Pa. PUC Approves Utility Default Service Program Which Includes Block Purchases For 50% Of Default Service

The Pennsylvania PUC adopted without modification a settlement concerning UGI Utilities, Inc. – Electric Division's default service plan covering the period June 1, 2017 through May 31, 2021

The settlement generally adopted UGI's procurement plan as filed, with the only major modification in the settlement being the timing of the procurements, so that they occur several months closer to the delivery start date

Under the adopted settlement, UGI will maintain the default service structure and procurement design approved for its current default service plan, which, for non-hourly customers, includes about 50% of load procured through full requirements load following contracts, and 50% through block purchases

More specifically, for GSR-1 Group (under 100 kW) customers, the adopted settlement authorizes UGI to acquire 50% of the estimated annual requirement through full requirements contracts, acquired in two tranches, except for approximately 2,833 MWh per year of supply acquired from the New York Power Authority and minor purchases of power acquired pursuant to the mandates of the Commission's net metering regulations.

The remaining 50% of the estimated annual requirement for all GSR-1 Group default service customers will be procured from the purchase of blocks (7x24 and 5x16) and spot purchases and sales from and into the PJM market. UGI will also procure any necessary AEPS credits, ancillary services and, where prudent, any congestion management services, and will serve as the load serving entity for this portion of default service supply.

Originally, UGI had proposed procuring both the full requirements tranches and blocks via laddered procurements held twice annually, with the procurements conducted about 6-8 months prior to the delivery start date. Under the adopted settlement, the procurements, which will retain the same laddering, will be conducted about 2-3 months prior to the start of delivery

Under the adopted settlement, the initial GSR-1 rates will be determined by adding the volumetric load-following service cost, the block procurement costs, ancillary and transmission procurement costs, associated load serving entity costs, AEPS costs and any unrecovered or over-recovered pre-June 1, 2017 default service cost/AEPS balances, and dividing the resulting amount by expected annual sales.

The initial rate will be incorporated into UGI's tariff no later than May 2, 2017, and at 30 days in advance of each subsequent quarter, and will be subject to quarterly adjustments to reflect actual and projected changes in costs and the recovery or refund of pre- June 1, 2017 default service cost balances.

The adopted settlement requires UGI to obtain and provide load research data to assist in future consideration of whether the residential and small commercial procurement class should be separated into unique classes. The small size of the associated load is a hindrance to any such move.

Hourly-priced default service pricing will apply to customers at or over 100 kW (GSR-2 Group)

The settlement adopted UGI's proposal to continue to make available, based on supplier interest and suppliers' expense, a Standard Offer customer referral program. Such a program has been available, at supplier's expense, since UGI's prior default service program began in 2014.

UGI has estimated that it would cost approximately $10,000 per month to operate the Standard offer Program due to estimated increased call time at UGI's call center. This monthly $10,000 charge would be allocated to participating suppliers on a per capita basis.

During the three-year term of the current default service plan, only one EGS expressed interest in serving the residential market in UGI's service territory. This EGS informed UGI it was no longer interested after receiving initial information about the Standard Offer program.

Docket No. P-2016-2543523