PSC Staff Says Utility's Default Service Cost Proposal Places Retail Suppliers At Disadvantage
May 14, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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Staff of the Maryland PSC said in comments to the Commission that a proposal from Pepco to recover certain transmission costs would place retail electric suppliers at a disadvantage
Staff's comments address updates to Pepco's bypassable transmission rate.
Staff noted that Pepco's and Delmarva's proposed transmission rates do not include charges levied on Pepco from PJM for the unbilled and reallocated settlement transmission revenue from January 1, 2016 to June 1, 2018 (relating to assignment of regional transmission expansion costs, or RTEP).
Pepco had originally proposed not to modify their transmission rates for these charges and instead continue to collect these costs in the bypassable Procurement Cost Adjustment (PCA, reconciliation).
While both the transmission rates at PCA are bypassable, Staff said that using the PCA to recover the unbilled and reallocated settlement transmission revenue from January 1, 2016 to June 1, 2018 puts retail suppliers at a disadvantage
"These costs should be in Pepco’s transmission rates to ensure proper cost allocation and to not disadvantage retail suppliers. If these costs continue to be placed in the PCA then customer classes who should not get billed for transmission costs will pay some of the costs and customers who have high energy usage but low demand will be disadvantaged if they have both a kW and kWh SOS transmission charge. Additionally, the PCA spreads costs out over time, meaning customers will pay for all the costs eventually, but not as quickly as if the costs were included in transmission rates. Retail suppliers cannot do this, which puts them at a relative disadvantage, and is another reason to not place the charge within the PCA," Staff said
Staff estimates the impact to the average residential SOS customer’s bill will be $5.21 per month increase (for a period of 12 months) if included in transmission rates as recommended by Staff
"Staff discussed this issue with Pepco and it is Staff’s understanding that they have agreed to reverse the transmission charges related to the transmission settlement put into the PCA since August to undo the cross subsidization that has been occurring," Staff said
Staff made a similar recommendation related to Delmarva's proposed transmission rates. However, at Delmarva, the revised legacy RTEP transmission costs result in a credit to Delmarva, which the utility had initially proposed to credit via the PCA. Staff recommended that the credits be reflected in the transmission rates
The Office of People's Counsel favored continuing to collect the at-issue charges at Pepco through the PCA, over a period of two years.
OPC stated, "Staff raises two issues with maintaining the collection through the PCA. First, Staff notes that retail suppliers are not necessarily able to spread out the collection of federal PJM settlement transmission costs in the same manner as Pepco’s PCA. While it is not known how retail suppliers have been or will be managing these increased costs for federal transmission rates, any timing difference between the transmission charges faced by retail suppliers and the charges that are reflected in Pepco’s SOS rates will be temporary if the collection is continued through the PCA. Since the federal charges began being incorporated in the PCA in August 2018, they have not yet been fully reflected in SOS rates because the PCA spreads those costs out over 12 months. Full incorporation will be coming to an end this July. At that point, PJM will no longer be charging the settlement charges to companies serving load in the Pepco zone and the competitive impact will decline, eventually tapering to zero impact. At that point, collecting the federal charges through the PCA will work to the advantage of the retail suppliers that collected the transmission charges over a shorter period of time because there will still be costs in the PCA that are included in SOS rates; SOS rates would therefore be relatively less attractive than some retail supplier rates. Therefore, the impact on retail suppliers is not uniform, would be temporary, and would not be overly burdensome."