April Maine’s Competitive Electricity Market Rules

April 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 Competitive Electricity Providers sell electricity T&D Utilities deliver electricity

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

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

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

April T&D Service Areas

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

April 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 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 Information: Can be found on the MPUC web page,

April Standard Offer Chapter 301

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

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

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

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

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

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

April 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 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 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 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 Licensing Chapter 305

April Steps to Provide Electricity Service In Maine 1)Obtain Maine License 2)Contract with T&D company for billing and metering services 3)EBT Training/Testing

April 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 Licensing Requirements Financial 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 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 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 Licensing Requirements Enforcement 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 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 License Application Available electronically on MPUC Supplier Web Page Fee: $100 MPUC will approve, deny or investigate within 30 days of application

April 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 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 Consumer Protection Chapter 305

April Consumer Protection All 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 Consumer Protection Small 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 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 Consumer Protection Small Customers - Verification of Choice Supplier must receive verification that customer chose supplier: Written -- Strict Rules Third Party Verification

April Consumer Protection Small 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 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 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 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 Consumer Protection Small Customers - Generation Bill Format Plain Language Separation, Definitions, Understandable

April Consumer Protection Market Risk Disclosure Applies to real time products (prices vary with energy prices or indices) Written disclosure prior to or at time of contracting Separate document or in contract acknowledged by signature or initials Language specified by MPUC (alternative language may be allowed)

April Consumer Protection Market Risk Disclosure Volatility risk Future performance Additional costs

April Resource Portfolio Requirement Chapter 311

April % of annual kWhs sold to customers in Maine (calendar year)

April Portfolio Requirement 30% Eligible

April Eligible Resources Small Power Production Efficient Cogeneration built before 1/1/97 Renewable Generation < 100 MW Fuel CellsGeothermal TidalHydro SolarBiomass WindMunicipal Solid Waste

April Cure Period If 20% in one year, can cure over next year MPUC may extend

April Compliance Use ISO-NE GIS system to comply with Maine’s RPS requirement for sales in ISO- NE territory Use settlement data or other documentation to comply with RPS for sales in northern Maine Verify compliance in annual report

April Uniform Information Disclosure Chapter 306

April Label Content - Fuel & Emissions Resources used to meet load obligations in NE over most recent 12 month period Verified through NEPOOL GIS data for sales in ISO-NE territory or through settlement data or other documentation for sales in northern Maine Conform visually to MPUC sample label

April Label Content - Fuel & Emissions Fuel sources of resource portfolio -- biomass, MSW, fossil fuel cogen, fuel cells, geothermal, hydro, solar, tidal, wind, nuclear, gas, oil,coal Emissions from generation resources -- CO2, NOX, SO2 Must compare emissions to a NE average emissions

April Product Offerings Separate label for each product offering

April Label must be: Mailed quarterly to “small” customers Available to all customers on request Sent with Terms of Service to small customers

April Compliance Provide labels and evidence of validity with annual report