Energy Choice
                            

Matters

PUC Sets Annual Licensing Fees for Brokers

April 24, 2015

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

The Pennsylvania PUC issued a written order concerning its assessment of its oversight costs to electric generation suppliers (EGSs) and natural gas suppliers (NGSs), including brokers.

On Friday, EnergyChoiceMatters.com reported how the PUC will calculate costs related to retail market oversight, and how it will assign such costs to individual EGSs and NGSs through annual fees.

Once the total costs of regulatory oversight of EGS and NGS firms are computed based on direct and indirect costs, the Commission will base the individual annual fee on gross intrastate operating revenues.

"By basing the direct and indirect costs allocation and resulting annual fee to be charged to each individual NGS or EGS on the entity’s gross intrastate operating revenues, the Commission is ensuring that each entity is paying its fair share of such assessment. Entities with smaller intrastate revenues will pay less than entities with larger intrastate revenues. As such, this methodology reasonably avoids a 'flat' fee being charged to individual NGSs and EGSs, which vary greatly in size and intrastate revenues," the PUC said.

The PUC will set the annual fee by allocating the total oversight costs to individual EGSs and NGSs using the gross intrastate operating revenues currently reported by NGS and EGS firms to the Commission pursuant to 52 Pa. Code § 62.110 (relating to NGS annual reporting requirements) and 52 Pa. Code § 54.39(b) (relating to EGS annual reporting requirements).

The PUC noted that, of the $7.2 billion in annual intrastate revenues reported by the 370 active EGSs in their annual reports to the Commission for calendar year 2013, $5.6 billion (or approximately 78%) is attributable to only 18 EGSs. Similarly, of the $874.7 million in annual intrastate revenues reported by the 164 NGSs for calendar year 2013, $826.5 million (or 94%) is attributable to only 15 NGSs.

The PUC noted the unique nature of registered NGSs and EGSs who serve as "brokers." That is, NGS and EGS brokers may not necessarily report gross intrastate operating revenues for the Commission to use as a basis for determining their reasonable share of the annual fee. However, the PUC noted that it does incur costs associated with regulating brokers.

As such, the Commission will charge each individual NGS and EGS, including those who serve as brokers, a minimum $350 fee, regardless of reported gross intrastate operating revenues.

The total minimum flat fee collected from all NGSs and EGSs will be subtracted from the total cost of NGS/EGS regulatory oversight for the fiscal year. For instance, if the Commission collects a total combined minimum fee of $200,000 from all NGSs and EGSs, the total cost of regulatory oversight (direct costs plus indirect costs) will be reduced by $200,000 before the total fee allocation by gross intrastate revenues is calculated.

As such, each individual NGS and EGS will pay a minimum fee of $350 in addition to their portion of the adjusted (to remove the total collected minimum fee amount) total cost of oversight based on gross intrastate operating revenues.

Under this approach, an EGS broker reporting no gross intrastate operating revenues will pay the minimum fee of $350. However, an EGS reporting intrastate operating revenues will pay the minimum fee of $350 plus a portion of the total EGS oversight costs (based on gross revenues).

Docket M-2014-2448825

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