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Recommended Order Would Set PECO Default Service Procurement, Design, Address Objections Related to CAP Shopping, Nonbypassable Charges

October 5, 2016

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

A Pennsylvania ALJ has issued a recommended decision concerning PECO's electric default service plan for the period beginning June 1, 2017 that would adopt, without modification, a settlement filed in the case, and which would dispose of contested issues including shopping by Customer Assistance Program (CAP), and nonbypassable recovery of certain non-market-based PJM charges

In the proceeding, consumer advocates had proposed that PECO be required to only allow CAP customer to shop via a new CAP-specific Standard Offer Program (CAP-SOP), which, among other things, would require retail suppliers to offer a rate below 7% of the currently effective PTC during a 12-montht term (with EGSs required to adjust their rates to maintain a 7% discount as the PTC changes). The proposal is similar to a CAP-SOP program recommended by an ALJ for approval at PPL (with certain changes regarding EGS rates, click here for story)

However, the ALJ found that CAP issues were not properly before the PUC in the PECO default service proceeding, and would decline to adopt sought changes as part of the default service order.

The ALJ noted that PECO separately has filed an updated plan to allow CAP shopping in light of a court remanding the issue to the PUC (click here for details), and the ALJ said that CAP issues at PECO should be addressed in such CAP-specific proceeding.

The ALJ did state that consumer advocates did make "valid points" about CAP.

Nevertheless, the ALJ noted, "PECO did not submit a CAP Shopping Plan in this proceeding. Based on the Secretarial Letter, PECO is filing its plan in another proceeding. It is important that PECO be allowed to present its plan before a ruling is made. Furthermore, if the undersigned ruled on the proposals submitted in this proceeding, it might conflict with a ruling in the other proceeding. The undersigned recommends that PECO’s proposal to file its plan in another proceeding be approved. Consequently, the undersigned will not address the CAP Shopping issue in this proceeding."

The settlement provides that 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).

In contrast, 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.

Noble Americas Energy Solutions had objected to the nonbypassable treatment of the PJM charges described above, arguing that nonbypassable treatment of such charges interferes with an EGS's rights as a PJM LSE to directly bill their shopping customers for their PJM transmission charges in connection with customized product and service offerings.

The ALJ found that Noble failed to present evidence to deviate from the previously approved treatment of the charges as addressed in PECO's prior default service plan.

Other terms of the settlement, for default service for the period June 1, 2017 through May 31, 2021, were not contested and were recommended for approval. As previously reported, the settlement dropped 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.

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

Docket No. P-2016-2534980

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