BEFORE THE PUBLIC UTILITY COMMISSION OF

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BEFORE THE PUBLIC UTILITY COMMISSION OF OREGON In the Matter of UM 1587 PUBLIC UTILITY COMMISSION OF LIST OF ISSUES OREGON

Conference Memorandum, as amended on May 3, 2012, the following parties: Shell Energy North America (US), L.P.

proceeding, submit this joint proposed list of issues to be addressed in this proceeding. I.

customers that elect direct access service.

1 BEFORE THE PUBLIC UTILITY COMMISSION OF OREGON In the Matter of UM 1587 PUBLIC UTILITY COMMISSION OF LIST OF ISSUES OREGON Investigation of Issues Related to Direct Access In accordance with the schedule established in the Presiding Judge's Prehearing Conference Memorandum, as amended on May 3, 2012, the following parties: Shell Energy North America (US), L.P.; Direct Energy Business; Constellation New Energy; and Noble Solutions, all of which are intervenors in the above-referenced proceeding, submit this joint proposed list of issues to be addressed in this proceeding. I. INTRODUCTION The undersigned parties are marketers and retail suppliers of energy that seek to increase the opportunities to serve customers that elect direct access service. Based on the direction provided in the Presiding Judge's May 3 Amended Ruling, the undersigned parties provide below a series of "problem statements" that are intended to frame the proposed issues and policy changes that should be considered in this proceeding and that are identified herein. 1

II. ISSUES TO BE ADDRESSED A. Default Service/Obligation to Serve: Problem Statements: According to ORS Section 757.

2 II. ISSUES TO BE ADDRESSED A. Default Service/Obligation to Serve: Problem Statements: According to ORS Section (1)(A), the "electric company" must provide a regulated cost-of-service option to all residential and small commercial customers. However, the Commission may waive this requirement for other classes of retail electricity customers. Pursuant to ORS , the Commission is to establish rules for "default" service to nonresidential consumers. Within these statutory confines, key issues to address in this proceeding in order to determine ways to enhance retail competition - are: what the terms and conditions of the default service should be; whether the obligation to serve can or should be eliminated based on the default service offerings, and what entity should provide default service, For instance, the Commission should consider limiting the supply products that may be offered by the default provider to large C&I customers. If the default provider offers just a single product offering to large C&I customers, these customers may be encouraged to take direct access service in order to take advantage of a broader array of service offerings. Moreover, when the default service provider offers just one product (such as a supply portfolio that is priced based on real time (spot) prices) to the default service customers that have not chosen to take service from an alternative Electricity Service Supplier ("ESS"), then competitive retail service offerings are not displaced by default service. Under these conditions, there need not be too much concern with allowing the utility to provide default service. On the other hand, if the utility is allowed to offer multiple electricity supply products under its default service (such as different fixed price time frames, or products that have enhanced renewable characteristics), then the utility's default service is competing directly with retail services. In these circumstances, the competitive issues become much more pronounced, 2

because the electric company has an inherent competitive advantage in the marketing of electric procurement service due to its incumbent status, access to customer information, regulatory

3 because the electric company has an inherent competitive advantage in the marketing of electric procurement service due to its incumbent status, access to customer information, regulatory protections, and name recognition. In addition, when default service is structured as a "plain vanilla" service based on short term prices, the nature of the utility's obligation to serve is fundamentally changed to one that is simply a flow-through of those short term market purchases. In this case, consideration can and should be given to eliminating the electric company's obligation to serve large C&I customers. Specific Issues To Be Considered: 1. Should the electric company, an affiliate of the electric company, or an unaffiliated entity be the "default supplier" for large C&I customers? 2. What is the default supplier's "obligation to serve" large C&I customers? Should the default supplier have an obligation to purchase power supplies under long term contracts for large C&I customers or should the default supplier's purchases be short term market-based purchases? 3. What are the terms and conditions of default service for large C&I customers? Should all large C&I customers be required to take direct access from and ESS, or if not, to purchase default service at the spot (real-time) market price of power? 4. What are the terms and conditions of default service for small C&I customers? Should default service for small C&I customers be priced at spot market prices or should the portfolio include a combination of short-term and longer term supplies? 5. What is the cut-off (e.g., threshold level of demand) that distinguishes small C&I customers from medium/large C&I customers? 3

Proposed Policy Changes To be Considered Large C&I customers that do not elect direct access service from an ESS should receive default service that is a passthrough of short term market-based

