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Settlement At PECO Adds 24 Month Contract For Small C&I Default Service For Price Stability, Drops Proposal For Five-Year Residential Contract

August 5, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A settlement among certain parties in PECO's default service procurement plan proceeding for the period June 1, 2017 through May 31, 2021 would drop an earlier proposal to use a five-year contract for a slice of residential supply, and would adopt the use of 24 month contracts for half of the small C&I portfolio.

Under the settlement, for the residential class, PECO would continue to procure a mix of one-year and two-year fixed-price full requirements (FPFR) contracts for approximately 96% of the default service supply, with one-year contracts comprising approximately 60% of this portfolio, and two-year contracts comprising approximately 40%. There would be six months of spacing between the commencement of contract delivery periods for this portfolio.

Originally, PECO had proposed to supply the remaining approximately 4% of the default service supply portfolio for the residential class with a mix of five-year fixed-price full requirements products (approximately 3.2%) and spot energy purchases (approximately 0.8%). The five-year products was proposed to consist of two tranches (each supplying 1.6% of the residential class default service load) of five-year fixed-price full requirements products (for June 2017 through May 2022 delivery)

The settlement drops this proposal for five-year contracts. Instead, the remaining approximately 4% of residential class supply currently obtained through 17-month FPFR products (and residual spot-market purchases), will be replaced with 24-month FPFR products (approximately 3.2% of residential default service load) and spot purchases (approximately 0.8%) directly from the energy markets operated by PJM. These 24-month FPFR products will be procured in the scheduled Spring 2017 procurements, and again in the scheduled Spring 2019 procurements

For all full requirements contracts, contracts will be procured approximately two months prior to the beginning of the applicable contract delivery period

Click here for a schedule of procurements and delivery periods under the settlement

For small commercial customers (100 kW or smaller, plus lighting customers on schedules AL, POL, SLE, SLS and TLCL), the settlement would provide that PECO will supply such customers using an equal share of competitively bid, laddered one-year and two-year FPFR products

This is a departure from the current small commercial default service supply plan, which relies exclusively on laddered 12-month contracts. PECO originally proposed the addition of 24 month contracts to the small commercial portfolio to increase price stability

For residential and small commercial customers, default service rates will continue to change quarterly and over/undercollections of default service costs will continue to be reconciled on a semi-annual basis. The projected GSA for each quarter, which forms the basis of the Price-to- Compare (PTC), will be filed by PECO 45 days before the start of each quarter.

PECO will continue to be responsible for and recover the following PJM charges from all distribution customers in PECO’s service territory through its Non- Bypassable Transmission Charge: Generation Deactivation/RMR charges (PJM bill line 1930) set after December 4, 2014; RTEP charges (PJM bill line 1108); and Expansion Cost Recovery charges (PJM bill line 1730).

During the default service plan's term, PECO will continue to be responsible for and recover Network Integration Transmission Service (NITS) and Non- Firm Point-to-Point Transmission costs associated with default service customers only through its unbundled, bypassable Transmission Service Charge.

Large C&I (above 100 kW) default service customers will be subject to hourly pricing

Left to litigation is the issue of shopping by Customer Assistance Program (CAP) customers and any restrictions on such customer shopping.

The settlement remains subject to PUC approval

Signatories to the settlement include PECO Energy Company, the Pennsylvania Public Utility Commission’s Bureau of Investigation and Enforcement, the Office of Consumer Advocate, the Office of Small Business Advocate, the Philadelphia Area Industrial Energy Users Group and the Retail Energy Supply Association

Docket No. P-2016-2534980

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