Duquesne Light Proposes Long-Term Solar Energy, AEC Contract As Part Of New Default Service Portfolio

Duquesne Light Proposes Increase In Fee To Retail Suppliers For Customer Enrollments Under Standard Offer Program

Proposes Program To Allow CAP Customers To Shop, Treatment Of Customers With Existing EGS Contracts Differs From Other EDC

Duquesne Light Files New Default Service Plan

April 21, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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Duquesne Light Company has filed with the Pennsylvania PUC a proposed electricity default service plan for the period June 1, 2021 through May 31, 2025 (DSP IX)

Notable among the changes from the current default service plan are a proposed long-term solar contract, an EV TOU electricity supply rate, a change in the Standard Offer Program, and a new shopping program for Customer Assistance Program (CAP) customers

Long-Term Solar PPA

During the DSP IX program term, Duquesne Light proposes to enter into a long-term Solar PPA (i.e., more than four years and less than twenty years) to support a utility-scale solar project (up to a total of 7 MW) in Pennsylvania, preferably in Duquesne Light’s service area. Duquesne Light intends to conduct a competitive solicitation for the Solar PPA

Duquesne Light proposes to use the alternative energy credits (AECs) from the Solar PPA to offset the solar requirements for default service customers, offsetting in part the obligation of the default service wholesale suppliers.

Duquesne Light also intends to acquire the energy from the solar facility under the PPA, sell it into the real-time PJM market and credit the revenues back to default service customers.

Duquesne Light also intends to assess the potential of purchasing the associated capacity and ancillary services from the facility.

"The Company seeks to support utility-scale solar alternative energy generating facilities in Pennsylvania for several reasons. First, Duquesne Light believes that a long-term Solar PPA is consistent with Act 129’s requirements for default service providers to consider long-term contracts in meeting the prudent mix standard. Second, the Company believes that a long-term solar contract may provide greater opportunity for cost-effective financing for the developer of a utility-scale solar project," Duquesne Light said

Standard Offer Program Changes

Duquesne Light proposes several changes to the Standard Offer program, under which customers calling the EDC for certain issues are informed of the program under which the customer may be randomly assigned to a retail supplier, for a 12-month period, with the price fixed for the term at a rate that is 7% below the price to compare at the time of enrollment

Duquesne Light proposes to charge EGSs $30 per enrollment under the Standard Offer program. Currently, EGSs are charged $10.28 per enrollment

Duquesne Light says that it is currently under-recovering costs to administer the Standard Offer program. Duquesne Light proposes to now utilize a third-party to administer the Standard Offer program, rather than Duquesne Light administering the program itself, as done currently

Duquesne Light proposes script changes to the Standard Offer program, proposing to adopt scripts similar to those used at the FirstEnergy EDCs. Duquesne Light said that its current scripts, which are lengthier, may be discouraging customers from enrolling in the Standard Offer program

Duquesne Light reported that, for residential customers, from June 2017 through February 2020, the Standard Offer program had about 7,300 referrals with about 5,800 enrollments onto an EGS. For small commercial customers over the same period, the Standard Offer program had 15 referrals and 7 enrollments

CAP Customer Shopping

Duquesne Light proposes to implement shopping for Customer Assistance Program (CAP) customers consistent with the recently issued tentative guidelines from the PUC

Currently, CAP customers may not shop at Duquesne Light

Consistent with the PUC's proposed policy statement, an EGS would have to charge a rate at or below the price to compare at all times to serve a CAP customer at Duquesne Light, and the EGS would not be permitted to charge termination fees.

Notably, for customers who become CAP customers in the middle of an EGS fixed price term contract, Duquesne Light's proposed program would allow the EGS to continue to serve the customer until the fixed price term expires (though not stated explicitly, presumably such legacy service would not need to comply with the CAP shopping price cap). At contract expiration, the EGS would have to comply with the CAP shopping pricing terms, or cease service to the customers

In contrast, as exclusively first reported by EnergyChoiceMatters.com (see story here), PECO proposed in its new CAP shopping program that an EGS may only continue to serve existing customers who subsequently enroll in PECO’s CAP if the EGS complies with the CAP pricing restrictions (rate cannot exceed the price to compare at any time)

For month to month EGS customers at Duquesne Light who become CAP customers, the EGS would be required to serve the customer under a product that complies with the CAP pricing and other terms within 120 days, or cease serving the customer

Also notable is that Duquesne Light would require EGSs to use 'rate ready' consolidated EDC billing to serve CAP customers

To serve CAP customers, Duquesne Light would require EGSs to file an annual affidavit affirming that the EGS intends to enroll CAP customers and that the EGS will comply with all aspects of the Company’s CAP customer shopping program.

In terms of program implementation, EGSs would be required to file a CAP Notice affidavit indicating that the EGS is interested in participating in CAP shopping. The notice from the EGS would not be binding, but would be used by Duquesne Light to gauge EGS interest in the program. Due to implementation costs of CAP shopping, Duquesne Light would not implement CAP shopping until it receives CAP Notice affidavits from at least five EGSs

Duquesne Light proposes that most CAP shopping implementation costs be deferred for future recovery in a rate case, with the remaining balance recovered through the universal service charge.