4 Proposed Policy Changes To be Considered Large C&I customers that do not elect direct access service from an ESS should receive default service that is a passthrough of short term market-based purchases. Under these conditions, the default supplier could be either the electric company or a third party that bids to provide the service. Finally, the cut-off for "large" customer status should be a minimum peak demand of 20 kv. B. Rules for Switching from Default to Direct Access: Problem Statement: The statute provides a process through which eligible retail electricity customers "must be allowed at least three business days" to select direct access service after the date that all electric companies and ESSs must announce their estimated prices for the next calendar year. See ORS This requirement has been implemented in a manner pursuant to which there is a limited "open season" period during which a customer may elect direct access service. When the open season period is limited, it is more difficult for eligible customers to switch to direct access, and more difficult for ESSs to develop and manage their marketing programs. The Commission should consider changes to the open season (or "shopping window") rules that make it easier for large C&I customers to elect direct access service and to switch between direct access service and default service. Specific Issues To Be Considered: 1. What should be the rules for "switching" between direct access and default service for large C&I customers? Should there be rules about the notice period, the price paid upon re-entry, and the length of the customer's stay on default service? 2. After the date on which electric utilities and ESSs announce their estimated prices for the next year, what should be the term of the "shopping window" or "open season" for customers to 4

choose direct access? Should the ESS be allowed to update its estimated price throughout the shopping window? 3. Should customer be allowed to "opt-out" completely from any sort of default service?

5 choose direct access? Should the ESS be allowed to update its estimated price throughout the shopping window? 3. Should customer be allowed to "opt-out" completely from any sort of default service? If so, how should transition charges be applied to opt-out customers? Are there alternatives to the current opt-out programs? 4. Should there be a wholesale "buy through" program available to customers from the default supplier, similar to the program offered by Puget Sound? How would such a program differ from an opt-out program? 5. What should be the threshold size for a customer's participation in the opt-out program? Proposed Policy Changes Large C&I customers should be allowed to switch between direct access service and default service upon 30 days' prior notice to the default supplier. The price to be paid by a customer upon return to the default supplier should be the same short-term (market) price that all other large C&I default customers pay. C. Implementation issues: Problem Statements: The statute allows customers eligible for direct access to "aggregate" their electricity loads. ORS If small C&I customers were able to aggregate enough customers either among themselves, or with large C&I customers, to achieve a sufficient level of demand, these customers could be treated like large C&I customers for purposes of their power supply choices. The statute provides that the Commission shall adopt rules for consumer protection. ORS (3). Many of the Commission's consumer protection provisions are unnecessary in order to 5

protect large C&I customers. The Commission should consider whether some or all of the consumer protection requirements should be limited to ESSs that serve residential and small C&I customers.

6 protect large C&I customers. The Commission should consider whether some or all of the consumer protection requirements should be limited to ESSs that serve residential and small C&I customers. As noted in Order No , the franchise fee issue should be addressed to ensure that franchise fees are collected for all customer usage, but are collected in a manner that ensures that direct access customers (and ESSs) do not pay franchise fees twice. Potential ES Ss have found it difficult, if not impossible to comply with PGE's electronic data interchange ("EDI") requirements. The EDI requirements, as well as related tariff provisions, should be examined to reduce the burden on prospective ESSs. Finally, as noted in section II.A, the electric companies enjoy superior name recognition and customer data access. These assets could confer a significant competitive advantage. The provision by the electric company of any supply service, whether default or otherwise, should be structured so that the electric company is not able to exercise that competitive advantage unfairly. For instance, if the utility wants to provide supply service that goes beyond "plain vanilla" default service, it should be required to do so through a competitive affiliate ESS, which should be required to follow the same direct access rules as non-affiliates, and which must not enjoy any preferential access to customer data or other utility information. Moreover, if the electric utility is the default service provider, the utility should not be allowed to promote default service to the detriment of competitive supply. Specific Issues To Be Considered: 1. May small retail electricity consumers "aggregate" their electricity loads in order to meet the threshold level of demand for treatment as a large C&I customer for purposes of eligibility for direct access service and default service? 6

2. With the exception of the requirement to disclose the price, power source and environmental impact of its power supply (ORS 757.

