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Recommended Decision Addresses Standard Offer Programs, CAP Shopping, NITS At Duquesne Light

November 12, 2020

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Copyright 2010-20
Reporting by Paul Ring •

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A Pennsylvania ALJ has issued a recommended decision addressing the default service plan of Duquesne Light Company (DLC or the Company) for the four-year period commencing on June 1,2021, and ending on May 31, 2025 (DSP IX).

The ALJ addressed contested issues in the proceeding as follows:

Standard Offer Program (SOP)

The ALJ recommended approval of a non-unanimous settlement concerning Duquesne Light's Standard Offer Customer Referral program (SOP)

Under the non-unanimous settlement recommended for adoption, DLC would outsource administration of the SOP to a third party. The costs associated with the third party administrator will be recovered, as proposed by DLC, from participating retail electric generation suppliers (EGSs).

The non-unanimous settlement recommended for adoption would adopt Duquesne Light's proposed increased fee to EGSs. As first reported by, Duquesne Light proposes to charge EGSs $30 per enrollment under the Standard Offer program. Currently, EGSs are charged $10.28 per enrollment

As part of its transition to using a third-party administrator, DLC agrees to develop customer education scripts that are, "consistent with the practices of Pennsylvania’s EDCs that currently utilize third party SOP administrators."

Under the non-unanimous settlement recommended for adoption, DLC agrees to provide these scripts to the parties for review/comment. Upon implementation of such scripting, DLC agrees to monitor the administrator's adherence to the scripts at regular intervals to ensure compliance and provide a report of its efforts at the midpoint of DSP IX, including a random sampling of call recordings of monitored solicitations, as part of such report.

Under the non-unanimous settlement recommended for adoption, DLC will continue its current practice of referring eligible customers to SOP, rather than automatically placing them into SOP.

Retail suppliers had proposed that Duquesne Light should automatically enroll new and moving customers with an EGS, rather than being given the option to enroll in default service or choose an EGS.

The ALJ rejected this proposal, stating, "EGS Parties [sic] proposal to automatically enroll new and moving customers in the SOP is contrary to the Choice Act and unfair to new and moving customers."

The ALJ said, "In attempting to justify their proposal, the EGS Parties mischaracterize the Choice Act. They state: 'The rationale for this recommendation is that the competition act never envisioned that after 25 years that the vast majority of customers could still be receiving default service.' In fact, there is nothing in the Choice Act that supports this statement. The Act’s short title is the Choice and Competition Act. This makes it clear from the start that the Act is about customer choice. Further, the Act requires that there be a Default Service Supplier even if the EDC is replaced in this responsibility."

The ALJ said, "The EGS Parties’ proposal, if accepted, would be poor policy with the potential for significant customer harm. Forcing a new or moving customer to switch to an EGS when the customer may be focused on the many issues of establishing a new residence is simply unreasonable. A customer that does not voluntarily and affirmatively elect service from an EGS should not be forced to accept service from an EGS."

Under the non-unanimous settlement recommended for adoption, DLC will continue its current practice of allowing SOP participants to remain with their EGS following the initial 12-month SOP period, absent affirmative action by the customer.

Under the non-unanimous settlement recommended for adoption, DLC will add a section to the "Customer Choice" page of its website that specifically addresses SOP and participating customers’ options upon expiration of their initial 12- month SOP contract.

Under the non-unanimous settlement recommended for adoption, DLC will conduct an analysis of SOP participants' effective supply rates following their initial 12-month SOP period, and will present results annually beginning in 2022.

The ALJ said of these provisions that, "The SOP Stipulation terms will yield useful information necessary for smart policy decisions. Importantly, the SOP Stipulation will better protect customers and makes sure they have the information and tools necessary to ensure they make financially smart choices regarding electric supply."

Customer Assistance Program (CAP) Shopping

The ALJ recommended adoption of a non-unanimous settlement concerning CAP shopping, under which Duquesne Light agrees to withdraw its proposal regarding Customer Assistance Program ("CAP") Shopping

Currently, CAP customers may not shop at Duquesne Light

As previously reported, Duquesne Light had originally proposed to implement shopping for Customer Assistance Program (CAP) customers consistent with the recently issued tentative guidelines from the PUC, including a requirement that an EGS would have to charge a rate at or below the price to compare at all times to serve a CAP customer

The non-unanimous settlement recommended for adoption provides that, within 6 months of a final, unappealable order implementing CAP Shopping in PPL Electric service territory, Duquesne Light will make a filing with the Commission regarding CAP shopping that is consistent with Duquesne Light’s CAP design, and which is informed by all available information and data.

