West Penn Power Files to Implement TOU Generation Rates

West Penn Power (Allegheny) has filed for approval of optional Time of Use (TOU) generation rates for residential and small to mid-sized non-residential default service customers with advanced meters (P-2011-2218683).

The voluntary rate would be available to customers on Service Types 10, 20 and 30, through the May 31, 2013 end of the current default service plan. Customers electing TOU generation rates would not be subject to any minimum stay; however, Allegheny reserved the right to later include a minimum term of service for TOU rates should there be evidence of gaming.

Allegheny would initially cap TOU participation at the amount of spot generation to be set aside for default service customers (discussed below), though due to the size of the caps and opt-in nature of the program, Allegheny does not expect participation to approach these caps. If participation did reach the cap, Allegheny would address the situation in a subsequent filing.

While a percentage of the TOU default service load will be included in the existing competitively bid default service contracts, the generation for TOU will be procured and priced from the existing spot market purchases called for under Allegheny’s default service plan, and originally intended to serve non-TOU default service customers. Specifically, Allegheny will dedicate to TOU customers, as needed, the 20% spot market purchases called for in its default service plan for Service Type 10 customers, the 9% spot market purchases for Service Type 20 customers, and the 12% spot market purchases for Service Type 30 customers.

"This allows TOU to be procured and ultimately reconciled to PJM spot market prices, thereby resulting in a market-based TOU offering," Allegheny said.

"As TOU participation increases, the percentage of spot market purchases embedded within non-TOU default service rates will subsequently decrease," Allegheny noted.

Allegheny reported that 20% of the Service Type 10 load equates to about 123,000 average customers, 9% of the Service Type 20 load equates to about 8,300 average customers, and 12% of the Service Type 30 load equates to about 240 average customers.

Spot market purchases would be made separately per TOU Service Type. There will be no expense/revenue subsidization between TOU Service Types, and there will be no expense/revenue subsidization between TOU Service Types and non-TOU Service Types, Allegheny said.

Allegheny said that the minimum level per Service Type for the company to effectively utilize spot market purchases is 100 kilowatts. Therefore, the total capacity Peak Load Contribution enrollment per Service Type for TOU participants must equal or exceed 100 kilowatts before the company can effectively offer TOU procured separately through the spot market.

In its next default service plan filing, for service beginning June 1, 2013, Allegheny will analyze the advantages and disadvantages of providing a TOU procurement that is separate and distinct from the procurement of supplies for non-TOU customers.

Reconciliation of costs and revenues under the TOU program would occur quarterly, and reconciliations would only apply to TOU rates. The TOU reconciliation rate would be a flat rate per kilowatt-hour added to all hours (i.e., there will not be an on/off-peak reconciliation rate).

Marketing, programming and administrative costs associated with TOU rates would be collected from all default service customers via the Energy Cost Adjustment generation reconciliation mechanism of Tariff No. 39.

The TOU periods would vary by season and customer class as follows:

Schedule 10 On-Peak Off-Peak

June through September 2 p.m. to 7 p.m. All other hours

October through May 6 a.m. to 8 a.m & All other hours

5 p.m. to 8 p.m.

Schedules 20, 22, 23, 24 and 30 On-Peak Off-Peak

June through September 1 p.m. to 6 p.m. All other hours

October through May 6 a.m. to 8 a.m & All other hours

5 p.m. to 8 p.m.

All on-peak hours shown above apply only to non-holiday weekdays.

Pricing for TOU rates would be determined 30 days after approval of Allegheny's plan by the PUC. However, Allegheny provided illustrative pricing based on forward market prices as of December 23, 2010:

Schedule 10 (¢/kWh) On-Peak Off-Peak
June through September 7.391 4.652
October through May 6.106 4.605

Service Types 20 & 30 (¢/kWh) On-Peak Off-Peak

June through September 7.496 4.661

October through May 6.197 4.679

TOU prices would be updated annually April 1 using current forward market prices in the APS Zone of PJM, to be effective for the upcoming TOU period of June 1 through May 31.

Allegheny also said that it anticipates seeking authorization for additional dynamic pricing options. Such additional options include a residential critical peak rebate offering and a non-residential critical peak price offering provided as a variant to non-residential TOU rates.