Daily Email







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
Reporting by Paul Ring •

The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of

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 customers."

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.

NEW Jobs on
NEW! -- Channel Partner Sales Manager -- Retail Supplier
NEW! -- Sales Channel Partner Manager -- Retail Supplier
NEW! -- Sr. Energy Analyst -- DFW
NEW! -- Channel Manager - Retail Division -- Retail Supplier
NEW! -- Sr. Accountant -- Retail Supplier -- Houston
NEW! -- Senior Counsel -- Retail Supplier -- Houston
NEW! -- Operations/Settlement Analyst
NEW! -- Retail Energy Supply RFP Coordinator
NEW! -- Jr. Gas & Power Scheduler/Trader -- Retail Supplier -- Houston
NEW! -- Marketing Coordinator -- Retail Supplier -- Houston
Corporate Counsel - Retail Supplier
Senior Counsel - Regulatory - Retail Supplier
Sales Representative -- Retail Supplier

Email This Story


Copyright 2010-19 Energy Choice Matters.  If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.



Daily Email