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Pennsylvania Expands Hourly Priced Default Service at PECO

December 5, 2014

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

The Pennsylvania PUC has adopted an electric default service plan at PECO for the period June 1, 2015 to May 31, 2017 which will lower the cutoff for hourly priced default service, upon the deployment of advanced meters.

The cutoff for hourly priced default service at PECO will be lowered to 100 kW from 500 kW under the PUC order, expanding hourly pricing to the medium C&I class.

Specifically, hourly pricing would be introduced to the medium C&I class by June 1, 2016, provided technical capabilities permit such transition. PECO commits to deploy and test the necessary systems changes to support an effective date of implementation for hourly priced default service for the medium commercial class no later than December 1, 2016.

Until hourly pricing is effective, non-laddered, six-month full requirements contracts would be used to serve medium C&I customers.

PECO is to use commercially reasonable efforts to implement and test billing and data management system changes necessary to implement hourly priced default service for medium commercial customers as soon as reasonably possible and no later than June 1, 2016 (when all medium commercial customers are expected to have interval meters).

If PECO determines that it cannot complete the implementation and testing of necessary systems changes in order to implement the hourly pricing transition by June 1, 2016, then PECO will confer with parties and the Office of Competitive Market Oversight (OCMO). If OCMO agrees that the hourly pricing transition cannot reasonably be completed by June 1, 2016, PECO will proceed with an otherwise scheduled March 2016 fixed price full requirements solicitation for medium commercial customers.

Procurement of default supplies for medium C&I customers was the only procurement issue contested in the case. The PUC adopted terms of a partial settlement regarding default supply for residential, small C&I, and industrial customers.

For residential customers, the default supply portfolio will reflect the following:

     • 96% of the load is supplied by a mix of products representing a transition to:

           -- 40% of this total served under 1-year fixed price full requirements products with delivery periods that overlap (laddered) on a semi-annual basis

           -- 60% of this total served under 2-year fixed price full requirements products with delivery periods that overlap on a semi-annual basis

     • The other 4% of the load is initially supplied by the pre-existing five-year block energy product purchased in DSP I and associated spot purchases; this block product expires on December 31, 2015, at which time the supply for this portion of the load is replaced by a fixed price full requirements product spanning 17 months (approximately 3% of the supply) and spot purchases (approximately 1% of the supply)

Small commercial default supply will continue to be supplied by one-year fixed price full requirements products, each laddered with six-month spacing between the commencement of contract delivery periods

PECO will continue to adjust default service rates for the residential, small commercial, and medium commercial classes (prior to hourly pricing) on a quarterly basis, but reconcile the over/under collection component of the GSA for those customers on a semi-annual basis instead of a quarterly basis.

Other litigated issues in the case revolved around treatment of certain PJM charges, and whether these should be assigned to generation suppliers, or PECO on behalf of all distribution customers.

The PUC ruled that PECO shall assume responsibility for RTEP, TEC/ECRC, and RMR charges for all distribution customers, and thus such costs shall be collected via nonbypassable charge. Retail suppliers will no longer be responsible for such charges. This has taken on new significance given that, as only noted by EnergyChoiceMatters.com, PJM's latest capacity performance transition proposal would rely on RMR contracts for the period 2015/16, rather than new capacity market procurements.

The PUC reversed an ALJ's recommendation that large C&I customers be granted a "carve-out" from the nonbypassable treatment of these charges.

The PUC ruled that Network Integration Transmission Service shall remain a part of the generation rate, and the responsibility of retail suppliers. The PUC rejected transferring NITS responsibility to PECO for all distribution customers.

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