Utility With Retail Choice Proposes Time Of Use Supply Rate Pilot For SOS Customers

Pilot Customers Would Also Be Allowed To Purchase 100% Renewable Power While Supplied By Utility

Utility Seeks To Defer Implementation Costs Until Next Rate Case

March 10, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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Pepco in the District of Columbia has filed a proposed residential supply rate Time of Use rate pilot, called Schedule R-TOU-P The D.C. PSC had directed Pepco to propose the TOU pilot for SOS customers

Pepco proposes that R-TOU-P be in place for three years, collecting treatment and control group data during the first two years and conducting final program evaluation, measurement, and verification in the third year.

Customers will have the ability to drop out of the pilot at any time without penalty; however, customers who choose to drop out will not be permitted to re-enroll in the pilot rate. At the end of this three-year period, any customers who are still enrolled in the program will be returned to Schedule R and its associated Standard Offer Service (SOS), absent extension of the program or implementation of a subsequent program with authorization by the Commission.

Pepco proposes to begin recruiting pilot participants in January 2021 in anticipation of a program start date of April 1, 2021. '"By initiating the pilot during a shoulder month, customers may be in a better position to immediately shift their load and realize savings, potentially reducing customer attrition. This timeline also has the benefit of avoiding immediately entering the holiday season during which customers may be less able to control their electricity usage and more likely to miss recruitment and customer education communications," Pepco said

Per PSC directives, Pepco proposes to limit R-TOU-P participation to Residential SOS customers currently served under Schedule R and who do not receive service under Rider NEM or own or lease electric vehicles. Residential Aid Discount (RAD) customers will be eligible to participate in the pilot. As with Pepco’s whole-house TOU rate for customers with plug-in vehicles, Schedule R-PIV, the Residential TOU pilot will be opt-in only.

In order to produce statically significant results, Pepco estimates that it will need to recruit approximately 835 residential SOS customers to participate in the pilot.

The TOU pilot will use the following pricing periods for summer and winter rate periods, with on-peak and off-peak pricing:

• Summer (June 1 through October 31)

--- Summer On-Peak: Between the hours of 4pm and 8pm, excluding weekends and holidays

• Winter (November 1 through May 31)

--- Winter On-Peak: Between the hours of 6am and 9am, excluding weekends and holidays

The TOU rates in the pilot will only apply to generation supply rates, and will not otherwise modify any existing distribution rates, including applicable surcharges. Schedule R-TOU-P will have the same distribution rates and surcharges as the current Schedule R. Supply rate schedule-specific factors have been developed based on the ratios of the estimated underlying market costs for each rate element during on- and off-peak hours in summer and winter rate periods. This is the same rate design methodology that was used to develop the rates for Pepco’s whole-house TOU rate (RPIV), which were approved by the Commission

Notably, Pepco proposes that TOU pilot customers will be eligible to also enroll in the Green Rider (Rider PIV-Green), which is a per-kWh add-on that allows certain SOS customers to purchase 100% renewable supply, as previously reported. Rider PIV-Green is currently only available to customers served under Schedule R-PIV. The rider is a dollar per kilowatt-hour rate, updated twice per year, and is applied to the Customer’s billed kilowatt-hours. The currently applicable Rider PIV-Green rate is equal to $0.04717 per kilowatt-hour.

Based on current SOS pricing, the R-TOU-P supply rates would be as follows, with current regular SOS flat rates listed for comparison (the TOU rates will adjust as the SOS rates change)

cents per kWh              R-TOU-P
     Regular SOS     On-Peak    Off-Peak 
Summer   $0.05757   $0.13712   $0.04480 
Winter   $0.06020   $0.20692   $0.04616 

Admin.   $0.00300   $0.00300  $0.00300

Bypassable transmission rates and the procurement cost adjustment would also apply, at the standard rates, for R-TOU-P customers

Pepco plans on filing a Customer Education & Outreach Plan by May 8, 2020.

R-TOU-P customers will be recruited based on a random selection from a proportionally stratified population of SOS customers by ZIP code designed to mirror the overall customer base. Pepco will recruit customers using a phased approach with randomly selected customer lists. Mailings will be sent in waves until the required sample size is reached. This phased approach will allow Pepco to assess the response rate and adjust tactics as needed. Pepco will also randomly select a group of customers who will not receive any recruitment materials; these customers will serve as a potential control group for the pilot.

If the Commission accepts Pepco’s proposed residential TOU pilot, Pepco requests the Commission’s approval to establish a regulatory asset that would capture incremental costs associated with program development and implementation. Pepco further requests that Company be allowed to accrue a return on this regulatory asset based on the Company’s weighted average cost of capital. If approved, Pepco would seek to recover the regulatory asset as part of a future rate case proceeding.

Formal Case No. 1130

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