Pa. PUC Approves 30% Decrease In Purchase Of Receivables (POR) Discount Rate
Pa. PUC Approves Settlement Which Drops Utility's Original Proposal Which Would Have Constrained Retail Suppliers' Ability To Hedge, Assign Capacity
Also Sets MFC, Bypassable Gas Procurement Charge
October 2, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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The Pennsylvania PUC adopted without modification a partial settlement in a rate case at Peoples Natural Gas Company LLC (the "Company" or "Peoples"), which includes the merger of rates of the Company’s Peoples and Equitable Divisions
The Purchase Gas Cost rates for the Company’s Peoples and Equitable Divisions had previously been consolidated
The settlement includes a new single supplier tariff for the Company, replacing the former Peoples and Equitable Division supplier tariffs
Of note in the proceeding is that Peoples Natural Gas Company LLC had originally proposed to change the capacity for Priority One Pool Operators who have a peak day demand of 2,000 Dth per day or less. Specifically, the Company originally proposed that Priority One Pool Operators who have a peak day demand of 2,000 Dth per day or less will not be assigned their pro-rata, or other agreed upon share, of pipeline and storage capacity. In lieu of such capacity assignment, the Company originally proposed to deliver the Pool Operator’s required daily gas supplies.
Direct Energy had opposed Peoples' original proposal to change the assignment of
capacity for Priority One Pool Operators with Peak Day Demand of 2,000 Dth per day, or less.
Direct Energy had raised serious concerns with this proposal
and the impact that it would have on the ability of natural gas suppliers (NGSs) to manage natural gas costs, to prevent the
volatility of prices, and to operate Priority One (P1) Pools.
Direct Energy had noted that the
Company’s proposal was not limited to smaller suppliers, nor was it voluntary in nature. "Even Direct
Energy, one of the largest energy providers in North America, has a peak day demand of less
than 2,000 Dth per day and, thus, would be impacted by the Company’s proposal," Direct Energy had noted
Direct Energy had noted that its P1 Pool is necessary to aggregate natural gas supplies to
satisfy the full requirements of its Priority One transportation customers.
Direct Energy had offered testimony explaining that, "Under the Company’s proposal, Direct Energy would not be assigned its agreed-upon
share of storage capacity. Instead, Peoples would deliver Direct Energy’s
required daily gas supplies to its transportation customers, bill the customers, and send Direct Energy a check for Peoples’ services. This proposal takes away any
control that Direct Energy has over its P1 Pool, in that it prevents Direct Energy
from being able to make future hedges and assign capacity on a long-term basis.
In this manner, Direct Energy would be unable to efficiently manage natural gas
costs, impacting its entire P1 Pool and potentially increasing costs for its
transportation customers. NGSs, including Direct Energy, need to be able to
manage their natural gas costs in order to build a market and to best serve their
The settlement adopted by the PUC only includes this change in the assignment of capacity as an option for suppliers, rather than making it mandatory
Specifically, under the adopted settlement, the Company’s existing pooling fees applicable to NP-1 and P-1 pools will be eliminated.
Under the adopted settlement, Peoples Natural’s proposal to deliver the required daily gas supplies for Pool Operators that have a peak demand of 2,000 Dth or less in lieu of capacity assignment is approved with the modification that it will be a voluntary option.
"By making this change voluntary, Peoples will be able to assist
smaller suppliers who want the assistance, without impacting larger suppliers and their ability to
manage natural gas costs," Direct Energy had said in a statement in support of a settlement
The adopted settlement also addresses the Merchant Function Charge, Gas Procurement Charge (GPC), and Purchase of Receivables discount. As the Division supplier tariffs have been consolidated into a single tariff, the same MFCs, GPCs and POR discounts will apply at both the former Peoples and Equitable Divisions
The settlement sets forth the Price to Compare for Priority 1 customers consisting of natural gas supply charges (a Commodity Charge and a Gas Cost Adjustment Charge ('GCA')), a Merchant Function Charge ('MFC') and a Gas Procurement Charge ('GPC') (Rider G)
The adopted Settlement Rates set forth the portion of the revenue requirement to be recovered via the MFC (2.49% of purchased gas costs for residential customers and 0.21% of purchased gas costs for small general service, medium general service and large general service) in Rider E and the GPC in Rider G.
The updated Total MFC for Residential customers is $0.1207 per Mcf, versus the current $0.0968 per Mcf
The updated Total MFC for SGS, MGS, LGS customers is $0.0102 per Mcf, versus the current $0.0246 per Mcf
The updated GPC is $0.0801 per Mcf. Previously, the GPC was $0.1055 per Mcf at both Divisions
The settlement updates the POR discount rate and MFC to match the current write-off factor used to derive the Company’s bad debt revenue requirement, and revises and updates the administrative rider that is designed to recover incremental POR implementation costs
The new POR uncollectibles discount component for residential customer receivables is 2.49%, down from the current 3.55% in the Peoples Division
The new POR uncollectibles discount component for commercial and industrial customer receivables is 0.21%, down from the current 0.77% in the Peoples Division
For all POR receivables, an updated administrative adder of 0.0213% will also be applicable to purchased receivables, down from the current administrative adder of 0.0417%
The administrative adder will be eliminated once actual costs of establishing the POR program are recovered
For comparison with respect to the former Equitable Division, the current total Equitable POR discounts are 1.5492% for residential customers and 0.5304% for commercial and industrial customers
Any shortfall in recovery of the uncollectible expenses and administrative costs of the POR program will not be recovered from sales customers.
With the consolidation of the supplier tariff into a single tariff, the rules governing the POR program will mirror the existing Peoples Division rules. The Equitable Division POR rules were substantively similar to the Peoples Division rules, though used different language.
The settlement was supported by Peoples Natural, the Commission’s Bureau of Investigation & Enforcement (I&E'), the Office of Consumer Advocate ('OCA'), the Office of Small Business Advocate ('OSBA'), Direct Energy Business, LLC, Direct Energy Services, LLC and Direct Energy Business Marketing, LLC (collectively 'Direct Energy'), Duquesne Light Company ('Duquesne Light'), Pennsylvania Independent Oil and Gas Association ('PIOGA'), Community Action Association of Pennsylvania ('CAAP'), Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania ('CAUSE-PA'), and Snyder Brothers, Inc., VEC Energy LLC and Snyder Armclar Gas Company LP ('collectively, 'Snyder Brothers').
The other parties in the proceeding, including Dominion Energy Solutions, Inc. ('DES') and Shipley Choice LLC d/b/a Shipley Energy ('Shipley') (collectively, the 'NGS Parties'), Equitrans LP, ('Equitrans'), Baker Gas, Inc. ('Baker Gas'), Marco Drilling, Inc. ('Marco'), MDS Energy Development, LLC ('MDS'), the Retail Energy Supply Association ('RESA'), and Peoples Industrial Intervenors ('PII'), did not oppose the settlement.