PUC Proposes Setting New Annual Fee for Retail Suppliers Based on Intrastate Revenues

The Pennsylvania PUC has issued a tentative order to implement Act 155 of 2014, which allows the PUC to assess annual fees to electric generation suppliers and natural gas suppliers related to the PUC's oversight costs of such suppliers.

The PUC proposes to charge a flat percent or assessment rate to retail electric and natural gas suppliers based on the entity's total gross intrastate operating revenues.

The PUC tentatively finds that this revenue-based fee for each supplier is superior to a flat fee applicable to all suppliers, as a flat fee, "is likely to be unfair to smaller firms or those just entering the market."

However, the PUC said that its proposal was preliminary, and sought comments on alternative mechanisms. Given that its assessment authority over retail suppliers is new, the PUC said that it will also consider an interim annual flat fee before adopting a permanent fee methodology.

The PUC also noted that it is aware of the unique nature of registered NGSs and EGSs who serve as "brokers."

"That is, NGS and EGS brokers may not necessary report gross intrastate operating revenues for the Commission to use as a basis for determining their reasonable share of the annual fee," the PUC noted.

"As such, the Commission seeks comments on alternatives for assessing brokers, including, but not limited to charging brokers a flat fee or a minimum EGS/NGS fee," the PUC said.

In a statement, Commissioner James Cawley in a joint statement with Chairman Robert Powelson noted the EGSs' gross intrastate revenues are composed primarily of electric distribution company transmission charges, and electric generation-related energy, capacity and ancillary charges, all of which are wholesale pass-through costs for EGSs.

Furthermore, the Commissioners noted that utilities currently recover their PUC assessments in base rates, not the bypassable Price to Compare.

"We must ensure that any fees and assessments on EGSs and NGSs are not discriminatory and do no skew competitive pricing," the Commissioners said.

"Given these gross revenue realities and competitive issues, we are interested in receiving comments on other, perhaps more accurate, methods of meeting the statutory requirement of establishing EGS and NGS fees on a reasonable cost basis, while ensuring competitive equity for supply services," the Commissioners said.

M-2014-2448825