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PSC Expresses Concern With Supply-Related Billing Charges In Distribution Rates, Will Further Examine Issue

PSC Adds Costs To Default Service Rate, Eliminates Optional Default Service Product

March 6, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

In an order on Washington Gas Light's rate case, the District of Columbia PSC expressed concern that billing costs related to default service supply may be embedded in WGL distribution rates, and said it would further examine the issue in Formal Case No. 1138 (a docket considering WGL's billing system and impact on suppliers).

"As an initial matter, during the evidentiary hearing, the Commission raised what we have determined is another pro-forma adjustment – the 50 cents Default Customer Billing Charges. The Commission questioned WGL’s 50 cent charge to competitive suppliers and questioned whether the Company was properly separating its distribution business from its supply business for ratemaking purposes as directed in Order No. 17132. WGL Witness Wagner confirmed that the Company charges $0.50 per account per month for suppliers who utilize the Company’s consolidated billing service. The Commission notes that WGL RMA 4D (Gas Procurement Cost) removes the PGC-related expenses, i.e., hedging, purchasing, and billing costs from the distribution cost of service. According to Witness Tuoriniemi, this adjustment removed the District’s share of the $772,000 of gas supply expenses from cost of service in this proceeding, which totaled $147.000," the PSC said

"With respect to the billing costs for the Default Customers, the Commission is concerned that supply-related costs may not have been entirely eliminated. WGL Witness Tuoriniemi testified that the 50 cent charge is the incremental cost it charges third party suppliers for adding the gas commodity to the bills of their customers. However, when questioned about whether Default Customers are charged the same 50 cents per bill for incremental billing costs, Witness Tuoriniemi testified that the cost is 'just embedded in the overall cost of service . . . it’s embedded in their distribution.' 747 Witness Tuoriniemi eventually states that there are no incremental costs for billing Default Customers. Based on the record in this case, we are unable to determine the actual billing costs to default customers with respect to the supply portion of their bills and therefore cannot determine whether there were any incremental billing costs for Default Customers," the PSC said

"In Formal Case No. 1093, the Commission made it clear that it would like all commodity-related costs to be separated from the distribution costs. It is our goal to ensure that non-distribution costs are not directly or indirectly embedded in the distribution cost of service and also that competitive suppliers ‘customers [sic] are not paying unnecessarily higher cost of billing services. Therefore, the Commission plans to further investigate whether WGL has removed all incremental costs to providing billing services to WGL’s Default Customers and will move this issue to Formal Case No. 1138," the PSC said

The PSC approved WGL's request to include in the bypassable Purchase Gas Charge (PGC) recovery of costs for the independent audit of the PGC. "We are persuaded that WGL has appropriately categorized these costs as non-distribution related costs which should be recovered from sales customers through the PGC," the PSC said

Also of note, the PSC in its rate case order found that WGL's offering of Interruptible Sales Service (ISS) should be eliminated, given competitive supply offerings

The PSC noted that there are very few ISS customers currently receiving services through Rate Schedule No. 3. A witness in the proceeding had testified that during the test year only 5.8% of WGL's average number of Interruptible Service customers in the District used Interruptible Sales Service under Rate Schedule 3.

"Additionally, the Commission notes that ISS customers have more than one choice of natural gas supplier. Given the small number of ISS customers and the choices that they have, the Commission determines that ISS should be eliminated," the PSC said

The PSC also ruled that Rate Schedule No. 6 (Small Commercial Aggregation Pilot) should be discontinued as there are no customers on this service.

Formal Case No. 1137

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