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Pennsylvania Small Business Advocate Seeks PUC Order Prohibiting FirstEnergy Solutions from Collecting Ancillaries As Pass-Through on Fixed Contracts
The Pennsylvania Office of the Small Business Advocate has filed at the Pennsylvania PUC a new petition for a declaratory order requesting that the Commission issue an order declaring that FirstEnergy Solutions, "is not permitted to recover the costs billed to it by PJM for ancillary services costs as a 'pass-through event' under the terms of its fixed price contract with its customers."
OSBA further requested that the Commission direct FES to completely refund any ancillary services costs that it has recovered from customers to date, with interest.
OSBA's separate petition is necessary, in part, because a prior declaratory petition from a union regarding the fixed price contracts had focused on the pass-through imposed on residential contracts, but FES has announced that it would no longer be charging the pass-through to residential customers
OSBA noted that as PJM itself describes the synchronized reserves obligations placed on LSEs (the source of the pass-through costs), "FES, as a load-serving entity, was not required to meet its obligation for synchronized reserve power by purchasing synchronized reserve service from PJM's Synchronized Reserve Market, which is what FES apparently chose to do."
"FES could have chosen to meet the synchronized reserve obligation by using FES's own generation, or by purchasing the power to meet the obligation from a third party. However, if FES had chosen to meet its synchronized reserve obligation by supplying its own power or by purchasing the power from a third party, FES would not have been able to make the claim that PJM 'billed these additional costs to FirstEnergy Solutions.' Therefore, it would not have been able to claim to its customers that these costs were a 'pass-through event,' recoverable under the fixed price contract. It is true that PJM billed these costs to FES, but that is because FES bought the power from PJM rather than from another source. It is certainly not true that these costs were new or additional costs that were imposed upon FES by PJM, This is the crucial difference. The imposition of costs by PJM is the contractual language that triggers a pass-through event, and in this case, it simply did not happen," OSBA said.
"Now FES seeks to recover the costs of that synchronized reserve obligation as a 'pass-through event' surcharge under the terms of its fixed price contract, twisting the terms of that contract in an attempt to recover what is certainly not a 'new or additional' charge 'imposed' by PJM," OSBA said.
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May 16, 2014
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Reporting by Paul Ring • ring@energychoicematters.com
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