Settlement to Increase POR Discount at PECO, Unbundle Distribution Rates into New Bypassable Charge

Parties have filed a settlement to unbundle certain natural gas supply procurement costs at PECO from base rates and include such costs in a new bypassable Gas Procurement Charge (GPC), with such settlement also moving uncollectibles into the POR discount rates.

The settlement was signed by PECO, the Office of Consumer Advocate and the Office of Small Business Advocate.

Under the settlement, the GPC would be set at $0.0401 per Mcf, reflecting various procurement costs and a stipulated amount of working capital. The annual costs and sales components used to determine the GPC would remain constant until PECO's next distribution base rate case filing.

The GPC will not apply to customers participating in PECO's High Volume Transportation (HVT) program in accordance with 52 Pa.Code § 62.221. PECO's GPC only applies to non-shopping participants in the Low Volume Transportation (LVT) program.

Furthermore, the settlement also addresses conforming PECO's current natural gas purchase of receivables program into the format adopted by the PUC in its natural gas market rulemaking. Specifically, the PUC required the use of Merchant Function Charges to recover uncollectibles.

PECO currently recovers all uncollectibles in distribution rates, with no discount to the POR program for uncollectibles.

Consistent with the PUC's rulemaking order, PECO will begin implementing a Merchant Function Charge by April 14, 2015.

The settlement notes that a prior order addressing PECO's POR program held that should the Commission determine that unbundled uncollectibles and a Merchant Function Charge are required, PECO's $4.4 million in POR uncollectibles will be unbundled, converted to a percent-of-revenue by class (GR - 1.07%; GC - 0.30%) and recovered through an MFC, and PECO will apply a corresponding discount to the receivables purchased from natural gas suppliers.

Settling parties agree that PECO may seek recovery of its incremental costs associated with the development, implementation and administration of the Gas POR Program (such as its Information Technology (IT) modification costs required to track POR program costs and the supplier collections experience) through a discounted POR rate after those costs are determined.

Docket No. P-2012-2328614