About 36,000 Duquesne Light customers are currently in CAP

Duquesne Light said that its transition to a Percentage Of Income Payment Plan for its CAP program may reduce the incentive for CAP customers to shop for a lower rate, due to the mechanics of the PIPP calculation, as it will lessen the impact of the supply rate on a customer's bill

Default Service Pricing, Procurements

Aside from any AECs from the long-term solar contract above that will offset the full requirements contract requirements, Duquesne Light does not propose any change in the procurement of default service supplies versus the current mechanism

In terms of default service pricing, Duquesne Light does not propose any change to the current six-month fixed price terms for residential and small commercial customers. As discussed below, certain new costs will be recovered through default service rates

For Residential & Lighting customers, default service is proposed to continue to consist of a combination of twelve (12) and twenty-four (24) month fixed-price full requirements ('FPFR') supply contracts obtained through semi-annual competitive auctions with overlapping, or 'laddered,' delivery periods. The full requirements contracts require supplier(s) to provide energy, capacity, ancillary services, and any other services or products necessary to serve a specified percentage of default service load 24 hours a day, for the term of the contract. In general, 50% of the full requirements supply would be from 12 month contracts, and 50% from 24 month contracts.

Duquesne Light proposes to continue to change the default service supply rates for Residential & Lighting customers every six months as in DSP VIII.

Additionally, Duquesne Light proposes to continue semi-annual reconciliation of the Residential & Lighting procurement group default service costs and revenues along with semi-annual rate changes.

For Small C&I Customers, which are customers with monthly metered demands less than 25 kW, default service is proposed to be supplied in the same manner as Residential & Lighting customers, which consists of a combination of twelve (12) and twenty-four (24) month full requirements supply contracts obtained through semi-annual competitive auctions with overlapping, or 'laddered,' delivery periods. In general, 50% of the full requirements supply would be from 12 month contracts, and 50% from 24 month contracts.

Rates for Small C&I customers would be fixed for six months and would be reset twice per year, and Duquesne Light proposes to continue to reconcile costs for these customers on a semi-annual basis

The procurement schedule and contract length for residential and Small C&I default service can be seen here

For medium C&I customers, defined as customers with monthly metered demands equal to or greater than 25 kW and less than 200 kW, Duquesne Light proposes that default service be supplied by full requirements supply contracts for three-month terms from third-party suppliers with no laddering, as done currently.

Duquesne Light proposes to continue its current hourly pricing mechanism for customers at and above 200 kW.

Net Metering Recovery Through Default Service Rates

Duquesne Light proposes to recover net metering year-end payouts associated with default service customers through bypassable default service supply and transmission rates

To date, these payments have been relatively small, and Duquesne Light has not recovered them from customers

Under the Commission’s net-metering regulations, Duquesne Light, as the default service provider, is required to compensate customer-generators at the end of each year for any remaining excess kilowatt hours generated by the customer-generator that were not previously credited against the customer-generator’s usage in prior billing periods at the Company’s PTC. 52 Pa. Code § 75.13(e).

Beginning with DSP IX, the Company proposes to recover these payments for generation as an expense in the respective default service class over/under collection calculation within the Company’s Rider No. 8 – DSS [default service supply] and Appendix A – Transmission Service Charge 1307(e) reconciliations (both are bypassable riders).

Administrative Costs, Working Capital In Default Service Rates

Consistent with an order in a previously reported rate case, Duquesne Light also proposes to include in the default service rates costs related to the filing preparation and approval process for its default service petition, as well as working capital costs for default service supply. These costs are, in aggregate, about $1.7 million annually.

Electric Vehicle Time of Use Supply Rate

Duquesne Light proposes a pilot Electric Vehicle Time of Use supply rate ('EV-TOU') for non-shopping customers

The EV-TOU Pilot Program would be offered to Residential, Small C&I and Medium C&I customers with demands less than 200 kW who own or lease an EV or who operate EV charging infrastructure at the service location. HPS-Eligible (hourly customers), CAP, virtual meter aggregation and budget billing customers will not be eligible

The TOU supply rate would apply to all of the customer's usage.

The proposed TOU periods would be:

Peak         1 p.m. –  9 p.m.
Shoulder     6 a.m. –  1 p.m.
             9 p.m. – 11 p.m.
Off-Peak    11 p.m. –  6 a.m.

In order to determine EV-TOU supply rates for each time period, the Company will adjust the adjusted default service wholesale price for each class using rate class factors that are based in part upon hourly locational marginal prices for energy from 2016 through 2019.

The Company will obtain default service supply for EV-TOU customers through the same fixed price full requirements (FPFR) products that provide standard default service supply for the respective customer classes. The FPFR wholesale suppliers will be paid the same price per megawatt-hour of supply regardless of how much of its supply is for EV-TOU customers. Any mismatches between revenues from EV-TOU supply rates and supply costs paid to FPFR product suppliers will be recovered/refunded within the existing bypassable Rider No. 8 – DSS 1307(e) customer class reconciliation

Implementation costs of the EV TOU program would be recovered in default service rates

Purchase Of Receivables

Duquesne Light proposes to continue its existing Purchase Of Receivables (POR) program for residential, small C&I, and medium C&I customers, with no change in the current discount rate of 0.10% for incremental, ongoing operating and administrative expenses associated with the POR Program related to these customers

Docket P-2020-3019522

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