Pennsylvania Maintains Quarterly Pricing of Default Service at PPL

The Pennsylvania PUC adopted a default service plan at PPL for the period June 1, 2013 through May 31, 2015 which retains quarterly adjustments to the Price to Compare for residential and small commercial customers.

As only reported by Matters, a recommended decision had proposed adoption of a six-month Price to Compare at PPL.

"We note that while PPL may procure default supply semi-annually under its proposed procurement plan ... delivery of a significant portion of that supply will begin each quarter," the PUC said of its decision to retain quarterly PTCs.

"Thus, as RESA argues, it would be more appropriate to adjust default service prices quarterly to better reflect that new portion of supply. In this way, default service prices will be more reflective of market prices, in furtherance of the goal of promoting a more robust retail electricity market," the PUC said.

"We also do not accept PPL's position that the frequency of its default service price changes should align with the contract terms of its retail market enhancement programs. While it may appear that such alignment could facilitate, to some degree, a customer's comparison of the PTC with the rates offered in those programs, the PTC itself may not accurately reflect market prices under these circumstances, and the comparison, therefore, would not be meaningful," the PUC added.

Furthermore, the PUC directed that PPL shall continue to use its current quarterly reconciliation methodology for its GSC-1 generation rates.

"[W]e are concerned that PPL's proposed semi-annual reconciliation based on a projected twelve-month rolling average of sales will further separate the PTC from the underlying wholesale costs of electricity," the PUC said.

The PUC adopted PPL's proposed default service portfolio mix for residential and small commercial customers.

Specifically, for residential as well as small commercial customers (under 500 kW), the PUC adopted a product mix in which half of PPL's procurements turn over every six months.

To achieve this goal, PPL will purchase 12- and 9-month full requirements, load following products semi-annually, for 100% of load not served by legacy block products (no new block or spot purchases will be undertaken). Through these semi-annual procurements, the 12-month product will be solicited approximately one month prior to delivery while the 9-month product will be procured approximately four months prior to delivery, with the exception of shorter-term procurements at the end of the plan to ensure no contracts extend beyond May 2015.

Hourly pricing will continue for large C&I customers.

The PUC adopted an aggregate wholesale supplier load cap of 50% for both the residential procurements and small commercial procurements.

The PUC denied PPL's provisional claim for certain cash working capital costs.

The PUC also rejected recovery of certain non-market-based transmission costs through a non-bypassable charge imposed on both shopping and default service customers.

"[W]e will reaffirm our finding that the imposition of a non-bypassable charge for the recovery of transmission-based costs is inappropriate for the reasons given in the FE DSP II Order. Moreover, we agree ... that [the] Electric Competition Law as well as Commission regulations require that transmission costs be treated as unbundled supply-related costs, and are more properly recovered from customers by the particular entity that provides generation service to those customers," the PUC said.

The PUC adopted an opt-in retail aggregation program at PPL, rather than a retail opt-in auction. This aggregation program, under which PPL will solicit customers for enrollment with a retail supplier, will be open to residential and small C&I customers (less than 25 kW), and both shopping and non-shopping customers. Low-income customers will be able to participate in the aggregation program (and the separate standard offer referral program as well).

As with PECO and the FirstEnergy EDCs, the PUC delegated many issues surrounding the aggregation program, including the customer assignment process and cost recovery, to a collaborative and a subsequent filing.

The PUC did establish that the opt-in aggregation program shall offer customers a twelve-month product, comprised of a fixed price for four months equal to a discount of 5% off the PTC at the time of enrollment, and an EGS-provided fixed-price product for the remaining eight months. The PUC shall review the terms of the 8-month price. A $50 bonus shall also be paid to participating customers by suppliers

The opt-in program shall feature a 50% supplier participation cap. However, the PUC rejected an ALJ's recommendation that the program include at least four successful bidders.

The PUC also directed PPL to offer a standard offer customer referral program under which customers will be enable to enroll, on an ongoing basis, for a 12-month term with a retail supplier, at a 7% discount from the then-current PTC. The standard offer program shall be open to small C&I customers as well.

The PUC ordered that the opt-in aggregation program must be implemented no later than July 1, 2013. "This direction will also change the target PTC for purposes of the discount," the PUC noted.

Implementation of the standard offer referral program shall occur no later than August 1, 2013.

The PUC rejected PPL's various proposals for a Time of Use offering for default service customers, and directed PPL to file a new proposal, encouraging PPL to use a retail supplier to fulfill the statutory obligation to offer a TOU option to default service customers.

P-2012-2302074