Settlement In PECO Default Service Case Includes Changes To Standard Offer Customer Referral Program

POR Discount To Be Affected

CAP Shopping Left To Future Proceeding

Billing Improvements For EGSs

Includes New Time of Use Option for Default Service Customers

August 14, 2020

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Various parties, including PECO, the Office of Consumer Advocate, the Office of Small Business Advocate, CAUSE-PA, several retail suppliers, and industrial customers have filed a settlement in PECO's default service proceeding that would establish parameters for default service for the period June 1, 2021 through May 31, 2025 (DSP V)

The settlement reserves two issues for litigation: (1) the allocation of the costs PECO incurs to implement new time-of-use ('TOU') default service rate options and (2) changes to the current assignment of responsibility for PJM Interconnection, L.L.C. ('PJM') charges for Network Integration Transmission Service ('NITS') from all load-serving entities to PECO (as proposed by the Electric Supplier Coalition).

The settlement remains subject to PUC approval

Procurement, PTC

The settlement would maintain the current customer classifications (delineations) for the purposes of default service procurement and pricing

Under the settlement, for the Residential Class, PECO would continue to procure a mix of one-year (approximately 38%) and two-year (approximately 61%) fixed-price full requirements ('FPFR') contracts, with six months spacing between the commencement of contract delivery periods. During the Revised DSP V period, the remaining approximately 1% of Residential Class load would be supplied directly by PJM’s spot energy, capacity and ancillary services markets.

For Small Commercial customers (at or under 100 kW), default service load would continue to be supplied by equal shares of one-year and two-year FPFR products.

For residential and small commercial FPFR products, suppliers would bid in a competitive, sealed-bid request for proposals ('RFP') process on 'tranches' corresponding to a percentage of the actual customer class default service customer load. Winning suppliers would be obligated to supply full requirements load-following service, which includes energy, capacity, ancillary services, and all other services or products necessary to serve a specified percentage of PECO’s default service load in all hours during the supply product’s delivery period. The full requirements product requires the supplier to provide PECO all necessary AECs, less any reduction in obligation due to PECO's long-term AEC contracting noted below, for compliance with Pennsylvania’s Alternative Energy Portfolio Standards ('AEPS') Act, 73 P.S. § 1648.1 et seq.

Each of the contracts would be procured approximately two months prior to the beginning of the applicable contract delivery period.

For Large Commercial and Industrial customers (over 100 kW), PECO would continue to solicit twelve-month hourly-priced full requirements products, without overlap, for all default service supply.

Under the settlement, PECO would also conduct two solicitations in both 2021 and 2022 for ten-year Solar AEC contracts to deliver a total of 16,000 Solar AECs annually (i.e., 4,000 Solar AECs in each of four solicitations). PECO would procure up to half of each year’s Solar AEC amount from solar generating facilities located within its service area. PECO would continue to allocate AECs obtained through its separate AEC procurements to wholesale default service suppliers in accordance with the percentage of load served by each supplier.

PECO's Generation Supply Adjustment (GSA) would continue to change quarterly and over/undercollections of default service costs would continue to be reconciled on a semi-annual basis. The Price to Compare, reflecting the GSA and transmission charge, would change quarterly.

Under the settlement, PECO would continue to be responsible for and recover the following PJM charges from all distribution customers in PECO’s service area through its Non-Bypassable Transmission Charge ('NBT'): Generation Deactivation/RMR charges (PJM bill line 1930) set after December 4, 2014; RTEP charges (PJM bill line 1108); and Expansion Cost Recovery charges (PJM bill line 1730). The issue of whether PJM charges for NITS should be recovered by PECO from all distribution customers through the NBT on a class basis is reserved for litigation.

Standard Offer Customer Referral Program (SOP)

Under the settlement, PECO would continue the current Standard Offer Customer Referral Program ('SOP'), including the cost recovery mechanisms last approved by the Commission in PECO’s DSP IV proceeding, until May 31, 2025, with some changes related to enrollment and branding

Under the settlement, PECO would change the brand name for the SOP from 'PECO Smart Energy Choice' to 'Customer Referral Program'.

