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PECO Says PUC Order Means Non-Shopping Customers Will Unjustly Subsidize Polar Vortex Rates of Retail Suppliers
Update, 2/14: This story has been revised based on responses from PECO. PECO's full statement appears at the bottom of the story:
PECO has sought rehearing of the Pennsylvania PUC's order extending shopping availability to the utility's electric Customer Assistance Program (CAP) customers, without any cap on retail supplier rates charged to CAP customers, as PECO argued in its request for reconsideration that non-shopping customers will be compelled to subsidize the competitive retail rates charged by electric generation suppliers (EGSs), with PECO specifically noting a recent news release from the PUC in which the PUC warned EGS customers that their variable rates may be "higher" due to recent cold weather and wholesale pricing.
Of note is that assistance to CAP customers is funded through charges on other customers. Currently, this means that non-CAP customers must subsidize the provision of service to CAP customers at default service rates.
However, under the PUC's order, retail suppliers will be allowed to serve CAP customers without any limitation on the retail supplier rate. PECO had proposed that retail suppliers only be allowed to serve CAP customers if their rates did not exceed the default service rate.
While the PUC flatly rejected this proposal in its recent order on the CAP program, PECO sought to follow the PUC's decision to its logical conclusion under today's retail market pricing.
In light of the record cold and volatility in PJM, EnergyChoiceMatters itself notes that many current variable rates significantly exceed the Price to Compare
"In the absence of PECO's proposed price limitation, all customers whether they choose not to shop for competitive generation supply or whether they enter into any EGS contract will still be responsible for paying a portion of the costs of any CAP customer contracts with [EGS] variable pricing," PECO said in a regulatory filing.
PECO, in the regulatory filing, pointed out that shortly after the PUC voted to allow CAP customers to shop, without any rate cap, the PUC issued a news release reminding customers who were, "using a competitive supplier to review their contract as cold temperatures and high demand have driven the wholesale price of electricity higher" and that "[c]ustomers with variable contracts or those with fixed contracts that have expired and were moved to a variable rate may see their prices increase."
Though PECO did not cite in the regulatory filing any specific retail supplier rates, Matters has seen variable rates as high as 25¢ charged to Pennsylvania customers just as a result of the December polar vortex (prior to the impacts of the more severe January pricing).
PECO did note in the regulatory filing that if 25% of PECO's CAP customers shopped and their EGS prices were (or became) 10% above PECO's Price to Compare on average, "an additional $1 million would need to be recovered annually from residential customers."
PECO said in the regulatory filing that since the additional costs would be recovered from non-shopping customers through the CAP subsidy, the PUC has not explained how its decision is consistent with its statutory duty to ensure that the Universal Service Fund Charge, a regulated charge to fund the provision of CAP service, is just and reasonable.
"Without a pricing limitation, rates charged by EGSs to CAP customers may be above, equal to or below PECO's residential PTC. In concluding that it lacks authority to limit the prices charged by EGSs in the Order, however, the Commission does not explain how the portion of any unregulated EGS prices above the PTC which will be paid by all PECO residential customers is consistent with the Public Utility Code's requirement that all rates be just and reasonable," PECO said in the regulatory filing.
Among other reasons, the PUC denied PECO's proposed price cap on retail suppliers' CAP rates because the PUC found that it lacks statutory authority over EGS rates.
PECO said in the regulatory filing that this finding was internally inconsistent with other provisions of the PUC's order. For example, PECO said in the regulatory filing that if the PUC lacked authority to set EGS rates, then compelling PECO to report on the prices charged by EGSs to CAP customers, as the PUC did, serves no purpose.
Moreover, PECO noted in the regulatory filing that the PUC required PECO to allow CAP customers to participate in the Standard Offer customer referral program, which mandates that EGSs offer a 7% discount off the Price to Compare.
"Although PECO's rejected CAP Shopping Plan limitation would only apply to those EGSs who voluntarily chose to serve CAP customers (and the Order still requires EGSs to register if they wish to serve CAP customers, see Order, pp. 22-23), the Commission appears to conclude that it only has authority to limit the prices charged to the exact same CAP customers by EGSs if those CAP customers choose to enroll through PECO's Standard Offer Program. The Commission does not provide a basis for this distinction," PECO said in the regulatory filing.
PECO also sought to delay the requirement to extend shopping eligibility to CAP customers from April 15 to June 15 due to backoffice limitations as well as to provide additional time for customer education.
In addition, PECO asked the Commission to eliminate the requirement that PECO publish its generation rate filing 75 days in advance of the associated Price to Compare taking effect instead of the current 45-day period, since this advancement was premised on EGSs having to match or beat the Price to Compare to serve CAP customers.
"An earlier GSA notification filing inherently causes the GSA projection to lose accuracy because certain supply cost data (e.g., spot-market prices) must be projected an additional 30 days in advance ... In the absence of the proposed price limitation, there is no need for the EGSs to have that additional preparation time, and moving the GSA filing to 75 days prior to effectiveness simply has the disadvantage of a loss of GSA accuracy with no countervailing benefit to customers or EGSs. The 75-day notification period should thus not be adopted in the absence of a price limitation," PECO in the regulatory filing.
Statement from PECO provided to ECM on Feb. 14:
"The February 13 Energy Choice Matters article regarding CAP Shopping in Pennsylvania includes portions of PECO's February 10 Petition for Reconsideration and Clarification with the Pennsylvania Public Utility Commission and reflects Energy Choice Matter's opinion of the information contained in PECO's petition. PECO strongly supports energy competition in Pennsylvania. Our proposed plan was developed to provide low-income customers with the benefits of the competitive energy market and also ensure price protections for these customers by providing discounts on their total bill and capping prices at PECO's default price. We have a long-standing relationship with the Pennsylvania Public Utility Commission and we look forward to continuing to work with the Commission and stakeholders to advance competitive energy markets for all customers in our state"
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February 13, 2014
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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