Report: Retail Suppliers Crediting $50 Million To Illinois Customers From FERC RTEP Settlement, Other Suppliers To Lower Future Rates

September 4, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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Staff of the Illinois Commerce Commission's Office of Retail Market Development filed a report concerning its review of retail supplier actions relating to a FERC settlement concerning regional transmission enhancement plan (RTEP) costs in PJM that generally resulted in lower costs to LSEs in the Commonwealth Edison transmission zone

EnergyChoiceMatters.com had exclusively first reported that Staff had sought data from retail suppliers concerning whether suppliers would pass-through such transmission cost refunds to customers

Staff issued data requests to 79 alternative retail electric suppliers (ARES) concerning their treatment of the lower PJM RTEP costs. A total of 77 ARES responded to the data request. Of the 77 responses received, 70 ARES provided complete responses.

"Based upon the responses received, amounts credited by PJM to individual ARES ranges from $600 to $12-$20 million. Five ARES stated they had not received any credits and three ARES stated that, in their cases, the credit nets out to a negative amount throughout each ARES’ certified service territories in PJM," Staff reported

"Other responses suggest that there is little commonality in individual ARES’ plans to treat or dispose of the credit. A majority of the ARES are crediting some or all of the credit to customers, either through a credit on the bill, a refund check, or embedding the refund into rates, thereby reducing them. 27 companies intend to distribute the refund to customers by incorporating the credits into their rates. In aggregate, the total amount that is to be refunded or credited back to customers within the ComEd territory is estimated to be $50,389,021.01.," Staff reported

"The rate adjustment will vary from adjusting current variable contract rates to future fixed contract rates. Of the 77 ARES responding, 15 companies are providing or have provided 100% of the refund directly to customers. Five companies are providing or have provided an amount ranging from 51% to 99% of the total credits received to their customers. Six companies are providing or have provided between 10% and 50% of total sums credited to their customers, and four companies are providing or have provided less than 10% of such sums to their customers," Staff reported

"Not all the ARES are providing a credit to customers; 28 companies or 35.4% of all companies responding are not providing a refund or credit in any amount. Of these 28, two have stated that they intend to use the funds in future offers or programs, and nine will incorporate funds into general costs, and 12 companies declined to disclose or specify how the funds would be allocated. Six companies state that they intend to incorporate the funds into their cost curve, which are used to set prices for prospective and existing customers and will result in lower costs to serve customers in the ComEd territory," Staff reported

"Several ARES are also declining to provide credits to customers for reasons other than incorporating the funds into rates or costs. Three ARES that responded only serve their own load; therefore, the credits will be applied directly to their own bill. One company stated that the credits do not affect its customers and another company stated that it has only has four customers in Illinois, so the aggregate refund is likely to be minimal. Several ARES stated they either did not receive notification of the credit or any credits from the settlement, and so have nothing to pass along to their customers." Staff reported

"Several ARES identified considerations not directly related to the information requested by Staff. A number of ARES that operate in the ComEd service territory also operate in other jurisdictions throughout the PJM footprint. The credits from the settlement are realized by increasing transmission rates in other parts of the PJM interconnection. Therefore, while an LSE may receive a credit based on the load it serves in the ComEd service territory, in total the refund may net out to a smaller or even negative amount due to the fact that the ARES serves greater load in those parts of PJM that are funding the credit through higher transmission rates. Companies raised this in their responses to the Commission apparently as a reminder that they operate in other states and that the settlement could create an overall increase in costs for the company," Staff reported

"NRG Energy Inc. filed a response on behalf of its four retail affiliates. NRG’s response provided no information on how the PJM credits would be utilized. These affiliates include Reliant Energy Northeast LLC, Green Mountain Energy Company, Energy Plus Holdings LLC, and XOOM Energy Illinois LLC. NRG states that there is nothing in the FERC order that supports the Commission’s belief that the Settlement was intended to benefit end-use customers within the ComEd Service territory. The company also states that the Commission is 'attempting to treat ... [ARES] as a public utility despite the fact that ARES are not utilities.' As mentioned in the Commission’s December 4, 2018 Initiating Order, '[t]he Commission is cognizant of the fact that it does not regulate rates charged by ARES, and is not seeking to do so here. Nonetheless, as a party to the Settlement, the Commission has an interest in determining the extent to which savings realized through the Settlement are reaching the customers in the ComEd service territory who were intended to benefit from the Settlement,'" Staff reported

"A number of other companies raised concerns similar to NRG Energy’s response, although, unlike NRG Energy, these ARES also submitted responses to the Data Request. Many of the companies take the view that FERC’s order does not support the Commission’s position that the settlement was intended to benefit customers in the ComEd service territory. The companies state that they are only responding in the spirit of cooperation or good faith," Staff reported

"Overall, Staff saw a 97.5% response rate from the ARES that were named in the Docket. The Commission would like to thank the ARES for their cooperativeness and responsiveness to the Data Request," Staff reported

Docket 18-1774

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