PECO Proposes Adding 24-Month Laddered Contracts to Small C&I Default Service To Introduce Price Stability; Proposes Slice of Residential Service Be Served Under Five-Year Contract

PECO has filed with the Pennsylvania PUC a proposed electric default service for the period June 1, 2017 to May 31, 2019.

For residential customers, PECO proposes to serve 96% of default service load under a mix of one-year (approximately 40%) and two-year (approximately 60%) fixed-price full requirements, load-following products.

The remaining approximately 4% of the default service supply portfolio for the residential class would consist of a mix of five-year fixed-price full requirements products (approximately 3.2%) and spot energy purchases (approximately 0.8%). The five-year products will consist of two tranches (each supplying 1.6% of the residential class default service load) of five-year fixed-price full requirements products (for June 2017 through May 2022 delivery)

For the Small Commercial (under 100 kW) class, PECO is proposing a change to add more price stability to default service.

The Small Commercial class is currently served with one-year fixed-price full requirements products, each laddered with six-month spacing between the commencement of delivery periods.

For Small Commercial customers, PECO is proposing to replace the current mix of products with equal shares of one-year and two-year fixed-price full requirements products. Specifically, PECO will transition to a Small Commercial supply mix where 50% of the fixed-price full requirements contracts have terms of one year, and the remaining 50% have terms of two years, each laddered with six-month spacing between start dates

PECO noted that, with this change, the Small Commercial procurement approach will transition from the current cycle in which 50% of the supply is replaced every six months to a cycle in which 37.5% of the supply is replaced every six months, thereby reducing the likelihood of significant rate changes due to adverse circumstances or market conditions at any given time.

"[T]he revised procurement strategy for the Small Commercial class provides price stability benefits for all small non-residential customers who may not have the knowledge or resources to elect a competitive EGS offering that provides the price stability they seek," PECO said.

The Small Commercial class would include all customers with annual peak demand of up to 100 kW on schedules GS, PD and HT plus lighting customers on schedules AL, POL, SLE, SLS and TLCL.

For non-residential customers above 100 kW, default service would consist of hourly, spot-priced full requirements products procured on an annual basis, under a newly consolidated Large Commercial and Industrial class (with the prior medium class being eliminated, as the medium class will move to hourly priced default service as of June 1, 2016)

For all of the procurements described above, default service products will be procured approximately two months prior to the beginning of the applicable delivery period.

PECO proposes to continue use of a Nonbypassable Transmission Charge (NBT) to recover the following PJM charges from all distribution customers in PECO’s service territory: Generation Deactivation/RMR charges (PJM bill line 1930) set after December 4, 2014; RTEP charges (PJM bill line 1108); and Expansion Cost Recovery charges (ECRCs) (PJM bill line 1730).

PECO proposes to also continue to be responsible for and to recover Network Integration Transmission Service (NITS) and Non-Firm Point-to-Point Transmission costs through its unbundled, bypassable Transmission Service Charge (TSC).

PECO proposes two changes related to how the adder to the hourly priced Generation Supply Adjustment (GSA) is implemented for Large Commercial and Industrial customers. In order to reduce fluctuations for Large Commercial and Industrial customers, PECO is proposing to reconcile the over/undercollection component of the Large C&I GSA (known as the E-Factor) on a semi-annual basis. As part of this change, PECO will file the GSA adder to hourly prices on a quarterly basis, rather than the current monthly basis. "This change will reduce potentially significant fluctuations in default service rates and provide better information for customer shopping decisions," PECO said