Energy Choice
                            

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Pa. PUC Considering Nonbypassable Charge, Longer Compliance Period To Mitigate Surprise Increase in RPS Obligation for Retail Suppliers

August 12, 2016

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

The Pennsylvania PUC is to issue a tentative order considering potential measures to mitigate a surprise increase in the non-solar Tier I obligations of retail suppliers and other LSEs, including the assignment of the increase to EDCs on behalf of all load, with costs recovered on a nonbypassable basis, or an extended compliance period for the increase

As was exclusively reported by EnergyChoiceMatters.com on July 11, the PUC had previously informed LSEs of an approximate seven percent increase in the otherwise anticipated annual non-solar Tier I obligations, due to the correction of past errors in calculating annual increases in the obligations, as such errors had resulted in the required increases not being fully put in place (see prior story here for specifics.

And as reported by EnergyChoiceMatters.com earlier this week, the PUC has already extended the compliance deadline for the true-ups of a portion of the non-solar Tier I obligations (and only such tier) represented by the unanticipated increase for the 2016 compliance year from September 1, 2016 to November 30, 2016, to permit further consideration of other mitigation measures (see August 10 story here for specifics.

The PUC yesterday adopted a motion from PUC Chairman Gladys Brown to issue a tentative order to begin consideration of such further mitigation measures.

Brown noted that, "Some stakeholders conveyed a concern with the adverse impact of this unanticipated increase in non-solar Tier I AECs on their business models."

Brown suggested that one remedial course of action would be for the Commission to leverage the purchasing power and billing functionality of the EDCs to ameliorate the market effects of the miscalculation. This process would require the Commission to determine for each EDC the number of adjustment AECs for procurement in its distribution zone for the 2016 AEPS compliance year. The EDC would then procure these credits either through (1) the over-the-counter spot market; or (2) a request-for-proposal process. The EDCs would then transfer the procured credits to all load serving entities (LSEs) operating in the respective EDC distribution zone during the 2016 AEPS compliance year on a load-weighted basis. The load weighted basis would coincide to the exact time frame as the 2016 AEPS compliance year, calculated as the LSE individual load divided by the total zonal load for that time frame. The EDC would recover the costs of this procurement through a preexisting non-bypassable charge, such as a competitive enhancement rider, solar photovoltaic alternative energy credit rider, or other tariff mechanism as deemed optimal by individual EDCs, so long as the charge is applicable to all rate classes. Each EDC would be required to provide a compliance filing detailing the specific implementation protocols for procurement and tariffed cost-recovery.

Another option is to delay the obligation to settle the adjustment amount associated with the non-solar Tier I credit obligation for an appropriate time period as discussed in the comments. This would give parties more time to procure the additional AECs necessary to meet the increase in the otherwise anticipated annual non-solar Tier I obligations. The appropriate time period can include compliance by the presently set November 30,2016 deadline, as extended in our August 9, 2016 Secretarial Letter, Brown said

The tentative order is to seek stakeholder comment on these two options, as well as any other proposals by stakeholders.

See Brown's adopted motion here

Commissioner Robert Powelson stressed that the miscalculation resulted from a third party vendor, and not the PUC Staff

Docket No. M-2009-2093383

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