Pennsylvania PUC Says Frequency Of Price To Compare Changes Needs To Be Reviewed In EDCs' Next Default Service Cases

Will Review Whether A 6-Month PTC Change Interval Would Have Provided, "More Stability"

EDCs Must Assess Benefits Of 6-Month Vs 3-Month Price To Compare

Identifies "Need" To Consider Long-Term Default Service Contracts Further; Directs EDCs To Show Compliance With Prudent Mix Standard In Next Proceedings

Directs EDCs To Consider EV-Time Of Use Default Service Rate Options

Closes Investigation That Reviewed Wholesale Settlement, Default Service Cost Allocation ("Smart"/Dynamic Rates) With "Guidance" To EDCs

January 23, 2020

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The Pennsylvania PUC has closed its investigation of default service with respect to various wholesale settlement and cost allocation issues, with the issuance of guidance to the EDCs

In doing so, the PUC directed that the frequency of Price to Compare changes should be reviewed in the EDCs' next default service proceeding, and whether a 6-month PTC change interval would have provided, "more stability"

The PUC also said that long-term contracts for default service "need" to be reviewed further, and directed that each EDC's next default service rate filing show compliance with the 'prudent mix' standard required by statute.

As first reported by EnergyChoiceMatters.com, the default service investigation was opened due to concerns from some Commissioners that the manner in which default service, with its plain vanilla, flat rate, was not rewarding customers' behavior that reduced wholesale costs

As a result, the PUC opened a review of wholesale cost allocation and default service rate design and procurement reforms due to the installation of smart meters, as Commissioner Andrew Place expressed concern that non-shopping customers under current default service rate design would not be rewarded for "positive" behaviors. (see prior story for more details and background)

The PUC issued a Secretarial Letter closing the investigation. The Secretarial Letter does not endorse any specific policy, but issued guidance to EDCs and directed EDCs to undertake various considerations and file certain information as part of their next default service proceedings

"With this Secretarial Letter, the Pennsylvania Public Utility Commission (Commission) closes the Investigation into Default Service and PJM Interconnection, LLC. Settlement Reforms at Docket M-2019-3007101 by offering guidance to the Electric Distribution Companies (EDCs) as they prepare the next round of Default Service Plans (DSPs). The Commission initiated this investigation in January 2019 seeking input on how smart meter technology could be utilized to design default service rates in a way that better aligns associated wholesale cost allocation with retail cost allocation. After review of the Comments and Reply Comments submitted by various stakeholders, the Commission has decided that it will consider some of these topics further on a case-by-case basis in subsequent DSP proceedings based upon the evidence presented in each case. With this Secretarial Letter, the Commission invites the EDCs to include in their DSP filings information and analysis on a variety of default service topics so that the Commission can arrive at an informed decision upon consideration of the record evidence presented in DSP proceedings," the Secretarial Letter said

PTC Rate Change Frequency, Long-Term Contracts

The PUC said that, "The Commission also believes that the DSP auction process and the PTC change intervals should also be reviewed in the upcoming round of DSP proceedings."

"We find that it may be worthwhile for the Commission and the large EDCs to closely examine the history of PTC changes over the past few years to see if a 6-month PTC change interval would have provided more stability," the PUC said

"Accordingly, we request that the large EDCs include in their upcoming DSP filings a 10-year history of their PTC changes and assess the benefits of a 6-month PTC change compared to a 3-month PTC change. EDCs are also free to propose other PTC change intervals that change no more frequently than on a quarterly basis," the PUC said

Concerning procurement and long-term contracts, the PUC said that, "the Commission agrees that long-term contracts need to be carefully considered and that we need to consider this topic further in upcoming DSP proceedings."

"We request that the EDCs include in their filings evidence showing how its DSP proposal complies with the prudent mix requirements of the Public Utility Code and case law," the PUC said

Energy, EV TOU Rates

Concerning the recovery of energy supply costs and time of use rates, the PUC said, "The Commission acknowledges the past difficulties of implementing TOU rates in a default service context. However, looking forward, we agree with the OCA that as EV usage and distributed energy deployment increase in the coming decades, TOU rates should be considered. While the adoption rate of EVs is a matter of speculation, it is indisputable that during the timeframe covered by the upcoming DSP’s, EV use will increase."

"With that said, we find that TOU rates, especially in the context of EV expansion, needs to be explored further, especially whether the lack of TOU rate offerings for operators of EVs presents a barrier to EV adoption. Accordingly, we urge all parties participating in the upcoming DSP proceedings to consider how EV specific TOU rate offerings could be made available to consumers," the PUC said

Capacity and Transmission Cost Allocation

"While the Commission agrees that the case for a major overhaul in capacity and transmission cost allocation may not have been made at this time, we find that this topic could benefit from some additional scrutiny. Specifically, the Commission is interested in whether making the use of capacity and transmission tags more uniform across the state (at least among the large EDCs) would be beneficial and in the public interest," the PUC said

"Accordingly, we request that the large EDCs, in their next DSP filings, provide information and analysis on their NSPL/PLC cost allocation calculations and why they use such cost allocation for consideration by the Commission. This analysis should also include a discussion on why any large EDC may still be using monthly summary usage data instead of actual customer usage data to determine PLCs/NSPLs, and what steps and timelines, would be needed to implement a change to their current practice, as well as any associated costs," the PUC said

CAP Customer Shopping

"While not a topic of the proceeding at this docket, the Commission wants to take this opportunity to remind the EDCs and all interested parties to assess how Customer Assistance Program (CAP) customers can participate in the competitive market in future DSP proceedings. This topic has been addressed in various dockets, and we refer all parties to these dockets for more information. In addition, parties should review the most recent Commission actions on this topic, including how CAP-shopping was addressed in the FirstEnergy EDCs DSP IV proceedings and the Commission’s proposed CAP-shopping policy statement. While we acknowledge that the proposed policy statement is unlikely to be final and effective in time for some of the upcoming DSP proceedings, we still think the EDCs and interested stakeholders should consider the issues and concerns raised by the Commission and commenters in that proceeding in any future DSP proceeding. We suggest that all the EDCs with CAP programs, as well as interested stakeholders, consider the issues and concerns raised by the Commission in the above-noted prior proceedings when developing their CAP-shopping proposals in the upcoming DSP filings," the PUC said

Standard Offer Program Referral Scripting

"Another topic not included in this docket, but again we think it prudent to mention because it has been a subject litigated in past DSP proceedings, is Standard Offer Program (SOP) scripting language. These are the scripts used by the EDCs and their vendor call centers to refer customers to the SOPs. We direct the EDCs and all interested parties to our most recent statement on SOP scripting as found in the 2018-2019 FirstEnergy DSP proceeding; specifically, the February 28, 2019 order, in that proceeding. We suggest that EDCs, when preparing their upcoming DSP filings, review the Commission’s actions in the above-noted FirstEnergy proceeding and to include in their filings analyses of their SOPs, the current scripting, and any proposed scripting that adequately informs customers about the SOPs while maintaining important safeguards and protections," the PUC said

Docket M-2019-3007101

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