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Legal and Business Issues Associated with New Competitive Opportunities for Electricity Services in 2010 and 2011. A Webinar Presentation November 19, 2009. Legal and Business Issues Associated with New Competitive Opportunities for Electricity Services in 2010 and 2011. Introductions

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slide1

Legal and Business Issues Associated with New Competitive Opportunities for Electricity Services in 2010 and 2011

A Webinar Presentation

November 19, 2009

slide2
Legal and Business Issues Associated with New Competitive Opportunities for Electricity Services in 2010 and 2011

Introductions

  • Utility and Telecommunications Regulation Group of Eckert Seamans Cherin & Mellott, LLC
  • Mondre Energy, Inc.
slide3
Legal and Business Issues Associated with New Competitive Opportunitiesfor Electricity Services in 2010 and 2011

Eckert Seamans – Utility and

Telecommunications Practice Group

  • Principally located in Harrisburg office
  • Represent major telecommunications, energy and water utility companies before state and federal regulatory agencies
  • Involved in the restructuring of the telecommunications, natural gas and electric industries
  • Experienced in compliance and licensing issues involving all types of regulated companies
slide4
Legal and Business Issues Associated with New Competitive Opportunities for Electricity Services in 2010 and 2011

Presentation Overview

  • Background in electric competition and

what’s in store for 2010-2011 (Carl Shultz)

  • How to determine if

competitive alternatives make

sense for your business (Judith Mondre)

  • FAQs about electric competition

(Carl Shultz)

  • Hot contracting issues

(Dan Clearfield & Judith Mondre)

  • New opportunities for controlling electric costs – Smart Grids

(Charles Zdebski)

  • Q & As
background in electric competition and what s in store for 2010 2011
Background in Electric Competition and What’s in Store for 2010-2011
  • Pre-1997, Electric Distribution Companies (EDCs) generated or bought the electricity and delivered it to consumers
  • In 1997, Electricity Generation Customer Choice and Competition Act split electricity into separate services so consumers could choose the supplier who provides electricity
  • However, shortly after 1997, rate caps were put in place which were lower than the market prices for electricity
background in electric competition and what s in store for 2010 20111
Background in Electric Competition and What’s in Store for 2010-2011
  • Rate caps delayed retail competition

Courtesy PA Public Utility Keystone Connection Newsletter, Summer 2009 available at www.puc.state.pa.us

background in electric competition and what s in store for 2010 20112
Background in Electric Competition and What’s in Store for 2010-2011
  • Rising fuel prices lead to rising electricity prices

Courtesy PA Public Utility Keystone Connection Newsletter, Summer 2009 available at www.puc.state.pa.us

background in electric competition and what s in store for 2010 20113
Background in Electric Competition and What’s in Store for 2010-2011

Major Electric Distribution Companies in Pennsylvania

Courtesy 2008 State of the Market Report for PJM available at www.monitoringanalytics.com

background in electric competition and what s in store for 2010 20114
Background in Electric Competition and What’s in Store for 2010-2011
  • Rate caps set to end for the major EDCs
    • January 1, 2010
      • PPL
    • January 1, 2011
      • PECO
      • Allegheny Power
      • Met-Ed
      • Penelec
slide10
Legal and Business Issues Associated with New Competitive Opportunities for Electricity Services in 2010 and 2011

How to Determine If

Competitive Alternatives Make

Sense for Your Business

slide11
Legal and Business Issues Associated with New Competitive Opportunities for Electricity Services in 2010 and 2011

11

Mondre Energy

  • Woman-owned small business focusing on energy conservation and cost-control strategies for industry, government, education, and non-profit sectors
  • Since 1998, MEI has saved clients hundreds of millions of dollars.
  • One of three state-wide evaluators for PA Act 129 compliance
slide12
Legal and Business Issues Associated with New Competitive Opportunities for Electricity Services in 2010 and 2011

12

Mondre Energy Areas of Expertise

  • Energy Management and Conservation Plans
  • Measurement and Verification
  • Rate Control and Negotiation/Bill Auditing
  • Green Power Initiatives
  • New Technology Analysis
  • Customized Analytic Software
slide14
How to Determine if Competitive Alternatives Make Sense for Your BusinessElectricity Shopping Makes Sense:
    • When the alternative supplier’s rate is materially lower than your electric utility’s rate
    • Because market prices fluctuate over time
  • Post rate-cap removal, buyers must remain vigilant to take advantage of electric sourcing opportunities
slide15
2010 PPL Opportunity

(Utility price greater than market price)

How to Determine if Competitive Alternatives Make Sense for Your Business

slide16
Legal and Business Issues Associated with New Competitive Opportunitiesfor Electricity Services in 2010 and 2011

Electric Competition

FAQs

slide17
FAQs

Q: Do I have to switch from

my present electric company?

Q: How do I know if a supplier

is reliable?

