UI Seeking to Make GSC Administrative Adder Nonbypassable

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December 14, 2010

United Illuminating is seeking to move the recovery of the Generation Service Charge (GSC) Administrative Adder from the bypassable Generation Service Charge rate component to the Non-Bypassable Federally Mandated Congestion Charge (NBFMCC) rate component (10-08-01).

UI recommended that the DPUC consider making the GSC administrative adder nonbypassable, "because such costs should be spread across all customers since they do not change when customers switch suppliers."

UI's request came in its semi-annual reconciliation of the Federally Mandated Congestion Costs and Generation Services Charge, originally filed in August.  However, as noted in an objection filed by Dominion Retail yesterday, the reconciliation proceedings, as the name suggests, have not before been used to re-allocate costs among the various rate components, whose design were addressed in generic market structure investigations (specifically, Docket No. 03-07-15, Establishment of The United Illuminating Company's Transitional Standard Offer).

"The semi-annual reconciliation of the GSC, BFMCC and NBFMCC was established in order to provide the Department an opportunity to review the revenues and expenses of each cost component and to provide the EDCs 'with a mechanism to adjust the charges that recover these costs.'  See Adjustment Clause Decision at 10.  The semi-annual reconciliation proceeding was not established to provide a mechanism for the EDCs to adjust the allocation of costs between the various rate components (emphasis by Dominion Retail)," Dominion Retail argued.

Dominion Retail said that the parties to the earlier rate design investigations were not provided notice that a change in rate design and cost allocation would be considered as part of UI's reconciliation proceeding.  

"Neither the Department's letter acknowledging the EDCs' semi-annual filings nor its hearing notice provided any indication that the Department would consider the re-allocation of costs as part of this proceeding," Dominion Retail said.

Addressing UI's proposal, Dominion Retail said that, "[a]ll of the costs recovered through the GSC Administrative Adder are associated with the provision of supply and retail access services to Standard Service and Last Resort Service customers."  

In particular, the GSC Administrative Adder is used for the collection of costs associated with, "retail access/settlement/procurement activities," Dominion Retail said, quoting UI's reconciliation filing.

Specifically, the GSC Administrative Adder is used for the recovery of costs associated with:

• Supply acquisition and portfolio management;
• Payroll and IT infrastructure and support for employees performing supplier relations, power contract administration and ISO load settlement; and
• Costs for Electronic Data Interchange infrastructure.

"If the EDCs are permitted to recoup these costs in their distribution rates while suppliers must reflect these costs in their retail supply offers, suppliers will be forced to compete against artificially depressed EDC generation rates," Dominion Retail said.

"Moreover, an improper allocation of supply related costs to distribution rates would result in customers who choose competitive supply paying duplicate costs and subsidizing the supply costs of those customers who choose to stay with the EDC supply option," Dominion Retail added.

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