Pa. PUC Rules On CAP Shopping, EGS Alternatives At Duquesne Light

Order Addresses Solar PPA For Default Service, Standard Offer Program, EV TOU Supply Rate

January 14, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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The Pennsylvania PUC issued a final order addressing the default service plan of Duquesne Light Company (DLC or the Company) for the four-year period commencing on June 1,2021, and ending on May 31, 2025 (DSP IX).

The PUC addressed issues as follows:

Customer Assistance Program (CAP) Customer Shopping

The PUC ruled that the issue of Customer Assistance Program (CAP) customer shopping at Duquesne Light shall be deferred

Currently, CAP customers may not shop at Duquesne Light

"Based on the record in this case, we agree with the ALJ and the Stipulating Parties that permitting Duquesne Light to defer implementation of CAP shopping until the Commission provided more guidance was reasonable. This is particularly true given the documented problems PPL Electric experienced in implementing its CAP shopping program, the financial implications for both CAP customers and non-CAP customers associated with CAP shopping, and the contested nature of CAP shopping in proceedings before the Commission. Under the circumstances, we will approve the CAP Shopping Stipulation and the withdrawal of the Company’s proposed CAP Shopping program, with one modification," the PUC said.

The modification is that Duquesne Light had proposed to make a filing regarding CAP shopping within 6 months of a final, unappealable order implementing CAP Shopping in the PPL Electric service territory. The PUC ruled that rather than using the PPL case as a trigger, Duquesne Light's filing obligation shall instead be based upon a final order in the PUC's proceeding addressing a CAP shopping policy statement

"Instead of relying on a final, non-appealable decision regarding CAP shopping in PPL Electric’s service territory, we believe it would be more reasonable for Duquesne Light to also follow the Commission’s guidance in its Proposed Policy Statement once it becomes final and effective, particularly since Duquesne Light’s original CAP Shopping proposal in this proceeding was consistent with the guidelines in the Proposed Policy Statement. The Commission is currently considering comments and reply comments to the Proposed Policy Statement, including those Duquesne Light submitted. The Commission’s guidance in the Final Policy Statement, which will be based on various stakeholders’ opinions on and experiences with CAP shopping, will assist Duquesne Light in making an informed decision regarding a future CAP shopping filing," the PUC said

The PUC ruled that, after a Final CAP Shopping Policy Statement becomes effective at Docket No. M-2018-3006578], Duquesne Light shall make a filing with the Commission regarding CAP shopping that is consistent with the Commission’s guidelines and Duquesne Light’s CAP design, and which is informed by all available information and data.

"[There is substantial evidence to support deferring CAP shopping based on the harms associated with it, including harms to the CAP customers and the non-CAP customers when the CAP customers pay more than the PTC. More specifically, when the retail generation price a CAP customer pays exceeds the PTC, the program costs of CAP are increased, and such increase is paid by other residential ratepayers that subsidize the program through distribution rates. CAUSE-PA St. 1 at 44. Additionally, there is evidence in this proceeding that even carefully crafted shopping restrictions in the PPL Electric and FirstEnergy service territories have not prevented CAP shopping prices that exceed the PTC due to holdover contracts for customers that were already shopping and had a contract with an EGS when they entered CAP. CAUSE-PA St. 1 at 46-48. None of the Parties have offered a proposed solution to this problem," the PUC said

The PUC rejected alternative CAP shopping provisions proposed by retail suppliers.

The PUC noted that, "The EGS Parties averred that Duquesne Light’s CAP Shopping proposal should be approved with minor modifications. The EGS Parties stated that when a CAP customer’s shopping term expires, if the customer makes no affirmative choice, then the customer should continue to be served by its existing EGS at a program-compliant price. The EGS Parties also stated that the CAP Shopping proposal be clarified to allow CAP customers to participate in the Company’s SOP, provided it is a CAP-compliant product."

However, the PUC said, "the EGS Parties’ modifications to the Company’s original proposal would not be a reasonable or viable alternative based on the record. The EGS Parties did not clearly explain their recommendation that the CAP customer remain with the EGS at a “program compliant price” at the end of the CAP contract, as this offer could be the same in terms of the savings offered to the CAP customer in the original contract or it could be at a different or lower level of savings compared to the original contract. It may also be difficult for Duquesne Light to monitor pricing and supplier compliance with the CAP shopping rules in the instance of a roll-over contract. The EGS Parties’ other proposal that the CAP customers participate in the SOP is not feasible for the CAP customers nor is it compliant with the CAP shopping rules, as there is no guarantee that customers will be given a price equal to or lower than the PTC during the 12-month term of the SOP contract."

