Pepco, Delmarva Plan to Raise SOS Rates to Reflect Higher Working Capital Costs Effective
February 1 Email This Story January 19, 2011
Pepco and Delmarva Power plan to increase Maryland SOS rates effective February 1,
2011 under their proposed rates for higher cash working capital cost recovery as
originally filed in March 2010, arguing that the tariffs may take effect by operation
of law (Cases 9226 & 9232).
The PSC set the cash working capital issues, as well as broader issues regarding
the components of the SOS administrative charge, for hearing. The hearing was held
in September, and post-hearing briefing was completed in November.
The utilities argued that the tariffs and applicable rates were not properly suspended
by the Commission when originally filed on March 9, 2010. However, even if they
had been, the utilities said that the suspension period would likely have been 150
days, the maximum time initially permitted by law, from June 1, 2010 (the original
effective date). A 150-day suspension would have expired in October, and the utilities
noted that 231 days have elapsed since June 1, 2010.
Statute provides that the Commission may suspend filed tariffs for a period beyond
150 days if it concludes it cannot complete the proceedings in that timeframe; however,
the utilities noted that no such additional suspension notice has been issued.
However, in July 9 letter orders to each company, the Commission ruled that the tariffs,
"were prematurely filed and, therefore, the Commission rejects them" (see 7/12).
Although Pepco and Delmarva cite the July 9 letter orders in their statements of
intent to implement the higher rates, they do not clearly address why the issue of
suspension, and automatic operation of law, come into play if the July letter orders
rejected the tariffs outright.
Rather than acknowledging the outright rejection (rather than a suspension), the
utilities summarize the July letter orders as orders in which, "[t]he Commission
stated that it would not permit the Company to put the rates into effect because
the Commission had previously determined that the scope of the proceeding should
be expanded." Furthermore, the utilities describe the July letter orders as "delegat[ing]
the matter to the Hearing Examiner's division," although by this time, the tariffs
had already been set for hearing, and the July letter orders only reference this
prior delegation, and do not suspend and delegate the tariffs for further review
and action as intimated by the utilities.
Pepco said that since March 9, 2010, it has not collected over $5 million in actual
cash working capital costs associated with providing SOS. Delmarva reported that
it has not collected about $2 million in actual cash working capital costs since
March 9, 2010.
Under updated tariffs filed by Pepco to reflect the inclusion of additional cash
working capital costs to current SOS rates, each residential SOS rate, for both the
October 2010 through May 2011 and the June 2011 through September 2011 periods, would
increase by 0.094¢/kWh.
Each Pepco Type I SOS rate, for the periods through September 30, 2011, would increase
by 0.112¢/kWh. Each Pepco Type II SOS rate, for the period through February 28,
2011, would increase by 0.102¢/kWh.
For Pepco hourly priced customers, a new cash working capital cost component of 0.072¢/kWh
would be added to the pricing calculation.
At Delmarva, each residential SOS rate, for both the October 2010 through May 2011
and the June 2011 through September 2011 periods, would increase by 0.0595¢/kWh.
Each Delmarva Type I SOS rate, for the periods through September 30, 2011, would
increase by 0.0862¢/kWh. Each Delmarva Type II SOS rate, for the period through
February 28, 2011, would increase by 0.0922¢/kWh.
For Delmarva hourly priced customers, a new working capital cost component of 0.0724¢/kWh
would be added to the pricing calculation.
Clean and redlined versions of the new SOS rates which would result from these additions,
barring an order from the PSC either directing the utilities to cease implementation
of the new rates, or finding that the utilities' operation of law argument is in
error, are available in the Pepco and Delmarva filings, linked below:
As previously reported, Pepco and Delmarva (as well as Baltimore Gas & Electric in
a separate case) are seeking higher cash working capital recovery through SOS rates
due to the move to weekly settlements in PJM, as well as generally higher commodity
rates versus when the level of cash working capital recovery was first established.
Other parties, such as the Office of People's Counsel, are seeking to remove the
bypassable "return" component included in certain SOS rates, and are seeking to modify
the Administrative Credit so that it is paid only to SOS customers, and not all distribution
customers (see 8/10).