Maine’s Competitive Electricity Market Rules

1. Maine’sCompetitive ElectricityMarket Rules April 2006

2. T&D Utilities: • Cannot own generating assets • Cannot participate competitively in the electric power market • Affiliate participation is limited (CMP has no affiliate. BHE and MPS have no affiliate activity.) April 2006

3. Competitive Electricity Providers sell electricity T&D Utilities deliver electricity April 2006

4. Who Sells Electricity in Maine:Competitive Electricity Providers (CEPs) • Suppliers sell electricity to retail customers. A supplier may be a generator selling its own electricity or a marketer purchasing and reselling electricity. • Aggregators & Brokers intermediaries who do not sell electricity April 2006

5. Rules and Business Processes • Business operations generally consistent with other states • Business operations run smoothly • Minor tinkering with rules occur, but consistency remains April 2006

6. Providers Licensed in Maine • Approximately 35 licensed suppliers • Approximately 25 licensed aggregators or brokers • Extent of activity in Maine varies April 2006

7. Green Power • A green market exists, for residential and business customers. • Green market supply includes hydro, biomass, landfill gas, wind, and solar. Supply or certificates may be purchased. April 2006

8. Load Served by Competitive Providers in March 2006 CMP BHE MPS Resid’l/Small C/I <1% <1% 7% Medium 35% 33% 46% Large 84% 66% 90% Total 39% 27% 41% State load served by competitive providers: 37% April 2006

9. Migration to Standard Offer – CMP and BHE Medium and Large Customers April 2006

10. T&D Service Areas April 2006

11. Consumer-Owned Utilities • 6% of Maine’s load • Do have retail access • Rules are simpler, might be different April 2006

12. ISO-NE • The bulk power system administrator in New England • To serve load within ISO-NE territory, you must: • Be an ISO-NE participant or • Contractual arrangement with ISO-NE participant April 2006

13. Northern Maine • Part of Maritimes Control Area • Transmission entry through New Brunswick • Northern Maine ISA does settlement and transmission scheduling • Must be a participant or have a contractual arrangement with a participant in NMISA administered market April 2006

14. Information: Can be found on the MPUC web page, www.maine.gov/mpuc April 2006

15. Standard Offer Chapter 301 April 2006

16. Standard Offer Service • Maine’s only default service • Provided by a competitive electricity provider(s) • At a rate determined by competitive bid April 2006

17. Customers in Standard Offer Customer makes no choice Standard Offer Providers Customer drops provider Provider drops customer April 2006

18. General Model • S.O. provider does not enroll or interact with individual customers • T&D reads meters, bills, collects for S.O. provider • T&D informs each S.O. provider of its S.O. sales • S.O. provider is paid its bid amount times its sales, less a pre-defined percentage for uncollectibles April 2006

19. Number of Providers • More than one provider may provide standard offer service • Total load for a customer class is apportioned among multiple providers based on the percentage of load won in the bid April 2006

20. Term of SO Rates • Terms described in RFPs issued by the PUC • Length currently 6 months for medium and large classes. Thus the rate for these customers tracks the market. • 1/3 of total residential and small commercial requirement purchased annually. This mitigates volatile wholesale prices. April 2006

21. Standard Offer Rate Classes There is one Standard Offer Price for each customer group. Residential & Small Commercial ( PRICE “A” ) Large Commercial & Industrial ( PRICE “C” ) Medium Commercial & Industrial ( PRICE “B” ) April 2006

22. How Rate Classes are Served • A provider may serve one or • more classes. • Provider will serve in 20% • increments in a rate class. 20% 20% 20% 20% 20% 20 April 2006

23. Rate Structure • Residential & Small C/I must be a flat per kWh rate • Medium may have seasonal rates, demand charge • Large C/I may have monthly or time-of-day rates, demand charge April 2006

24. Pricing Examples Standard Offer Prices: $.05 per kWh T&D Rate $ 10.00 Customer Charge $ 5.00 Winter kW $ 2.00 Summer kW $ .10 Winter kWh $ .05 Summer kWh $1.00 per kW $ .05 per kWh $ .06 Winter kWh $ .03 Summer kWh April 2006

25. Standard Offer Bid ProcessResidential/Small Commercial Rate Class ABC Co Bid 4.4 LMN Co Bid 4.7 RST Co Bid 4.8 40% 40% 20% Providers receive the price they bid $$$ Example Only Example Only The customer is billed one Standard Offer Rate: 4.6 April 2006

26. Collections • T&D will bill and handle all credit & collection for SOP • Uncollectibles will be provided for by retaining a pre-determined percentage of revenues • Consumer protection rules that apply to T&D will apply to Standard Offer (eg, payment arrangements, disconnect for non-payment) April 2006

