PECO Files To Recover New Costs Via POR Discount, Add Merchant Function Charge

Consistent with prior Pennsylvania PUC direction, PECO has filed to begin recovering uncollectible costs through its natural gas purchase of receivables discount, and to create a bypassable Merchant Function Charge to recover uncollectibles from default service customers.

PECO's original gas POR discount rate only included a temporary 1% discount for implementation costs. Uncollectibles, for both competitive supply and sales service customers, are currently recovered in base rates.

However, after PECO's program was implemented, the PUC adopted regulations regarding the unbundling of natural gas procurement costs. Such regulations provide that distribution companies are required to file a bypassable Merchant Function Charge (MFC) rider, and that the MFC rider, "must remove the cost of uncollectibles applicable to natural gas costs from its distribution rates and recover those annual costs as part of the PTC [Price to Compare] on a revenue neutral basis."

Moreover, the adopted regulations provide that a distribution company's POR program, "shall use a discount rate designed to reflect the NGDC's [distribution company's] actual uncollectible rate for supply service customers," plus any incremental implementation and administrative costs of the POR program.

Distribution companies with existing POR programs that did not have a defined term, such as PECO's, were given until April 14, 2015 to update their POR program to be consistent with the adopted regulations

PECO has now filed in tariff form proposed new POR discount rates which will result from compliance with the PUC's directives.

PECO will implement a POR discount of 2.07% for Rates GR and CAP, 1.30% for Rates GC and the Excess Off-Peak Use Rider, and 1.00% for Rates OL, L and MV-F, proposed to be effective June 1, 2015

The bypassable Merchant Function Charge will reflect the application of the uncollectibles percentage factor of the POR discount (1.07% for Rates GR and CAP; 0.30% for Rates GC and the Excess Off-Peak Use Rider) to sales service commodity costs.