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Pa. PUC Staff Opposes "Artificial" Proposed Bypassable Adder To Default Service Rates

Says Proposed Adder Violates Statute, Obligation Of Default Service Provider

May 18, 2018

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

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The Pennsylvania PUC's Bureau of Investigation and Enforcement (I&E) is opposing a proposed bypassable adder to default service rates at the FirstEnergy Pennsylvania EDCs, stating that the proposal, and similar alternative proposals, "unfairly target the Companies' residential default service customers for application of an artificial and unsupported charge."

As first reported by EnergyChoiceMatters.com, the FirstEnergy Pennsylvania EDCs are proposing, "a bypassable retail market enhancement rate mechanism," for residential customers as part of their default service plan, "in order to incent residential retail shopping," the EDCs have said

The proposed PTC Adder (retail market incentive adder) is $0.00144 per kWh for the June 1, 2019 through May 31, 2023 DSP term

In a post-hearing brief, I&E said that, "I&E opposes both of the bypassable retail market enhancement rate mechanisms proposed in this proceeding, identified as the PTC Adder proposed by the Companies, and the retail rate mechanism proposed by RESA. In both cases, these proposals unfairly target the Companies' residential default service customers for application of an artificial and unsupported charge."

"Each of these proposals violates the Public Utility Code's ('Code'), prohibition against rate discrimination, violates fundamental ratemaking principles, and fails to acknowledge customer choice," I&E said

I&E said that the adder, "is not predicated on the cost of generation."

"[T]he PTC Adder is calculated arbitrarily and it is being assessed solely to influence residential default customers' decisions to enter the retail market. I&E avers that there is no evidence that assessing the PTC Adder to the Companies residential default service customers would in any way promote their Companies' provision of safe and reliable service to those customers. Furthermore, the PTC Adder is not in any way tied to the Companies' cost of providing residential default service. Instead, the PTC Adder is simply an arbitrary charge that the Companies unilaterally determined was necessary to incent these customers to enter the retail shopping market," I&E said

I&E said that, as set forth in the Code, EDCs are required to provide default service electric to customers at no greater cost than the cost of obtaining generation, and, as such, the adder conflicts with such requirement

"I&E avers that the Companies' PTC Adder proposal also violates Section 1304 of the Code," which states in relevant part that, "No public utility shall establish or maintain any unreasonable difference as to rates, either as between localities or as between classes of service."

"In this case, there is no nexus of connection between the PTC Adder and the Companies' cost of serving the single class of customers that the Companies have decided to target, residential default service customers," I&E said

An I&E witness said that the Companies' proposal infringes upon customers' rights to make choices about their electric supplier.

"It is not the Companies' responsibility to influence residential customers to shop for electricity, as it is the customers' option to choose an alternate supplier, and they should not be penalized for remaining with their default supplier," I&E's witness said

"Therefore, the Companies' proposal to penalize them with the PTC Adder charge in an attempt to incent them to enter the market fails to respect these customers' informed decisions, unfairly punishes them for making a permissible electric choice, and therefore it should be denied," I&E said

I&E also said that there was no evidence that imposing the PTC adder upon residential default service customers would have an identifiable effect on customer shopping rate.

I&E also opposed a similar adder proposed by RESA

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