Q: If I sign up with a new supplier, when will the switch to a new supplier start?

slide18
FAQs

Q: What if my supplier

goes out of business or

stops serving me?

Q: After I choose a supplier,

can I switch again?

Q: Will my EDC charge me more for "other services" if I change suppliers?

slide19
FAQs

Q: If one company generates

my electricity and another

provides the rest of my electric

service, who will I call about

outages or repairs?

Q: Will I receive two electric bills each month if I choose a new supplier?

Q: Who do I contact if I have billing questions?

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Legal and Business Issues Associated with New Competitive Opportunitiesfor Electricity Services in 2010 and 2011

Hot Contracting Issues

hot contracting issues
Hot Contracting Issues

Make sure price comparisons are consistent

Gross Receipts Tax

Included in utility pricing

Suppliers may or may not include

Transmission

Not included in utility fixed-price generation option

Included in utility price-to-compare (shopping credit)

Suppliers may or may not include

hot contracting issues1
Hot Contracting Issues

Make sure price comparisons are consistent

Utility price offers will be adjusted quarterly based upon on-going auction results

Supplier price offers should be fixed (no quarterly adjustments)

hot contracting issues2
Hot Contracting Issues
  • What happens/how do

I get out of this?

  • Credit worthiness/ability to demand security
  • Remedies for non-performance of seller
contact information
Contact Information

Daniel Clearfield, Carl Shultz and Charles Zdebski

Eckert Seamans Cherin & Mellott, LLC

dclearfield@eckertseamans.com

cshultz@eckertseamans.com

czdebski@eckertseamans.com

www.eckertseamans.com

Judith Mondre

Mondre Energy

jmondre@mondreenergy.com

www.mondreenergy.com

25

smart grid
Smart Grid

What Is It and What Does It Mean To You?

An Eckert Seamans Webinar

November 19, 2009

Charles A. Zdebski

Raymond A. Kowalski

Eric J. Schwalb

the summary
The Summary

What is Smart Grid?

FERC, DOE and Their Roles

The States’ Role; i.e., the Pennsylvania PUC

The FCC and its Role

What Does All This Mean to You?

Developments to Expect in the Near Future

Further discussion

what is smart grid
What is Smart Grid?

The notion of Smart Grid is that there will be intelligence and communications connectivity, not only in the elements that comprise the electric power transmission and distribution system, but also in the appliances and devices that are powered by the electric system

FERC has the principal responsibility for the transmission portion of the electric power elements of the Smart Grid

State PUCs MAY have the principal responsibility for the distribution portion of the electric power elements

FCC has the principal responsibility for the communications connectivity elements of the Smart Grid

FCC sees connectivity being provided by broadband communications, that is, high-speed, high-capacity digital communications using Internet protocols

See also, DOE, NTIA and RUS, federal agencies that are administering loan and grant programs for Smart Grid and broadband projects

ferc doe and their roles ferc
FERC, DOE and Their Roles: FERC

Chairman Jon Wellinghoff appointed by President Obama on March 19, 2009, a Commissioner since 2006. His self-described priorities as Chairman include “providing a platform for participation of demand response and other distributed resources in wholesale electric markets including energy efficiency and plug-in hybrid electric vehicles (PHEVs), and promoting greater efficiency in our nation's energy infrastructure through the institution of advanced technologies and system integration.”

Commissioner Suedeen G. Kelly has been on the Commission since 2003. Prior to FERC, she was a private practice energy lawyer, law professor and Chair of the New Mexico Public Service Commission. She is Co-Chair of the FERC NARUC Smart Grid collaborative.

Commissioner Philip D. Moeller was sworn in on July 24, 2006. Prior to FERC, he was the energy policy advisor to U.S. Senator Slade Gordon (R – Washington) and a Washington, D.C. representative for Alliant Energy and Calpine Corporation.

Commissioner Marc Spitzer was appointed by President Bush and confirmed by the Senate for a term expiring June 30, 2011. He is the former chair of the Arizona Corporation Commission and at FERC seeks to build on his record in Arizona, most relevantly including: “Demand response, energy efficiency, and access to the grid by alternative resources were major focuses of Commissioner Spitzer in retail rate cases and policy decisions before the Arizona Commission.”

ferc doe and their roles ferc1
FERC, DOE and Their Roles: FERC

NARUC/FERC Smart Grid Collaborative: Led by Commissioner Kelly and Frederick Butler, who is both on NJ Board of Public Utilities and NARUC President. Proposed criteria for awarding of smart grid stimulus funding under American Recovery and reinvestment Act of 2009 (“ARRA”).

On July 16, 2009, following Title XIII of the Energy Independence and Security Act of 2007 (“Energy Act”), FERC issued a policy statement on Smart Grid policy. The statement focuses on inter-operability, cyber security and interim rates.

