PUC Rejects Retroactive Assignment Of Costs To Retail Suppliers

The Public Utilities Commission of Ohio recently rejected a recommendation from the Ohio Consumers’ Counsel to assign previously incurred propane commodity costs, recovered in the bypassable default service rate, to retail suppliers

OCC made the recommendation in a PUCO review of Duke Energy Ohio's purchased gas adjustment

For the time period covered by a GCR audit, propane commodity costs were assessed solely to GCR customers. While Duke's propane-air facilities were utilized to maintain distribution operating pressures on more than 50 days during the audit period, no suppliers participating in the choice program elected to utilize their allocated share of Duke’s propane-air facilities during the audit period and, therefore, did not pay for any portion of Duke's propane costs, consistent with the applicable tariff language

As part of the stipulation, Duke agreed to change its gas tariff to require choice suppliers to deliver 100 percent of their target supply quantity.

Duke also agrees to start including the incremental cost of propane utilized for system integrity in the Contract Commitment Cost Recovery Rider (CCCR Rider), to, as described by PUCO, "make choice customers pay their fair share of marginal propane costs on a going-forward basis."

The incremental propane cost will be based on the difference between the cost of producing propane-air and the weighted average cost of gas for Duke’s supply and storage withdrawals at the citygate on the day it was burned.

However, the assignment of propane costs to retail suppliers is on a prospective basis only

OCC objected to that provision, arguing that the stipulation should be amended to include the incremental propane costs previously incurred during the audit period in Duke’s Contract Commitment Cost Recovery Rider (CCCR), and to require a refund of those costs to GCR customers

PUCO rejected the OCC's recommendation, as PUCO found that the stipulation, "reasonably resolves the issue of allocation of propane costs."

"As Duke and IGS note, the re-allocation of propane costs under the Stipulation necessitates a tariff change, which OCC does not contest. We agree with Duke and IGS that it would be inappropriate to require a retroactive re-allocation that is counter to the Company’s tariffs and the expectations of the competitive suppliers that have acted in compliance with the current tariff provisions and the terms of the gas supply aggregation/customer pooling agreement contained therein," PUCO said

PUCO also rejected OCC's recommendation that Duke be required to implement a standard service offer auction process for default service, noting that, under the revised code, only a utility may apply for such an exemption from the GCR mechanism

PUCO also rejected OCC's proposal that Duke be required to include shadow-billed default service costs on utility consolidated bills, though PUCO noted that OCC is free to raise the issue in a recently opened rulemaking on natural gas market utility billing (which as proposed would add a price to compare statement to bills, see story here)

The stipulation also provides that Duke will file an application to change its gas tariff to prevent avoidance of capacity release due to timing of customers leaving the GCR.

Duke has also agreed to hold a collaborative to discuss rates and charges paid by competitive retail natural gas suppliers for Firm Balancing Service (FBS) and Enhanced Firm Balancing Service (EFBS) and to discuss whether the formula for pricing FBS should be modified.

Case No. 18-0218-GA-GCR