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PSC Considering Whether To Modify Utility's Bypassable SOS Reconciliation Mechanism, Schedules Technical Conference

June 1, 2018

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

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The Public Service Commission of the District of Columbia scheduled a technical conference for June 7, 2018 concerning its review of the design of Pepco's bypassable SOS reconciliation mechanism

The Commission previously opened an investigation into the Potomac Electric Power Company’s (Pepco, or Company) use and operation of the Procurement Cost Adjustment (PCA) for Standard Offer Service. According to Pepco’s tariff, the PCA is defined as, "an adjustment made in order to true-up the rates [that] customers are billed to reflect the Company’s actual costs of providing SOS."

Pepco makes a true-up adjustment to the PCA at least four times a year and the true-ups revise the PCA based on actual and forecasted collections of SOS revenues by SOS type and the actual and forecasted cost of providing SOS.

According to the PSC, Pepco represents that it calculates the current monthly PCA using a deferred balance approach which is computed using all the costs and revenues for providing SOS that have been continuously accumulating since May 2005 when the initial tariff implementing SOS in the District of Columbia went into effect. Each month, the total monthly generation and transmission revenue collected from SOS customers is subtracted from the total monthly generation and transmission expenses incurred to provide SOS services. That number, which may be positive or negative, is then added to the previous month’s generation and transmission-related cumulative deferred balance going back to 2005. According to Pepco, this new cumulative deferred balance is then divided by a 12-month rolling sales forecast to develop the generation and transmission component of the PCA, resulting in a monthly debit from or a credit to SOS customers.

The PSC said that it is interested, among other things, in better understanding how the PCA operates and whether there are alternative methodologies for calculating the PCA to be billed to SOS customers. For example, Delmarva Power & Light Company calculates the PCA annually using one year’s data as opposed to a monthly calculation.

The Commission invited interested persons to participate in a technical conference to discuss and provide recommendations on whether there are alternative methodologies for calculating the PCA in the District of Columbia.

Formal Case No. 1134

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