PGW, Retail Suppliers File Settlement Resulting from Default Service Collaborative

Retail suppliers and Philadelphia Gas Works have reached a settlement to implement various retail choice billing and education enhancements, but which does not address any change in the default service mechanism (R-2008-2073938).

The settlement results from a collaborative which was originally established in response to retail suppliers' proposal for an alternative supplier to assume the default service responsibility for some or all of Philadelphia Gas Works' customers (see 4/14).

The stipulation, among PGW, Interstate Gas Supply, Dominion Retail, Hess, and Direct Energy Services, does not address the provision of default service, but does preserve suppliers' ability to address this issue in the future and continue collaborative discussions.

Instead, the settlement would implement other retail market enhancements.

Among other things, PGW will provide consumer education about natural gas suppliers operating in its service territory. PGW has offered to provide this information by the following means with the details to be determined by a smaller breakout group of collaborative process participants:

a. Bill messages

b. PGW website

c. Good Gas News (PGW's bill insert) and the e-bill equivalent of Good Gas News

d. Bi-annual mailings to all customers and mailings to new applicants

e. Call center (and district office) script additions at time of application, which will:

i. Ask customers if they have selected a natural gas supplier.

ii. Direct customers to the natural gas equivalent of papowerswitch.com (which has not been launched yet)

iii. Inform customers that a mailing will be sent discussing natural gas suppliers and natural gas supplier offers.

f. Addition of a hold recording which discusses gas choice

In order to fund the choice consumer education program, PGW will seek recovery of these costs via a consumer education surcharge (with a potential spending ceiling) that will be included in the distribution charge.

The recovery mechanism for these costs and the spending level will be determined in the Purchase of Receivables collaborative, which was previously established under PGW's most recent base rate proceeding.

PGW will work towards the completion of a settlement agreement with the Purchase of Receivable collaborative participants by January 2012.

The settling parties also agree to address, in the POR collaborative, the issue of obtaining a waiver of proposed regulations in order to recover uncollectible expenses associated with natural gas sales to both shopping and non-shopping firm customers through a non-bypassable Merchant Function Charge that would be included in PGW's distribution charge (the proposed regulations would recover sales service uncollectibles through a bypassable MFC).

In addition to traditional fixed and variable rates, PGW's billing system will be modified to administer a percentage discount off of PGW's Price to Compare, flat rates, and multiple per mcf rates.

PGW will also provide rate ready consolidated billing, with further details to be determined in the Purchase of Receivable collaborative.

Suppliers had originally suggested a customer referral program, but PGW expressed legal and logistical concerns. The settlement does provide that, "PGW is agreeable to billing for natural gas suppliers on a PGW consolidated bill basis a percentage discount off of PGW's Price to Compare for a three month period but customers must affirmatively select this natural gas supplier offer and then affirmatively select the natural gas supplier after the 3 month period"

Under the stipulation, PGW will provide natural gas suppliers with releasable customer contact information if a natural gas supplier customer moves within PGW's service territory (i.e. the customer terminates current gas service and applies for new gas service).

PGW will inform natural gas suppliers via an EDI transaction when a customer drops a natural gas supplier in order to switch to PGW or another supplier.

PGW has agreed to form a collaborative with interested parties regarding capacity and capacity related issues, including: 1) transportation capacity assignment; 2) storage capacity allocation; and 3) the Daily Delivery Quantities ("DDQ") and Daily Contract Quantities ("DCQ") calculations.

PGW will propose tariff changes, upon which the capacity collaborative participants are in agreement, in PGW's March 1, 2012 annual 1307(f) filing.