27. Treatment of Uncollectibles Let’s Say: Bid price: 4 cents Actual kWh sales: 100,000 Pre-set uncollectibles percentage: 1% Then: 100,000 x .04 = $ 4,000 $4,000 x .01 = $ 40 SOP receives $ 3,960 April 2006

28. Leaving Standard Offer • Res’l and small C/I - may leave and re-enter SO as often as they like • Medium and Large customers - opt-out fee applies if customer was in competitive market and then went onto standard offer service • Aggregates with load >50 kW - subject to opt-out fee April 2006

29. Opt-Out Fee • Opt-out fee = 2 times the highest standard offer bill for the most recent period customer took standard offer • Paid if customer leaves standard offer after less than 12 months • No opt-out fee in Northern Maine • PUC may waive fee April 2006

30. Licensing Chapter 305 April 2006

31. 3 Steps to Provide Electricity Service In Maine • ) Obtain Maine License • ) Contract with T&D company for billing and metering services • ) EBT Training/Testing April 2006

32. Consumer Protection – Two Groups of Customers, with different consumer protection requirements “Small” customers - In T&D’s rate class that has no demand charge (<20 kW, 25 kW or 50 kW depending on T&D) - More stringent consumer protection rules apply Larger customers: - All others - Less stringent rules apply April 2006

33. Licensing RequirementsFinancial Capability • Most recent financial disclosures or that of corporate parent • Additional documentation to demonstrate ability to refund customer deposits if deposits will be held April 2006

34. Licensing Requirements Technical Capability • Description of industry experience with electricity or natural gas markets • Document that applicant is a participant in ISO-NE or NMISA market or has a contractual arrangement with a participant April 2006

35. Licensing Requirements Financial Security • Applies to CEPs serving residential and small commercial customers • Initial amount - $100,000 • Subsequent – 10% of annual revenues from Maine sales • Letter of credit or cash April 2006

36. Licensing RequirementsEnforcement Proceedings and Customer Complaints • Disclose enforcement proceedings against applicant or associated entities within last 6 years • Disclose customer complaints against applicant within last 12 months April 2006

37. Licensing Requirements Miscellaneous • Ability to satisfy portfolio requirement • Disclosure of affiliates in retail electricity business • Evidence of tax registration • Contact persons • List of jurisdictions in which applicant or affiliates engaged in electricity sales • List of jurisdictions in which applicant or affiliates applied for license and disposition of application April 2006

38. License Application • Available electronically on MPUC Supplier Web Page • Fee: $100 • MPUC will approve, deny or investigate within 30 days of application April 2006

39. Licensing Conditions • Comply with Maine laws and regulations • Update for substantial changes in circumstances • Reasonable efforts not to conduct business with unlicensed entities • Submit to jurisdiction of Maine courts and MPUC • Contracts for service to residential and small commercial customers interpreted according to Maine law and maintained in Maine courts and agencies April 2006

40. Annual Reports • File on or before July 1 • Average prices, revenues, sales by customer class and T&D territory • Resource mix (ISO-NE territory use GIS certificates) • Enforcement actions • Compliance portfolio requirement April 2006

41. Consumer Protection Chapter 305 April 2006

42. Consumer ProtectionAll Customers • Obtain customer authorization • No release of customer information • Comply with Unfair Trade Practices Act • No unreasonable collection costs • Comply with Equal Credit Opportunity Act • Comply with telemarketing limitations April 2006

43. Consumer ProtectionSmall Customers – Terms of Service • Send Terms of Service within 30 days of contracting w/customer • Annual notification of Terms • Include Uniform Disclosure Label with Terms April 2006

44. Terms of Service Price structure Estimated bill method Late payment terms Deposits Fees & penalties Toll-free number Contract length Warranties Do not call list Rescission rights Standard Offer Credit agency procedures April 2006

45. Consumer ProtectionSmall Customers - Verification of Choice Supplier must receive verification that customer chose supplier: Written -- Strict Rules Third Party Verification April 2006

46. Consumer ProtectionSmall Customers - Rescission Period • Tell customers orally and in Terms • Customer’s rescission may be oral, written or electronic • Rescission Period • 8 days by mail • 5 days if sent electronically or by hand April 2006

47. Consumer Protection Small Customers - Slamming Complaints • Customer can file a complaint • MPUC will investigate • Provider must refund customer money plus expenses • Penalties are determined by the MPUC April 2006

48. Consumer Protection Small Customers - Changes • Provide customer with 30-day notice of change to Terms • Provide customer with 30-day notice of contract termination April 2006

49. Consumer Protection Small Customers - Generation Bill Content • Consumption, price, charge • Average cent/kWh charged this month • Itemized list of products billed • Payments applied, arrears, late payment information April 2006

50. Consumer Protection Small Customers - Generation Bill Format • Plain Language • Separation, Definitions, Understandable April 2006