Citizens'/Wellsboro Propose Customer Referral Program Under New Default Service Plan

Citizens' Electric Company of Lewisburg, PA and Wellsboro Electric Company have proposed implementing a New/Moving Customer Referral Program as part of their proposed default service plan for the period from June 1, 2013, through May 31, 2015.

Due to their small size, the Pennsylvania PUC exempted Citizens' and Wellsboro from several retail market enhancements, including the retail opt-in auction and Standard Offer customer referral program. However, all utilities were to develop a New/Moving Customer Referral Program.

Citizens' and Wellsboro said that they will modify their customer service policies to offer a New/Moving Customer Referral Program, "once EGSs [electric generation suppliers] enter their territories." Under the New/Moving Customer Referral Program, customers calling Citizens' or Wellsboro to initiate service or arrange a move within an EDC service territory would be directed to PAPowerswitch.com to further explore competitive opportunities.

Currently, no residential suppliers offer service at Citizens' or Wellsboro, per PA Power Switch.

Citizens' and Wellsboro will also provide the Price to Compare on customer bills and will post sample bills on the companies' websites, in compliance with the PUC's retail markets order.

With regards to default service, Citizens' and Wellsboro propose to continue their current "stratified," managed portfolio approach for June 1, 2013, through May 31, 2015, but with certain costs reconciled annually rather than quarterly.

Specifically, the managed portfolio will involve the purchase of one or more annual 7x24 products of an aggregate total of 20-25 MW, with the anticipation that 20-25 MW will be in place from this product for each consumption period if credit and other conditions allow the companies to purchase appropriate products. The procurement of the 7x24 product(s) is staggered during the year to ensure that the entire 7x24 portion of the portfolio is not purchased at a single time.

The remainder of the companies' combined monthly load requirement will be procured through 5 MW (or larger) 5x16 products, also staggered during the preceding four quarters. Finally, any generation requirements above or below the annual 7x24 and monthly 5x16 procurements will be purchased or sold on the PJM spot market at prevailing market rates.

Alternative Energy Credits will be procured in a similar manner. In addition, the companies seek authorization to procure a portion of their AECs for the 2016 reporting year (June 1, 2015 to May 31, 2016) due to the possible volatility in the PJM AEC market going forward, especially in 2015 and beyond. ACES Power Marketing, LLC, which will continue to manage the default service portfolio, has recommended that the companies purchase 20%-40% of the AECs for the 2016 reporting year during the January 2014 to December 2014 timeframe

Citizens' and Wellsboro propose to generally maintain the current Generation Supply Service Rate (GSSR) riders, adding only language necessary to transition to an annual calculation and reconciliation of the following cost categories: transmission; ancillary services; capacity; ARR/FTR; PJM membership dues; default service program (DSP) development and litigation costs; and portfolio management costs.

All other costs, including physical or financial energy products, working capital, congestion, transmission losses/credits, ongoing generation-related legal and consulting fees, other administrative and credit costs, will continue to be adjusted and reconciled on a quarterly basis.

The revised GSSR remains a quarterly adjusted rate, but with certain costs now reconciled annually as noted above.

Under the new calculation, the generation component of the GSSR shall be calculated quarterly by first dividing the companies' total projected quarterly retail default service sales (kWh) into the total direct and indirect generation supply procurement costs, including the net overcollections or undercollections of generation supply costs for the quarter commencing six months prior to the effective GSSR date.

The costs collected through the "F" portion of the rate will include all generation costs that are currently recoverable through the GSSR except those explicitly included in the annual portion of the rate.

The other portion, which will be referred to as the "A" portion of the GSSR, shall be calculated annually, effective July 1 of each year, by dividing the companies' total projected annual retail default service sales (kWh) into the total projected direct and indirect transmission, ancillary services, capacity, FTR/ARR, DSP development and litigation, PJM member fees and portfolio management costs for the period July 1 through June 30, including the net overcollections and undercollections of the same cost categories for the twelve month period ending March 31 of the prior application period.

To arrive at the total GSSR for each quarterly period, the generation component (F component) for each quarter shall be added to the transmission component (A component) in effect for the overlapping annual period. The sum of both the F and A components will be multiplied by a factor representing Pennsylvania gross receipts tax rate in effect for the period. The final quarterly GSSR will apply to each kWh of generation service billed to default customers in the next billing quarter