STATE OF MAINE

PUBLIC UTILITIES COMMISSION

242 STATE STREET

18 STATE HOUSE STATION

AUGUSTA, MAINE

              04333-0018

                                                                        

Thomas L. Welch                                                                                                                                                William M. Nugent
    Chairman                                                                                                                  Stephen L. Diamond

                                                                                                                                 Commissioners                                                                                                                                                                                                                    

June 2001

 

Dear Consumer:

 

Under revised rules established by the Public Utilities Commission in January, leaving Standard Offer Service once you have purchased electricity supply from a competitive provider and later shifted to standard offer service may require you to pay a substantial “opt-out” fee.  Please review this letter and the enclosed material for an explanation of when – and why – the opt-out fee applies.

 

The opt-out fee applies to medium and large non-residential customers who purchase from a competitive supplier, then take standard offer service, and return to the competitive market without remaining on standard offer for at least 12 months.  Customers who have not previously purchased from a competitive supplier may leave standard offer any time without an opt-out fee.

 

These rules are not intended to discourage you from switching to competitive service, or to a different competitive provider.  They are aimed at stopping “gaming” of the standard offer.  “Gaming” is periodic switching from competitive service to standard offer and then back again done to take advantage of seasonal or other price differentials.  This practice drives up the cost of providing standard offer service, thereby causing higher standard offer prices, and thus it must be discouraged.

 

The opt-out fee applies regardless of how briefly the customer is on standard offer.  Therefore, when switching suppliers you should be sure that you are not without competitive service for any time, even a day, because this brief entry to standard offer service will trigger the opt-out fee.  The opt-out fee is now twice your highest monthly supply charge for your most recent period on standard offer service.

 

You may be eligible for a waiver if you accidentally trigger the opt-out fee, for example by entering standard offer service for only a few hours or days while switching from one competitive supplier to a new competitive supplier.  To learn more about filing a waiver request, see the enclosed Opt-Out Fee Frequently Asked Questions sheet.

 

We encourage you to explore your competitive options by contacting suppliers licensed to serve your area.  A list of these suppliers is available at www.state.me.us/mpuc/Electric Supplier/licensees.htm or by calling the PUC Electric Choice Information Line at 1-877-PUC-FACT.

 

Competitive suppliers may be able to offer you better prices, terms and features than standard offer.  While we encourage you to explore your options, if you decide to switch, you should be careful to time your switch to avoid the opt-out fee.

 

Thank you for your attention to this important matter.

 

Maine Public Utilities Commission

 

 

 

                      PRINTED ON RECYCLED PAPER

PHONE:  (207) 287-3831 (VOICE)                                                                TTY: 1-800-437-1220                          FAX: (207) 287-1039

 

 

 

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“Opt-Out” Fee

Frequently Asked Questions

 

 

Maine restructured its electric industry in 2000, opening the supply portion to a competitive market.  Maine consumers may now choose the company that produces their electricity.  Consumers who do not choose a competitive supplier, or who leave the competitive market, automatically receive “standard offer” service.  The Public Utilities Commission sets the terms for standard offer service.  The prices for standard offer are established by a competitive bid process based on current market conditions. 

To help keep the cost of standard offer service reasonable, an “opt out” fee is assessed -- in some situations -- when a customer who previously bought in the competitive market leaves standard offer.  The information below highlights how and when this fee is triggered.

What is the Opt-Out Fee?
The opt-out fee is a charge assessed when certain customers or aggregators -- who have previously purchased electricity supply in the competitive market -- enter or default to standard offer service for less than 12 months. 

Which customers can trigger the fee?
The following types of customers and aggregators will incur an opt-out fee if they switch or default to standard offer service for less than 12 months (except as noted below):

• Any customer in a medium or large non-residential standard offer class

• Any customer with a demand of greater than 50 kilowatts in the service territory of a consumer-owned or municipal utility with a single standard offer class
• Any aggregator or other competitive provider that serves a set of residential or small non-residential customers whose total demand is more than 50 kilowatts

Who is not currently affected?

• Customers on the Northern Maine system or grid, which are customers of Maine Public Service Company, Eastern Maine Electric Cooperative, Van Buren Light and Power District, and Houlton Water District
• Customers in a residential or small non-residential standard offer class
• Any customer or account with a demand of 50 kilowatts or less in a consumer-owned or municipal distribution utility territory with a single standard offer class
• Customers who have not previously purchased from a competitive supplier

Why assess an Opt-Out Fee?
The opt-out fee deters “gaming” of the standard offer, which is periodic switching from competitive service to standard offer and then back typically done to take advantage of seasonal or other price differentials.  “Gaming” drives up the cost of providing standard offer service, and standard offer prices, and therefore must be discouraged. 

How much is the fee?
The fee is currently two times the highest month’s electricity supply bill for the most recent period that the customer has been on standard offer.  The Commission may increase the opt-out fee as noted below. 

How can I avoid the Opt-Out fee?
When switching suppliers, make sure your supply contracts give you continuous competitive service.  Avoid having one contract end before the next one begins.  Transfers between competitive providers and into and out of standard offer are typically done on your regular monthly meter-read date, so when setting switchover dates, reflect this date in your contracts to avoid even briefly defaulting to standard offer service. 

If I am leaving Standard Offer and will owe an Opt-Out fee, whom should I notify?
If leaving standard offer before the 12-month point, notify your distribution utility.

What if I accidentally trigger the Opt-Out Fee?  Are waivers available?
Waivers may be granted to customers who accidentally trigger the opt-out fee by entering standard offer service for a brief period.  For example, customers who are switching from one competitive supplier to another and enter standard offer service for a limited period may be eligible for a one-time waiver of the opt-out fee.  Each waiver request is individually reviewed and decided on its unique facts. 

How do I request a waiver?
Send a letter requesting a waiver, and explaining how you triggered the opt-out fee and why you believe it should not apply, to: Dennis Keschl, Administrative Director, Maine Public Utilities Commission, 18 State House Station, Augusta, ME  04333-0018. 

Who gets the opt-out fee?
The distribution company assesses and collects the opt-out fee, but then pays it to the standard offer provider or providers who served the customer in question, to help defray the higher costs the provider incurs serving short-term standard offer customers. 

Can the Opt-Out Fee ever go up?
Yes.  The PUC may set a higher opt-out fee if it finds that one is necessary to maintain the deterrent purposes of the fee or to obtain reasonably-priced standard offer service. 

Should I still explore my competitive options? 
Yes, we encourage all consumers to explore their options.  Competitive suppliers may be able to offer you better prices, terms and supply features than standard offer. 

How can I get a list of licensed suppliers serving my area?
Check out the list on our website at
www.state.me.us/mpuc/Electric Supplier/licensees.htm or call us at 1-877-PUC-FACT.