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PUC Revamps Formula To Assess Fees on Retail Suppliers/Brokers; But Maintains Use of Intrastate Revenues In Allocation

April 24, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

The Pennsylvania PUC adopted a motion from Chairman Robert Powelson and Commissioner Gladys Brown to issue a final order concerning the assessment of annual fees on electric generation suppliers and natural gas suppliers (which may include brokers), which maintains the use of a supplier's intrastate revenues in assigning it a share of total costs assessed to suppliers by the PUC.

A written order was not yet published.

However, according to the adopted motion from Powelson and Brown, the final order will modify a tentative order's proposal for the calculation of indirect PUC costs assigned to suppliers, which are used to develop their annual fees.

The tentative proposal had calculated indirect costs strictly based off of the intrastate revenues of NGSs and EGSs.

"We contend that this proposal does not meet the cost-causation relationship that is clearly required in Act 155. Increases in NGS and/or EGS revenues do not inherently mean the Commission will experience an increase in responsibilities and tasks related to these types of firms," Powelson and Brown said.

"To that end, we propose that indirect costs be calculated in the following manner (this example will be set for NGSs). NGS indirect costs will be calculated by multiplying the ratio of NGS direct costs to total Commission direct costs by the total Commission indirect costs," Powelson and Brown said.

In formula form, the calculation would read:

(NGS Direct Costs / Total Commission Direct Costs) * Total Commission Indirect Costs = Total NGS Indirect Costs

This formula would be the same for EGSs.

"Further, the total pool of indirect costs for the respective industries, as determined by our proposed formula above, would be allocated amongst individual NGSs and EGSs based on individual company intrastate revenues, as proposed in the tentative order," Powelson and Brown said.

"We believe this proposal appropriately relates the amount of indirect costs to the reporting of direct costs by Commission staff. As Staff increases/decreases time spent on supplier activities, the amount of indirect costs the Commission spends on Staff responsibilities related to the supplier oversight would logically increase/decrease. Under this proposal the indirect cost component will correlate with the direct time spent by Commission Staff on supplier activities, thus making our proposal compliant with the language of Act 155," Powelson and Brown said.

The motion from Powelson and Brown did not specifically address any change regarding the treatment of brokers versus what was proposed in the tentative order. Brokers fall within the definition of EGS and NGS, and the PUC's tentative order has sought alternatives regarding how to assess the fees on brokers.

Docket No. M-2014-2448825

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