Standard Offer Program (SOP)

The PUC adopted a non-unanimous stipulation concerning Duquesne Light's Standard Offer Program (SOP)

See details of the non-unanimous stipulation here

Notably, in the proceeding, retail suppliers had proposed that Duquesne Light should automatically enroll new and moving customers with an EGS, rather than being given the option to enroll in default service or choose an EGS. The PUC rejected this proposal

Under the PUC's order, Duquesne Light will now charge EGSs $30 per enrollment under the Standard Offer program. Currently, EGSs are charged $10.28 per enrollment

Duquesne Light will continue its current practice of allowing SOP participants to remain with their EGS following the initial 12-month SOP period, absent affirmative action by the customer.

Network Integration Transmission Service (NITS)

The PUC rejected a proposal from certain retail suppliers to assign the obligation for Network Integration Transmission Service (NITS) to Duquesne Light for all distribution customers, with recovery on a nonbypassable basis, and with retail suppliers relieved of any NITS obligations

The PUC noted that it has recently rejected such a proposal in other EDC default service proceedings, as previously reported

"We find that the EGS Parties have not set forth any arguments or evidence in this proceeding that would cause us to deviate from our prior decisions in which we have established that an EDC collects NITS only from its default service customers," the PUC said

"The crux of the EGS Parties’ argument in this proceeding is that Duquesne Light should be directed to recover NITS charges via an NBT charge because its current practice is discriminatory and causes undue harm to shopping customers and their EGSs. We find no merit in this argument," the PUC said.

Solar PPA

The PUC approved Duquesne Light's solar PPA proposal

As previously reported, during the DSP IX program term, Duquesne Light proposed 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 will 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 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.

"It is important to examine the Solar PPA in the context of the DSP Plan. The Company here is proposing to acquire a long-term contract for about half of its default service solar AEC requirements. As noted by the ALJ, the Company is not offering a solar rate or product. R.D. at 48. The critical issue at hand is only whether this long-term Solar PPA is an appropriate component of the Company’s prudent mix strategy for default service customers. As noted by the ALJ, the only argument the EGS Parties make in this regard is that the price under the Solar PPA may deviate from the market in some future years. Given that Act 129 specifically contemplates contracts as long as twenty years, this argument does not hold up well. We agree with Duquesne Light that if price variability were a valid basis for objecting, then all long-term contracts should be prohibited. Such is not the case under the Code," the PUC said.

"We also agree with the ALJ that the Company’s proposal to sell the excess energy procured under the Solar PPA from the solar facility does not place the Company back in the generation business. Thus, we shall reject the EGS Parties’ contention regarding the same. The Company will not own the solar generating facility; instead, as the purchaser in the Solar PPA, Duquesne Light will procure both energy and solar AECs from the seller – that is, the developer who owns the solar facility – to meet the demand levels of its default service customer. Should the energy procured under the Solar PPA exceed the demands of its default service customers, the Company proposes to sell the excess energy into the wholesale market. By selling any excess energy, the Company is simply seeking to employ a process to balance supply and demand and obtain for default service customers additional value from the Solar PPA. Notably, the Commission previously has permitted a Default Service Supplier to sell excess energy into the market when default service supply purchased under a block product exceeded the demands of default service customers. PECO Energy 2009 Order at 6-7, 9; Duquesne Light R.B. at 11. Thus, an EDC’s sale of excess energy that was purchased to serve default service load is not prohibited by the Competition Act, as contended by the EGS Parties," the PUC said

EV-TOU Pilot Program For Non-Shopping Customers

The PUC approved of a pilot program providing EV-focused time of use generation supply rates to default service customers with EVs. See more details on the program here, which was adopted as set forth in a recommended order

Retail suppliers had opposed the program

"Contrary to the EGS Parties’ arguments, there is nothing in Section 54.187(c) of our Regulations that prohibits Duquesne Light from providing a TOU rate tailored to EVs, and that Regulation cannot be read as overriding the clear language in the Competition Act," the PUC said

"There is also no evidence in this proceeding that an EGS is currently offering an EV-TOU rate (Duquesne Light St. 5-R at 22; EGS Parties’ Exh. KMS-IR) or that the Company is somehow inappropriately competing with the EGSs. The Company’s proposal does not prevent the competitive supplier market from implementing EV-TOU rates or other programs that will shift charging to off-peak hours. Duquesne Light testified that it has supported and will continue to support EGS-offered EV-TOU programs in its service territory, and the EGSs that wish to offer an EV-TOU rate in the Company’s service territory may do so using the Company’s dual-billing or consolidated bill-ready billing options. Duquesne Light St. 5-R at 22. For all of these reasons, we shall deny the EGS Parties’ Exception and adopt the ALJ’s recommendation on this issue," the PUC said

Non-contested Issues

The PUC adopted a settlement concerning non-contested issues in the case, including the pricing and procurement of Duquesne Light's default service supplies (other than the solar PPA noted above).

See our prior story here for more details on these non-contested provisions which were adopted without modification

Docket No. P-2020-3019522

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