procurement
0
2
4
6
8
10
12
Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01
Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02
Monthly Prices
Average Price
Cen
ts/k
Wh
Source: MECO Filings with MA DTE
6.4
8.4
![Page 15: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/15.jpg)
Default Service Customers Are IncreasingTotal Monthly kWh Sales
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
April 1999 December 1999 December 2000
Competitive Supply
Default Service
Standard Offer
Source: DOER Customer Migration Numbers
![Page 16: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/16.jpg)
Distribution Companies Co-Market
with Retail Suppliers
Distribution Company
Default ServiceCustomers
Wholesale Suppliers
Retail Suppliers
![Page 17: Retail Competition: Managing a Difficult Transition David L. O’Connor Commissioner Massachusetts Division of Energy Resources (DOER) Presentation to National.](https://reader030.fdocuments.us/reader030/viewer/2022020718/56649e915503460f94b95b91/html5/thumbnails/17.jpg)
Reports and Information
Available at DOER Website:
www.state.ma.us/doer
Customer Migration Data
1998 Market Monitoring Report
1999 Market Monitoring Report