ComEd Proposes Change in Application of PEA (Reconciled Default Service Costs)
March 31, 2014 Email This Story Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • firstname.lastname@example.org
Commonwealth Edison has proposed to change how the Purchased Electricity Adjustment (PEA) is applied.
The PEA reconciles ComEd's default service rates with actual costs. It is a bypassable rate, but is not reflected in the official Price to Compare. One of the problems in the current market is attempting to develop an apples to apples comparison of rates given the PEA.
Given that ComEd relies heavily on non-load following products, the PEA balance has been quite volatile. An amortization process was added to smooth out the volatility; however, this has had the consequence of creating accumulations of the PEA which, as they grew larger, has a more and more significant impact on customer shopping decisions.
"This accumulation, if not periodically 'reset' can cause persistent adjustments which may become material to customers' decision making, and can cause the prices for electricity being paid by bundled service customers under Rider BES [Basic Electric Service] to deviate from the market prices of energy reflected in the procurement process and posted as the charges under Rate BES. This is particularly true at the start of a new procurement period when many customers are making supply decisions and accumulated adjustments from prior periods will apply to the upcoming procurement year. This effect can distort price signals being sent to customers, reduce price transparency, and complicate comparisons between ComEd's bundled service rate and the charges of competitive suppliers," ComEd said.
To address this, ComEd is essentially proposing that, at the end of an annual June to May delivery period, the PEA shall be reset to zero, with any remaining PEA amount rolled into the base default service rates for the next year.
Specifically, each year, in the initial determination of PEPs [Purchased Electricity Prices] used to compute Retail Purchased Electricity Charges that are expected to be applicable beginning with that year's June monthly billing period, any cumulative balance of deferrals associated with the computation of previous Purchased Electricity Adjustment (PEA) Factors existing at the end of the most recent month for which applicable data are available prior to the date such PEPs are determined shall be included in the determination of such PEPs. Such balance shall continue to be reflected in PEPs and their associated Retail Purchased Electricity Charges that are applicable through the May monthly billing period following such June monthly billing period
ComEd asked that the new PEA process be approved for the June 1, 2014 delivery year. ComEd has reviewed the proposed revision with stakeholders and the Policy Division, Rate Department, Accounting Department, and Office of Retail Market Development of the Commission's Staff, as well as the Retail Energy Supply Association (RESA) and the Illinois Competitive Energy Association (ICEA). ComEd has also previewed the specific tariff language proposed with the Rate Department of Staff. ComEd averred that none of these parties has expressed an objection to the proposed change.