7 2. With the exception of the requirement to disclose the price, power source and environmental impact of its power supply (ORS (3)), should the consumer protection requirements apply only to ESSs that serve residential and small C&I loads? 3. How should franchise fees be collected so that direct access customers do not pay twice? 4. How can the utilities' tariff protocols for certification of ESSs be modified to make the process less cumbersome? Proposed Policy Changes Small C&I customers should be allowed to aggregate their loads in order to be eligible for the flexible switching rules and default service option for which large C&I customers are eligible. Aggregated customer load should be served by the default supplier at the short term (market) price unless the aggregated load chooses direct access. With the exception of disclosing price, power source and environmental impact, the consumer protection rules that apply to ESSs that serve residential and small C&I customer load should not apply to ESSs that serve large C&I customers. One way to manage franchise fees collection would be to have them recovered by the electric company from all end-use customers based on the cost-of-service rate charged by the electric company to its bundled customers. The electric company could remit payment to the local municipality on behalf of ESSs serving direct access customers, and the electric company could recover the franchise fees from all customers through the transmission/distribution rate. Finally, the Commission should require the electric companies to simplify the certification/registration process for ESSs. 7

D. Utility Procurement/Transition (Stranded) Cost issues: Problem Statement: One of the greatest barriers to supplier/marketer participation in a direct access program is cross-subsidization between

8 D. Utility Procurement/Transition (Stranded) Cost issues: Problem Statement: One of the greatest barriers to supplier/marketer participation in a direct access program is cross-subsidization between the electric company's electric procurement/generation costs and its transmission/distribution costs. If any portion of an electric company's electric procurement/generation costs is allocated to the transmission/distribution rates paid by all customers (including direct access customers), the electric company gains a competitive advantage in the sale of electric power to retail customers. This advantage arises because when such cross subsidization occurs, retail choice customers are essentially paying twice for their electricity supply service - they pay once for the utility's generation costs for supply they are not receiving (and do not want) because the costs are embedded in the transmission/distribution service, and again to the ESS for the electricity supply that they do want. An additional area of concern is the level of "transition" charges (if any) that direct access customers must pay, also known as stranded costs, when they leave electric company service. As indicated in Section II.A, unless the electric company's "obligation to serve" is clearly defined, the electric company may purchase long term power supplies for more of its end-use customer load than is necessary. Excess procurement by the electric company under long term contracts, which can occur when the electric company does not take into account load migration that will occur as direct access expands, can lead to unnecessary transition costs for customers that choose direct access. As also noted in Section II.A, the Commission should consider eliminating the electric company's obligation to serve to large C&I customers. Instead, these customers should be expected to elect direct access or purchase short-term (spot) supplies from the default supplier (which may or may not be the electric company). Such action will serve to reduce (even eliminate) stranded costs. 8

9 Specific Issues To Be Considered: 1. Are the electric companies' costs properly functionalized as between generation and transmission/distribution, to ensure that direct access customers are not paying twice for supply service once to the ESS and again to the company? 2. How are exit fees, transition charges and transition credits calculated by each electric company? When do these charges apply? 3. How is the procurement component of the "cost of service" rate for bundled customers calculated? What resources are included in this rate? Does this rate reflect the cost of renewable supplies that are in the electric companies' portfolios? 4. What changes to utility procurement practices are necessary to limit new stranded costs as direct access increases? 5. What direction should the Commission give the electric companies with respect to entering into contracts with the Bonneville Power Administration, consistent with the electric companies' obligation to serve? Proposed Policy Changes The Commission should remove all generation/procurement-related costs, including fixed administrative costs associated with procurement, from customers' transmission or distribution rates. Electric companies should be directed to purchase power on a long-term basis (any contract term exceeding 30 days) only for the customers for which the electric company has an obligation to serve. The electric company's obligation to serve should be limited to residential and small C&I customers, and if the electric company remains the default supplier for other customer classes, that service should be a flow through of spot market purchases. 9

III. CONCLUSION The undersigned parties look forward to addressing the foregoing issues through the process that

The undersigned parties reserve the right to adjust their proposals on the issues above and address additional

Respectfully submitted, Date: May 16, 2012 John W.

10 III. CONCLUSION The undersigned parties look forward to addressing the foregoing issues through the process that is established for this proceeding. The undersigned parties reserve the right to adjust their proposals on the issues above and address additional issues that may be determined to be within the scope of this proceeding. Respectfully submitted, Date: May 16, 2012 John W. Leslie McKenna Long & Aldridge LLP 600 West Broadway, Suite 2600 San Diego, California Tel: (619) Fax: (619) mckennalong. com On behalf of: Shell Energy North America (US), L.P. Direct Energy Business Constellation NewEnergy Noble Solutions

Administrative Law Judge Patrick Power and all persons listed on the official service list

11 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 16th day of May, 2012, a true and correct copy of the foregoing Joint Parties' List of Issues was served by electronic mail on Presiding Administrative Law Judge Patrick Power and all persons listed on the official service list maintained by the Commission in Docket No. UM A copy of the service list is attached hereto. Signed by: Sue M. Pote

Summary Report UM 1587 ISSUES RELATING TO DIRECT ACCESS Category: Miscellaneous In the Matter of PUBLIC

Commission Printed: 5/16/2012 Opened by Commission Order. See Order NO. 12-057 at http://apps. puc. state.