The Energy Act provides FERC jurisdiction over intrastate Smart Grid issues, potentially all the way to devices in customer’s homes.

ferc doe and their roles doe
FERC, DOE and Their Roles: DOE
  • The ARRA provides DOE authority to distribute huge sums of Smart Grid grants. On October 27, 2009, DOE announced awards of $3.4 billion in stimulus funding for 100 projects. Most notably for this webinar, they include:
    • PPL Electric Utilities Corp.: $19 million
    • PECO Energy: $200 million
    • FirstEnergy: $57 million
the states the pa puc
The States: The PA PUC
  • Jurisdiction Over Intrastate Issues Will Remain
  • NARUC is heavily involved
    • State issues include rates, reliability, revenue and cost allocation and infrastructure investment, deployment and development
    • For example, on August 14, 2009, PECO filed a $ 650 million plan with the PUC to install more than 1.6 million smart meters. Together with PECO’s stimulus funding, projected customer savings is estimated at:
    • $1.5 billion lifetime
the fcc the chairman
The FCC: The Chairman

FCC Chairman Julius Genachowski (D) received a J.D. from Harvard Law School (magna cum laude). He received a B.A. from Columbia College (magna cum laude). Prior to his appointment, Genachowski spent more than 10 years working in the technology industry as an executive and entrepreneur.

Genachowski is tech-savvy and well-connected in the technology industry. The creation of the National Broadband Plan, required by Congress to be delivered by the FCC by February 17, 2010, will be the principal achievement of his tenure.

the fcc commissioners
The FCC Commissioners

Commissioner Michael J. Copps (D) has served as a commissioner since May 31, 2001. He oversaw the final phases of the digital television transition and is now poised, along with Commissioner Clyburn, to oversee the FCC’s reform of its media policies.

Commissioner Robert M. McDowell (R) was first appointed to the FCC in 2006 and has been reappointed. Although the FCC recently launched a proceeding to set rules for open access to the Internet, McDowell will attempt to keep the FCC from implementing strict “command and control” regulation of the Internet.

Commissioner Mignon Clyburn (D) was sworn in to the FCC on August 3, 2009. She spent 14 years as publisher and general manager of The Coastal Times newspaper and 11 years on the South Carolina Public Service Commission. The only non-lawyer commissioner, she brings the unique perspective of local regulation to the federal regulatory body.

Commissioner Meredith Attwell Baker (R) was sworn in as Commissioner on July 31, 2009. Ms. Baker most recently served as Acting Assistant Secretary of Commerce for Communications and Information and Acting Administrator of the National Telecommunications and Information Administration (NTIA), where she had a role in the digital television transition.

what smart grid means to you arra ferc and doe view
What Smart Grid Means To You: ARRA, FERC and DOE View
  • Characteristics of a Smart Grid as described by Title XIII of the Energy Independence and Security Act of 2007 and embraced by FERC and DOE:
    • increased use of digital information and controls technology to improve reliability, security, and efficiency of the electric grid;
    • dynamic optimization of grid operations and resources, with full cyber-security;
    • deployment and integration of distributed resources and generation, including renewable resources;
    • development and incorporation of demand response, demand-side resources, and energy efficiency resources;
    • deployment of "smart" technologies (real-time, automated, interactive technologies that optimize the physical operation of appliances and consumer devices) for metering, communications concerning grid operations and status, and distribution automation;
    • integration of "smart" appliances and consumer devices;
    • deployment and integration of advanced electricity storage and peak-shaving technologies, including plug-in electric and hybrid electric vehicles, and thermal storage air conditioning;
    • provision to consumers of timely information and control options;
    • development of standards for communication and interoperability of appliances and equipment connected to the electric grid, including the infrastructure serving the grid; and
    • identification and lowering of unreasonable or unnecessary barriers to adoption of smart grid technologies, practices, and services.
what smart grid means to you the fcc view
What Smart Grid Means to You: The FCC View

The FCC’s National Broadband Plan (GN Docket No. 09-51), due to Congress on February 17, 2010, will include a specific section relating to Smart Grid.

It’s not just automated meter reading and demand-side management any more

The FCC must address “gaps” in the existing infrastructure that inhibit Smart Grid deployment. These include upgrading:

The grid itself

Better efficiency

Self-healing

Distributed generation

Buildings and homes

Energy management

Consumer information

Efficiency incentives

Dynamic pricing

Smart appliances

key developments for you in the near future
Key Developments For You in the Near Future

Electric delivery infrastructure

Integrated Grid Management

Electric Customer Benefits

Available Resources

Recommendations

further discussion
Further Discussion

Charlie Zdebski

202.659.6605

czdebski@eckertseamans.com

Ray Kowalski

202.659.6655

rkowalski@eckertseamans.com

Eric Schwalb

202.725.2138

eschwalb@eckertseamans.com