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Pa. PUC Issues Draft Mechanism To Comply With Utilities To Offer Time Of Use Generation Rate To Default Service Customers Under Court Remand

December 5, 2016

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

The Pennsylvania PUC issued a secretarial letter setting forth a proposed mechanism for PPL, and more broadly other EDCs, to comply with their obligation, as default service provider, to offer a Time of Use generation rate option to default service customers which would still rely on a retail supplier to supply the default service TOU plan

A court previously rejected the PUC's approval of a mechanism that allowed multiple retail suppliers, with individual prices set by the EGSs, to offer TOU plans to PPL customers as fulfilling the statutory requirement that the default service provider offer a TOU plan, as the Court held that "[t]he Competition Act requires PPL to offer Time-of-Use rates to its customer-generators. PPL may not satisfy this burden by transferring it to Electric Generation Suppliers."

The PUC asked parties to comment on the efficacy and legality of the following draft TOU design, which would still rely on an EGS to supply the TOU program. However, only one EGS would be selected, rates would be uniform for all TOU default service customers, and rates would be set via an auction (similar to wholesale default service procurements).

Under the draft TOU design, an EDC will hold annual auctions to contract with a single supply vendor. The vendor’s responsibility will be to supply the electricity commodity within the design framework of the TOU program. Eligible vendors will need to meet the following criteria:

• Be a Commission licensed Electric Generation Supplier

• Be bill-ready capable

• Provide load-weighted net-metering service as a TOU vendor

• Agree to waive early termination fees in its provision as a TOU vendor

• Contract as the EDC’s TOU vendor for the one–year period commencing June 1st and continuing through May 31st

Similar to fixed rate default service auctions with wholesale electric suppliers, the EDC may design additional requirements for potential vendor EGSs to become eligible auction participants. This may include, but not be limited to, financial integrity and operational qualifications, the PUC proposed in the draft

The TOU product design will entail an on-peak period from 2 p.m. to 6 p.m. year round, except during weekends and holidays where there will be no on-peak hours. The on-peak price will be 1.5 times the off-peak price. Auctions will be ranked based on the lowest off-peak price bid. The lowest off-peak price bidder will win the vendor contract for the ensuing 12-month period beginning June 1st, the draft provides

The TOU rate option will be available to all default service procurement class customers who are not eligible for the EDC’s spot-market only default service portfolio. Any existing Commission-approved limitations on customer shopping shall apply to this TOU product option as shall all consumer protections contained in the Commission’s regulations, the draft provides

The EDC will be in charge of the main marketing of the program, which will include targeted mailings and a dedicated website. The vendor may also market the program so long as its marketing complies with all pertinent Commission Orders and Regulations, the draft provides

Both the EDC and the supply vendor shall be capable of enrolling a customer in the TOU program, the draft provides

If the EDC fails to obtain any bids it shall apply a contingency on-peak/off-peak multiplier application to its Price-to-Compare (PTC) for the ensuing 12-month period beginning June 1st, the draft provides. The same on/off-peak hours shall apply as described above. The multipliers will be:

• Off-peak: PTC * 0.82

• On-peak: PTC * 1.28

Any net-metered customers enrolled in this contingency TOU rate shall be reimbursed on a load-weighted basis. The EDC shall file a tariff supplement to effectuate this contingency mechanism, the draft provides

The Commission further invited comments on alternative designs that may more efficiently foster TOU participation while satisfying the requirements under Act 129 and the court's order.

This may include proposals to utilize wholesale energy suppliers as the TOU vendor.

Docket M-2016-2578051

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