Filing Date: 3/14/2012 Case SCHUE, STEVE (503) 378-6667 Law Judge(s): POWER, PATRICK SERVICE LIST: OPUC

PACIFICORP, DBA PACIFIC POWER 825 NE MULTNOMAH ST, STE 2000 PORTLAND OR 97232 GREGORY M.

HILLSBORO OR 97123 STEPHANIE S ANDRUS PUC STAFF--DEPARTMENT OF JUSTICE BUSINESS ACTIVITIES SECTION 1162

500 SAN DIEGO CA 92101 PAMELA J BEERY BEERY, ELSNER AND HAMMOND, LLP 1750 SW HARBOR WAY, STE 380 PORTLAND

PUTNAM AVE GREENWICH CT 06830 CYNTHIA BRADY CONSTELLATION NEWENERGY, INC 550 WEST WASHINGTON BLVD, STE 300

12 Summary Report UM 1587 ISSUES RELATING TO DIRECT ACCESS Category: Miscellaneous In the Matter of PUBLIC UTILITY COMMISSION OF OREGON Investigation of Issues Relating to Direct Access Oregon Public Utility Commission Printed: 5/16/2012 Opened by Commission Order. See Order NO at puc. state. or. us/orders/2012ords/ pdf. Filing Date: 3/14/2012 Case SCHUE, STEVE (503) Law Judge(s): POWER, PATRICK SERVICE LIST: OPUC DOCKETS CITIZENS' UTILITY BOARD OF OREGON 610 SW BROADWAY, STE 400 PORTLAND OR OREGON DOCKETS PACIFICORP, DBA PACIFIC POWER 825 NE MULTNOMAH ST, STE 2000 PORTLAND OR GREGORY M. ADAMS RICHARDSON & O'LEARY PO BOX 7218 BOISE ID ANDREW BARTLETT CITY OF HILLSBORO 150 EAST MAIN ST. HILLSBORO OR STEPHANIE S ANDRUS PUC STAFF--DEPARTMENT OF JUSTICE BUSINESS ACTIVITIES SECTION 1162 COURT ST NE SALEM OR GREG BASS NOBLE AMERICAS ENERGY SOLUTIONS, LLC 401 WEST A ST., STE. 500 SAN DIEGO CA PAMELA J BEERY BEERY, ELSNER AND HAMMOND, LLP 1750 SW HARBOR WAY, STE 380 PORTLAND OR RICHARD I BEITLER FREEPOINT COMMODITIES, LLC 599 W. PUTNAM AVE GREENWICH CT CYNTHIA BRADY CONSTELLATION NEWENERGY, INC 550 WEST WASHINGTON BLVD, STE 300 CHICAGO IL RANDY DAHLGREN PORTLAND GENERAL ELECTRIC 121 SW SALMON ST - 1VVTC0702 PORTLAND OR R BRYCE DALLEY ROBERT DIXON PACIFIC POWER CITY OF HILLSBORO 825 NE MULTNOMAH ST., STE EAST MAIN ST PORTLAND OR HILLSBORO OR of 3

Summary Report UM 1587 ISSUES RELATING TO DIRECT ACCESS JOHN

550 WEST WASHINGTON BLVD, STE 300 CHICAGO IL 60661 ROBIN FREEMAN

Utility Commission Printed: 5/16/2012 ANDREA GOODWIN NORTHWEST AND

, 1216 PORTLAND OR 97201 CHRIS HENDRIX WAL-MART 2001 SE1OTH ST

STATE ST - STE 200 SALT LAKE CITY UT 84111-2322 ROBERT JENKS CITIZENS'

JOHN LESLIE SHELL ENERGY MARY LYNCH CONSTELLATION ENERGY COMMODITIES

5074 NAWAL DRIVE EL DORADO HILLS CA 95762 LISSA MALDONADO SAFEWAY INC.

COALITION 1317 F STREET NW STE 600 WASHINGTON DC 20005 G.

