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Citing Higher Retainage Rate, Pa. PUC Commish Urges Parties to Be Mindful Of "Competitive Fairness"
In a statement regarding a recent order concerning the purchased gas cost filing of Peoples Natural Gas Company LLC - Equitable Division, Pennsylvania PUC Commissioner James Cawley expressed concern with the retainage rate as contained in a settlement agreement, noting its impact on retail suppliers, and urging parties to be mindful of "competitive fairness," even when retail suppliers do not actively participate in the PGC proceedings.
"While I commend the parties for reaching agreement on a number of complex issues, one aspect of the Settlement raises competitive concerns, and is inconsistent with past practices," Cawley said in a statement accompanying the PGC order.
"Specifically, the parties to the Settlement have agreed to maintain the 6% retainage rate, whereas estimated historical Lost and Unaccounted For (LAUF) and Company Use were 4.92%, 4.75%, and 5.24% over the last three years. In most cases, the 3-year historical average is used to establish the retainage rate charged to Natural Gas Suppliers (NGSs) to compensate the utility for its share of system loss and use of natural gas. In this instance, the 3-year average is approximately 5%. Another factor that may be taken into consideration when setting the retainage rate is adjusting this LAUF and Company Use for the NGS's share of discounted retainage by customers whose continued natural gas service is subject to alternative fuel competitive pressures. In the instant case, this adjustment for discounted accounts, based on the record, is approximately 0.15%. Therefore the record supports a reduced retainage rate of approximately 5.15%," Cawley said.
"It should be noted that NGSs did not participate in this proceeding, apparently to their detriment. This, however, should not result in uncompetitive outcomes to these proceedings. I urge the parties in the future to be more cognizant of competitive fairness," Cawley said.
Docket: R-2014-2403935
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August 27, 2014
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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
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