Retail Supplier Asks State Regulator To Address UFE Settlement Issues Created By EDC's "Data Anomalies" -- EnergyChoiceMatters.com

Retail Supplier Asks State Regulator To Address UFE Settlement Issues Created By EDC's "Data Anomalies"

EDC Planning To Use PJM Settlement C Process, Retail Supplier Raises Concerns About Stranded Credits Due To Disputes

February 16, 2023

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Reporting by Paul Ring • ring@energychoicematters.com

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Energo Power & Gas LLC ('Energo') petitioned the New Jersey Board of Public Utilities ('Board' or 'BPU') to convene an expedited proceeding to address a Jersey Central Power & Light ('JCP&L') unaccounted for energy ('UFE') settlement issue.

Energo alleged, "Based on its review of prior monthly settlement figures, Energo believes that JCP&L submitted incorrect energy volumes to PJM, resulting from incorrect UFE adjustments, for certain prior months outside the PJM 60-day period that were approximately 25% higher than appropriate. This has resulted in Energo incurring hundreds of thousands of dollars of unwarranted costs."

Energo alleged, "Energo notes this inaccurate UFE settlement process affects other third-party suppliers ('TPSs') and BGS providers in New Jersey."

Energo alleged, "Based on Energo’s historical usage data for JCP&L UFE, Energo is owed a credit. Other market participants that were undercharged as a result of incorrect application of UFE factors will likely be asked by JCP&L to make additional payments to true up for the incorrect undercharges."

Energo alleged, "In September 2022 JCP&L’s parent company, FirstEnergy, implemented a new system for the purpose of managing its settlements processes and submitting the results to PJM. FirstEnergy recently discovered data anomalies related to deploying the new system, which are impacting both Settlement A and B results. As a result, JCP&L’s settlement numbers from late July 2022 through December 2022 for UFE are, FirstEnergy admits, incorrect."

Energo alleged, "FirstEnergy has informed Energo that it plans on utilizing Settlement C of the PJM settlement process to re-settle the incorrect UFE numbers."

Energo alleged, on January 31, 2023, the Manager of Regulated Settlements at FirstEnergy sent the following email: "Good morning. In September 2022, FirstEnergy implemented a new system for the purposes of managing its settlements processes and submitting the results to PJM. Specifically, the new system was utilized to perform Settlement A, or 'Primary' settlements, for power flow beginning with September 2022 and forward. Regarding Settlement B, or 'Secondary' settlements, the system began processing July 2022 power flow and forward. Data anomalies related to deploying a new system have been discovered, impacting both Settlement A and B results. The anomalies identified vary between zones and have manifested themselves in different ways. As such, FirstEnergy has made corrections to the system and is preparing to complete a resettlement of the wholesale market with all suppliers within all FirstEnergy PJM zones for the previously settled periods of July through October 2022. Since the new settlement system had updates completed in December of 2022, the normal Settlement B process will correct any data issues seen in Settlement A beyond the previously described timeframe. Given the scale of this project, preparation for and execution of a market resettlement will take time to work through and complete. Once we complete the preparation process, additional communication will be provided to all suppliers with more detailed information (e.g., timing). Please note that with a market resettlement, every supplier will be asked to provide their consent to proceed with the process – it is the expectation of all that such consent will be granted to ensure all parties are resettled appropriately. We encourage your prompt response to those requests when they are issued at a later date. Thank you."

Energo said, "The PJM Settlement C process provides EDCs with a process to true-up significant metering or billing errors beyond the 60-day Settlement B timeframe. However, the PJM Settlement C process requires all affected parties to consent to a resettlement, which Energo fears is very unlikely to occur, especially given that the problems, according to the FirstEnergy statement above, appear to span more zones than just JCP&L -- if all parties across all zones are required to consent, the chance of resettlement quickly diminishes."

Energo said, "The Board should query whether employing a resettlement process, that has a low likelihood of being unanimously agreed upon which would then delay issuance of credits JCP&L has been amassing as result of the UFE overpayments by certain TPSs, is the right path forward. After all, it’s highly unlikely parties will agree to make true-up payments to FirstEnergy for previous incorrect UFE undercharges resulting from FirstEnergy’s faulty systems and it’s highly likely there will be disputes as to the proper amounts to credit parties like Energo and parties similarly situated. These disputes could take years to resolve, if ever, and leave millions of dollars rightly owed to TPSs stranded with FirstEnergy."

Energo said, "For the reasons stated above, Energo respectfully requests the BPU investigate this very expensive bill settlement issue and order JCP&L to resolve the issue with TPSs within 45 days, outside the Settlement C process. Resolution of credits with TPSs would shrink the pool of participants needed to provide consent for the Settlement C process to proceed and would be an equitable resolution for TPSs with credits currently stranded with FirstEnergy. Energo requests that the Board direct JCP&L to provide an explanation for the 'data anomalies' which have caused the UFE inaccuracies and assurance that the anomalies in their settlement system have been corrected."

Energo alleged, "TPSs should not be forced to bear the burden resulting from FirstEnergy’s faulty settlement systems, nor should ratepayers. UFE credits owed to TPSs should be issued expeditiously."

Energo said, "In the alternative, should the Board support FirstEnergy’s use of the Settlement C process, the Board should direct JCP&L to provide Energo and other TPSs and BGS providers with its proposed resettlement numbers prior to those numbers being submitted to PJM as a part of the Settlement C process, no later than March 1, 2023. This will allow the parties to resolve disputes over the resettlement calculations prior to JCP&L submitting them to PJM. Finally, the BPU should also require JCP&L to engage in an expeditious process for obtaining the required consents by March 15, 2023. Lastly, the Board should direct that Settlement C refunds are issued no later than March 31, 2023."

BPU Docket EO23020086

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