4445 EASTGATE MALL STE 100 SAN DIEGO CA 92121 ANDREA MORRISON DIRECT

CLEVE REGULATORY & COGENERATION SERVICES INC 333 SW TAYLOR - STE 400

13 Summary Report UM 1587 ISSUES RELATING TO DIRECT ACCESS JOHN DOMAGALSKI CONSTELLATION NEWENERGY, INC. 550 WEST WASHINGTON BLVD, STE 300 CHICAGO IL ROBIN FREEMAN LEAGUE OF OREGON CITIES PO BOX 928 SALEM OR Oregon Public Utility Commission Printed: 5/16/2012 ANDREA GOODWIN NORTHWEST AND INTERMOUNTAIN POWER PRODUCERS COALIT 1300 SW PARK AVE., 1216 PORTLAND OR CHRIS HENDRIX WAL-MART 2001 SE1OTH ST BENTONVILLE AZ MAJA HAIUM LEAGUE OF OREGON CITIES 1201 COURT ST. NE SUITE 200 SALEM OR KEVIN HIGGINS ENERGY STRATEGIES LLC 215 STATE ST - STE 200 SALT LAKE CITY UT ROBERT JENKS CITIZENS' UTILITY BOARD OF OREGON 610 SW BROADWAY, STE 400 PORTLAND OR JOHN LESLIE SHELL ENERGY MARY LYNCH CONSTELLATION ENERGY COMMODITIES GROUP, INC NAWAL DRIVE EL DORADO HILLS CA LISSA MALDONADO SAFEWAY INC STONERIDGE MALL ROAD PLEASANTON CA JOEL MALINA COMPETE COALITION 1317 F STREET NW STE 600 WASHINGTON DC G. CATRIONA MCCRACKEN CITIZENS' UTILITY BOARD OF OREGON 610 SW BROADWAY, STE 400 PORTLAND OR MARCIE MILNER SHELL ENERGY NORTH AMERICA 4445 EASTGATE MALL STE 100 SAN DIEGO CA ANDREA MORRISON DIRECT ENERGY SERVICES, LLC IRION A SANGER DONALD W SCHOENBECK DAVISON VAN CLEVE REGULATORY & COGENERATION SERVICES INC 333 SW TAYLOR - STE WASHINGTON ST STE 780 PORTLAND OR VANCOUVER WA STEVE SCHUE PUBLIC UTILITY COMMISSION OF OREGON PO BOX 2148 SALEM OR AJAY SOOD FREEPOINT COMMODITIES, LLC 3006 E. GOLDSTONE DR, STE 112 MERIDIAN ID of 3

Summary Report UM 1587 ISSUES RELATING TO DIRECT ACCESS DOUGLAS C TINGEY PORTLAND GENERAL

5/16/2012 DAVID TOOZE CITY OF PORTLAND - PLANNING & SUSTAINABILITY 1900 SW 4TH STE 7100 PORTLAND

GEORGE WAIDELICH SAFEWAY INC SARAH WALLACE PACIFIC POWER 825 NE MULTNOMAH ST STE 1800 PORTLAND

14 Summary Report UM 1587 ISSUES RELATING TO DIRECT ACCESS DOUGLAS C TINGEY PORTLAND GENERAL ELECTRIC 121 SW SALMON 1VVTC13 PORTLAND OR Oregon Public Utility Commission Printed: 5/16/2012 DAVID TOOZE CITY OF PORTLAND - PLANNING & SUSTAINABILITY 1900 SW 4TH STE 7100 PORTLAND OR S BRADLEY VAN CLEVE DAVISON VAN CLEVE PC 333 SW TAYLOR - STE 400 PORTLAND OR GEORGE WAIDELICH SAFEWAY INC SARAH WALLACE PACIFIC POWER 825 NE MULTNOMAH ST STE 1800 PORTLAND OR BENJAMIN WALTERS CITY OF PORTLAND - CITY ATTORNEY'S OFFICE 1221 SW 4TH AVE - RM 430 PORTLAND OR of 3

BEFORE THE PUBLIC UTILITY COMMISSION OF OREGON OPENING BRIEF. Pursuant to the Ruling issued by the Oregon Public Utilities Commission ( Commission )

BEFORE THE PUBLIC UTILITY COMMISSION OF OREGON In the Matter of PORTLAND GENERAL ELECTRIC COMPANY, Docket No. UM 1953 OPENING BRIEF OF WALMART INC. Investigation into Proposed Green Tariff OPENING BRIEF