Pennsylvania PUC Clarifies Pricing, Cost Recovery of PECO Retail Opt-in Program

The Pennsylvania PUC, in an order on clarification and reconsideration, has clarified the pricing applicable to the retail opt-in program to be implemented at PECO for electric customers (in place of an opt-in auction), and has also clarified its prior order with respect to cost recovery for the program, and other retail market enhancements.

Specifically, with respect to cost recovery, the PUC had said in its prior order on PECO's default service plan that a collaborative was to address how, "participating EGSs [electric generation suppliers] or customers will pay for the costs of market enhancements."

However, PECO called this provision allowing for the potential allocation of market enhancement costs to customers inconsistent with Ordering Paragraph No. 14 of the order, in which the Commission stated that the collaborative parties should submit a proposal, "on how electric generation suppliers will pay for the costs of the Retail Market Enhancement Programs."

On reconsideration, the PUC clarified that, "we intend that any discussion among the interested Parties regarding the development of a plan to address RME [retail market enhancement] Program cost recovery include consideration of the possibility that customers as well as EGSs may be responsible for some program costs."

The PUC noted that while it has previously expressed a belief in the intermediate retail workplan order that most retail market enhancement costs should be the responsibility of the EGSs, "we did not preclude the possibility that some costs may, in fact, be more appropriately recovered from participating customers."

"Similarly, the fact that certain portions of the October 12 Order specifically refer to cost recovery by EGSs does not conflict with our clear direction that the Parties consider the possibility that customers may bear some cost responsibility as well. Thus, we envision that one of the purposes of the collaborative process among PECO and other interested parties will be to address this possibility, in addition to determining the most appropriate cost recovery mechanism to put in place," the PUC said.

The PUC accordingly denied PECO's request that the Commission clarify that the costs of its retail market enhancement programs are to be recovered from EGSs only, and not customers.

The PUC also clarified certain provisions relating to the pricing of the opt-in retail program to be implemented at PECO (whose design was delegated to a collaborative), which is taking the place of the proposed opt-in auction.

Among other things, the PUC had broadly adopted an opt-in program design featuring a four-month fixed price, representing a discount to the Price to Compare, with an eight-month fixed price for the remaining term of the opt-in product, but left details such as enrollment and EGS-selection to a collaborative.

With respect to the eight-month fixed price, whose terms and rate are subject to PUC review, the PUC clarified that, "our intent regarding the EGS filing of the terms and conditions of its eight-month product offering is that such filing be made at least forty-five days before the offers for the eight-month fixed price product are extended to customers."

"An EGS that elects to participate in the Retail Opt-In Program may submit its filing in advance of that deadline (including the submission of its filing before its initial customer offer letter is mailed), but will not be required to do so," the PUC said.

The PUC also clarified the pricing of the four-month discount at the start of the opt-in program.

In its original order, the PUC described the opt-in product as, "A twelve-month product, comprised of a fixed price for four months equal to a discount of at least 5% off the PTC at the time of enrollment, and an EGS-provided fixed-price product for the remaining eight months."

The use of the term "at least" in this order caused confusion, and suggested that the four-month pricing may not be uniform among suppliers, or could exceed a 5% discount.

However, on clarification, the PUC reiterated that the PECO opt-in program is to mirror the format adopted at the FirstEnergy EDCs, in which the PUC adopted a specific, set discount off the PTC, specifically adopting, "a four-month guaranteed five percent discount off of the PTC at the time of enrollment, and an EGS-provided fixed-price product for the remaining eight months "

On clarification, the PUC said that the opt-in product at PECO shall similarly be, "A twelve-month product, comprised of a fixed price for four months guaranteed to be 5% off the PTC at the time of enrollment, and an EGS-provided fixed-price product for the remaining eight months."

"On this basis, the Retail Opt-In Program [four-month] price is, essentially, a set amount," the PUC clarified.

The PUC also clarified that PECO is ordered to file a plan that allows, effective January 1, 2014, Consumer Assistance Program customers to purchase supply from a competitive retail supplier. There had been confusion as to whether the January 1, 2014 deadline was the date by which PECO was required to only file a plan allowing CAP customers to shop at some later date, as opposed to the PUC's intent that January 1, 2014 reflect the date when CAP customers shall be allowed to shop.

Docket: P-2012-2283641