Additionally, under the settlement, the SOP enrollment process would require that, prior to obtaining customer approval to participate in the SOP, the customer service representative (CSR) for PECO’s third-party SOP administrator will ask the customer’s authorization to enroll with a specifically named supplier. OCA had expressed concern that, currently, CSRs are enrolling customers into the SOP prior to the identification of the supplier with whom the customer would be contracting.

Prior to filing its next default service program, PECO agrees to conduct a customer satisfaction survey of customers who withdrew from the SOP before the conclusion of the twelve month program, those who selected a new EGS at the conclusion of the SOP, those who returned to default service at the conclusion of the SOP, and those remained with their SOP supplier at the conclusion of the program.

Under the settlement, PECO agrees to allow customers to enroll in the SOP through its website and is to waive the SOP referral fee for web-enrollments. The website presentment will contain the same information and disclaimers about the program as currently provided in PECO’s SOP-related scripts.

All implementation costs to enable SOP web-enrollment would be recovered over the Revised DSP V period through a Purchase of Receivables discount. PECO is to present a good-faith estimate of implementation costs to the Joint Petitioners by the end of March 2021. If the Joint Petitioners approve those costs, PECO would proceed with implementation by March 2022. SOP suppliers must accept referrals from both PECO’s website and call center.

Billing Improvements

The settlement provides that PECO will convene a stakeholder process to discuss mechanisms to collect electric generation supplier (EGS) pricing information compatible with PECO’s 'bill-ready' billing system and to develop bill improvements to ensure that shopping information is clear and transparent to residential customers. This process will also address EGS recommendations to improve the presentation of shopping information on residential customer bills.

CAP Shopping

Under the settlement, PECO will not implement its proposed CAP Shopping Plan as described in its original DSP V Petition

PECO's original CAP shopping proposal had included a requirement that retail suppliers must adhere to CAP program pricing limits, or drop the customer, for existing shopping customers who become CAP customers mid-contract. See background here

The settlement notes that PECO, in a separate docket, is currently seeking to transition its CAP program from the existing Fixed Credit Option ('FCO') design to a Percent of Income Payment Plan ('PIPP') design.

The settlement provides that within 90 days of a final order in the separate CAP design proceeding (M-2018-3005795), PECO will make a filing with the Commission in which it will make a proposal regarding CAP shopping that is consistent with the CAP design approved in such final order

Time of Use Option

The settlement provides that, during DSP V, PECO would introduce new Time of Use (TOU) default service rate options for eligible customers in PECO’s Residential and Small Commercial procurement classes (the 'TOU Rates') to comply with PECO’s obligation under Act 129 of 2008 ('Act 129') to offer TOU and real-time rates to all default service customers with smart meters.

PECO would source both the standard and TOU default service for residential and small commercial customers from the same supply portfolio for each procurement class.

PECO would use the standard default service GSA as the reference price for PECO’s TOU rate calculations. PECO would calculate the TOU Rates on a quarterly basis

PECO’s TOU generation rates would differentiate prices across three usage periods that are constant throughout the year, as shown below.

• Peak: 2 p.m. – 6 p.m. Monday Through Friday, excluding PJM holidays

• Super Off-Peak: Midnight (12 a.m.) – 6 a.m. Every day

• Off-Peak: All other hours

The settlement would initially adopt the TOU price multipliers for each procurement class shown below, but such multipliers may be updated in the future. The multiplier is the ratio to the Super Off-Peak TOU price

GSA-1 Residential 
TOU Pricing Multipliers
Peak              6.5
Super Off-Peak      1
Off-Peak          1.5


GSA-2 Small Commercial 
TOU Pricing Multipliers
Peak              5.1
Super Off-Peak      1
Off-Peak          1.7

PECO’s TOU Rates would be available to residential and small commercial default service customers with smart meters configured to measure energy consumption in watt-hours. However, customers enrolled in the Company’s Customer Assistance Program ('CAP') would not be eligible for the residential TOU Rate during the DSP V term to avoid potential adverse impacts on CAP benefits.

PECO would recover the costs to implement the new TOU rates from customers in the eligible procurement classes (i.e., the Residential and Small Commercial Classes) through the administrative cost factor of the GSA. The issue of how the costs PECO incurs to implement its new TOU Rates should be allocated to the Residential and Small Commercial procurement classes is reserved for litigation.

Docket No. P-2020-3019290

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