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Settlement Would Retain 6-Month Fixed Default Rate at Duquesne Light, Require Unbundling Proposal

September 16, 2014

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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

A partial settlement in Duquesne Light's default service proceeding for the period beginning June 1, 2015 would maintain the use of six-month fixed pricing for residential default service.

Specifically, under the settlement, Duquesne Light's initially proposed mechanism for procuring and pricing residential default service for June 1, 2015 to May 31, 2017 would be adopted. For residential customers, Duquesne Light would supply customers through 12-month, laddered full requirements supply contracts from third party suppliers obtained through semi-annual competitive requests for proposals. There will also be one 6-month full requirements contract at the beginning of the default service period.

The table below shows the RFP Date, Procurement Amount, Contract Term and Delivery Period for each residential procurement under the settlement:

Date       Amount    Term       Delivery Period
Oct  2014*  50%    6 Months   Jun 2015 - Nov 2015
Mar  2015   50%   12 Months   Jun 2015 - May 2016
Sept 2015   50%   12 Months   Dec 2015 - Nov 2016
Mar  2016   50%   12 Months   Jun 2016 - May 2017
Sept 2016   50%   12 Months   Dec 2016 - Nov 2017

*Note: Approval for this procurement obtained independently of default service proceeding

The settlement provides for semi-annual reconciliation of the residential default service costs and revenues.

Issues regarding the default service procurement plans for Small Commercial & Industrial, Medium Commercial & Industrial, and Large Commercial & Industrial customers are reserved for litigation.

Under the settlement, Duquesne Light agrees, in the earlier of its next general rate increase filing or its default service plan filing for the period commencing June 1, 2017, to propose to unbundle from base rates costs associated with the provision of default service, including default service proceeding and procurement costs, and cash working capital with regard to default service procurements. Duquesne Light will simultaneously propose a mechanism for recovery of such costs from default service customers. All parties reserve the right to comment on and oppose such proposal.

The settlement calls for a collaborative to discuss cost recovery for the continued operation of Duquesne Light's standard offer customer referral program (SOP). Originally, Duquesne Light had proposed increasing POR discount rates to recover costs of the program. The collaborative shall not address or consider any proposals to recover SOP costs from EGSs that do not participate in Duquesne Light's POR program or from Medium or Large Commercial and Industrial customers (i.e., customers with cumulative demands equal to or greater than 25 kW) that are not eligible for the SOP program or to recover SOP costs through an increase to the Medium C&I Purchase of Receivables discount rate.

Duquesne Light will continue its current standard offer referral program (with a $10.28 customer enrollment fee for participating EGSs which became effective September 1, 2014) until it is replaced by a revised SOP approved by the Commission.

The settlement would also adopt Duquesne Light's proposed Time of Use program, for one year only, under which a single EGS would be selected to provide TOU generation service to default service customers. A collaborative would be established to consider adopting a TOU program allowing for multiple EGS participants for the period starting June 1, 2016.

The partial settlement, which is not opposed with respect to the issues contained therein, was signed by, among others, Duquesne Light, the PUC's Bureau of Investigation & Enforcement, the Office of Consumer Advocate, and the Retail Energy Supply Association.

With respect to contested issues, RESA is seeking a mix of 3, 6, and 12-month contracts for small C&I default service, instead of the near-exclusive reliance on 12-month contracts for small C&I customers proposed by Duquesne Light.

For medium C&I customers, 25 kW to 300 kW, Duquesne Light proposed 100% non-laddered quarterly contracts. RESA supports this proposal, except that RESA proposes to lower the hourly pricing cutoff to 100 kW, as envisioned by the PUC's end-state retail market order. The Office of Small Business Advocate opposes non-laddered quarterly pricing for medium C&I customers, preferring the current use of six-month contracts.

Also reserved for litigation is the issue of the party responsible for non-market-based PJM charges, and whether these charges should be bypassable or nonbypassable.

Docket P-2014-2418242

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