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Duquesne Light Proposes Program To Rely On "Limited" Number of Retail Suppliers To Meet Default Service Time of Use Obligation

October 2, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Duquesne Light has proposed a Time of Use program supplied by retail electric suppliers as a means of complying with the statutory requirement to offer a TOU option to default service customers, but would limit the number of suppliers able to participate in the program

The EGS-offered TOU program at Duquesne Light would be for a 12-month term (June 1, 2016, through May 31, 2017), with a one-time customer enrollment window of June 1, 2016 through July 31, 2016. The program would only be open to residential customers

Retail suppliers may retain any customers enrolled in the TOU program at the end of its term, but may not impose a termination fee on such customers if customers later switch.

Suppliers may participate in the program via rate ready or bill ready billing.

For rate ready billing, only one EGS will be selected by Duquesne Light to participate in the program. For bill ready billing, Duquesne Light will permit up to three EGSs to offer TOU service to customers under the program

Duquesne Light will select the EGS to offer service under the program via RFP on the basis of lowest average weighted price.

Duquesne Light said that it is providing for a limitation on the number of EGSs that can participate because if the number of customers who may agree to participate in the TOU program in 2016 is small then these customers could be spread over multiple EGSs which may not provide statistically significant information to the utility that can be used in designing future programs.

For both the rate ready and bill ready program, the "Summer TOU" timeframe would be defined as the period of June 1, 2016 through September 30, 2016. During the period of June 1- September 30, 2016, an EGS must maintain the same On-Peak rate(s) it offers to customers throughout the term. One rate will be charged for all hours starting October 1, 2016, through May 31,2017.

Specific peak hours could vary based on whether the EGS is participating in the rate ready or bill ready program.

For the rate ready program, Duquesne Light would require that On-Peak hours be defined as 2-6 PM weekdays, excluding PJM holidays, between June 1 and September 30, 2016. Off-Peak hours would be all hours between June 1 and September 30, 2016, and all hours between October 1 and May 31 would be around-the-clock/Non-Summer hours. These hours would all be priced using a Seasonal rate. The Seasonal rate would remain the same from October 1 through May 31. There would not be any difference in the rate during this period for on-peak or off-peak hours.

For the bill ready program, EGSs have flexibility in defining specific peak hours. However, there will be a limitation that the on-peak hours must be within the 12-7 PM time period for all weekdays, excluding PJM holidays, between June 1 and September 30, 2016. The EGS must consistently apply the same on-peak hourly definition during the entire Summer TOU period. For example, Wednesday afternoon from 12-7 cannot be declared "off-peak," and weekends cannot be declared "on-peak." Off-peak hours are all hours between June 1 and September 30, 2016 that are not on-peak hours. Off-peak hours cannot be changed once established by an EGS.

Duquesne Light said that it will provide a rate comparison website for customers to evaluate different rate options including default service.

If no approved EGSs submit qualifying bids, or if no bid is accepted, Duquesne Light will offer TOU default service for the applicable program year to eligible TOU customers.

Duquesne Light proposes to recover its costs for implementing the TOU program, which includes communications costs, TOU analysis costs, incremental billing costs and training costs, through its residential default service rates. Duquesne Light estimates that these costs will be approximately $512,500.

Duquesne Light said that, based upon the TOU participation rates of other EDCs, which have averaged 1-2%, Duquesne Light anticipates that a maximum of approximately 1,000-3,000 customers may participate in the TOU program for June 1, 2016, through May 31, 2017.

"If EGSs were required to pay for Duquesne Light's estimated costs of $512,500 to implement the TOU Program, this would result in an estimated TOU customer acquisition cost of $171 - $512," which Duquesne Light said augurs for its proposed allocation of costs to default service rates

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