UGI Proposes Expansion of Hourly Pricing, Certain Retail Market Enhancements

UGI Utilities, Inc. - Electric Division has filed with the Pennsylvania PUC a proposed default service plan for the period from June 1, 2014, through May 31, 2017 that would include an expansion of hourly pricing, and certain changes intended to enhance the retail market.

Under the new default service plan, hourly pricing would apply to customers at or over 100 kW (GSR- 2 Group), versus the current cutoff of 500 kW. For hourly customers, UGI will be designated as the load serving entity, and will acquire capacity, transmission to UGI's system, ancillary services, transmission and distribution losses, congestion management costs, AEPS credits and such other service or products as necessary to provide default service supplies to GSR-2 Group customers, rather than conducting procurements for hourly service. AEPS credits will be sourced through an RFP.

For customers under 100 kW (GSR-1 Group), UGI would serve customers on non-laddered, 12-month full requirements load following contracts, with each contract's delivery period running from June 1 to May 31 of the applicable delivery year. The full requirements contracts would place AEPS compliance responsibility on the wholesale supplier.

The small customer 12-month full requirements contracts would be solicited in two equal tranches through RFPs conducted in the months of September/October and March/April preceding each annual delivery period beginning on June 1.

Small customer pricing would be adjusted quarterly, to reflect actual and projected changes in administrative costs and the recovery or refund of pre- June 1, 2014 default service cost balances.

In the event UGI is unable to attract full requirements bids for small customer default service that are acceptable to the Commission, UGI would under a contingency plan issue RFPs, in consultation with its procurement manager, to acquire forward purchases of power (in 7 x 24 or 5 x 16 blocks) to cover approximately 90% of projected total GSR- 1 Group hourly requirements, with the remainder of GSR-1 Group loads being met with spot purchases. The contingency plan takes on greater importance at UGI versus other utility default service proceedings due to UGI's prior challenges in attracting qualifying bids for past procurements.

To attract wholesale supplier interest, UGI proposes to combine both residential and C&I loads for customers with peak loads below 100 kW in the GSR-1 Group. In addition, UGI said that in order to increase the chances of obtaining successful bids for GSR-1 Group supplies, UGI is not proposing to adopt a supplier load cap for GSR-1 Group default supplies.

UGI will recover administrative costs associated with default service through default service rates, including (a) internal and external legal costs, (b) Market Monitor costs, (c) load forecasting costs, (d) depreciation expenses associated with hourly billing software, hourly meters and load research software, (e) labor and benefits costs associated with preparing the default service filing, and (f) labor and benefits costs associated with procuring default supplies and conducting hourly billing.

To improve the retail market, UGI proposes to implement a New/Moving Customer Referral Program and a Standard Offer Customer Referral Program.

Under UGI's proposed Standard Offer Program, participating retail suppliers would agree to offer residential or small commercial customers a seven percent (7%) discount off of the then current PTC for a twelve month period.

UGI would inform the following non-CAP customers of the availability of Standard Offers:

(a) New residential or small commercial applicants for service from UGI who would otherwise be placed on default service,

(b) Existing residential or small commercial default service customers moving their accounts within UGI's service territory,

(c) Residential or small commercial default service customers contacting UGI for high bill complaints once the high bill complaint is fully satisfied, and

(d) Residential or small commercial default service customers inquiring about customer choice

When a customer expresses interest after being advised of the Standard Offer Program, the customer will be transferred to a Standard Offer retail supplier in a fair and impartial manner. The UGI representative will remain on the telephone until the EGS telephone system picks up the call, either through an EGS representative or a recorded menu. Upon receiving the transferred call, the Standard Offer supplier will present the customer with the terms and conditions of the standard offer. If the customer decides to enroll in the Standard Offer Program, then the Standard Offer supplier will enroll the customer

UGI estimates that it will cost approximately $10,000 per month to operate the Standard Offer Program as proposed. This cost estimate is based upon an estimated increased call time at UGI's call center.

Under its Standard Offer Program, UGI proposes to charge participating suppliers the costs of operating the Standard Offer Program. The Standard Offer Program costs of $10,000 per month will be divided among participating Standard Offer Program suppliers each month.

UGI provides electric distribution service to approximately 62,000 customers in portions of two northeastern Pennsylvania counties

UGI said that there are currently no retail suppliers making offers to residential customers in its territories. A de minimis amount of residential accounts (three) are shown as shopping on PA Power Switch, which could reflect residential meters associated with C&I accounts.