In the event that the Commission orders PPL Electric to continue its CAP shopping program, Duquesne Light should be directed to make a separate filing with the Commission regarding CAP shopping, the ALJ said

"Given the substantial opposition to CAP shopping by CAUSE-PA and OCA in this proceeding, I agree with the parties to the CAP Shopping Stipulation. It is reasonable to wait for additional clarity from the Commission and/or courts before going forward with CAP shopping. I recommend that the Commission approve the CAP Shopping stipulation and Duquesne Light’s withdrawal of it CAP shopping proposal in the proceeding," the ALJ said

Network Integration Transmission Service (NITS)

The ALJ would reject a proposal from retail suppliers to assign the obligation for Network Integration Transmission Service (NITS) to Duquesne Light for all distribution customers, with recovery on a nonbypassable basis, and with retail suppliers relieved of any NITS obligations

Duquesne Light and Calpine opposed this proposal from retail suppliers, see our prior story here for their arguments against the proposal

The ALJ said, "I agree with the arguments of Duquesne Light and Calpine. The EGS Parties proposal that Duquesne Light be required to implement a non-by-passable charge to recover NITS charges from all customers should be rejected. I recommend that the Commission reject this proposal[.]"

Solar PPA Proposal

The ALJ recommended approval of Duquesne Light's solar PPA proposal

As previously reported, during the DSP IX program term, Duquesne Light proposes to enter into a long-term Solar PPA (i.e., more than four years and less than twenty years) to support a utility-scale solar project (up to a total of 7 MW) in Pennsylvania, preferably in Duquesne Light’s service area. Duquesne Light intends to conduct a competitive solicitation for the Solar PPA

Duquesne Light proposes to use the alternative energy credits (AECs) from the Solar PPA to offset the solar requirements for default service customers, offsetting in part the obligation of the default service wholesale suppliers.

Duquesne Light also intends to acquire the energy from the solar facility under the PPA, sell it into the real-time PJM market and credit the revenues back to default service customers.

The ALJ said, "For the reasons explained below, I conclude Duquesne Light has justified the solicitation of a 7 MW long-term solar PPA for development in Pennsylvania, preferably in the Company’s service territory. Duquesne Light’s proposed 7 MW solar PPA provides a prudent amendment to past supply mixes approved by the Commission for the Company. There is no need for a long-term projection of future prices to justify the approval of the actual contract by the Commission, as recommended by OCA. I agree with Duquesne Light that projecting long-term prices is speculative and without purpose in evaluating whether to proceed with a long-term contract. I recommend that the Commission approve this proposal, as part of the DSP IX procurement plan, subject to its actual review of the contract with the selected project sponsor."

The ALJ rejected arguments raised by retail suppliers against the solar PPA proposal

The ALJ said, "The Company is proposing to acquire a long-term contract for about half of its default service solar AEC requirements. The Company is not offering a solar rate or product. Therefore, the issue is only whether a long-term solar PPA is an appropriate component of a prudent mix strategy for default service customers. The only argument the EGS Parties make in this regard is that the price under the PPA may deviate from the market in some future years. I agree with Duquesne Light with respect to this argument. If that were a basis for objecting, then all long-term contracts should be prohibited. However, the Choice Act specifically permits contracts of 4 to 20 years."

The ALJ said, "The EGS Parties argue that sale of the energy from the solar facility places the Company back in the generation business. The critical requirement under the AEPS Act is to obtain requisite AECs. Procuring a 7 MW long-term solar contract is expected to secure slightly more than 50% of the required solar AECs (SAECs) on a long-term basis. The Company proposes to sell this energy into the market, and credit the sales revenue to the default service reconciliation."

The ALJ said, "I agree with Duquesne Light that, contrary to the EGS Parties’ contention, the sale of this energy does not put the Company in the generation business. The Company will not own the solar generating facility. It is simply a process to balance supply and demand and obtain for default service customers additional value from the solar PPA. The Commission has previously permitted a Default Service Supplier to sell excess energy into the market when default service supply purchased under a block product exceeds the demands of default service customers. Sales of energy purchased to serve default service load are not prohibited by the Choice Act, as contended by the EGS Parties."

EV-TOU Pilot Program For Non-Shopping Customers

The ALJ recommends approval of a pilot program providing EV-focused time of use generation supply rates to default service customers with EVs

Details of the program may be seen in our prior story here. A non-unanimous stipulation among certain parties addressed certain customer education and reporting requirements related to the TOU pilot, but not the substance of the program as detailed in our prior story, aside from the fact that DLC agrees to annually reset the EV-TOU supply rate factors as part of its tariff supplements updating Default Service Supply rates.

Notably, DLC will obtain default service supply for EV-TOU customers through the same fixed price full requirements (FPFR) products that provide standard default service supply for the respective customer classes. The FPFR wholesale suppliers will be paid the same price per megawatt-hour of supply regardless of how much of its supply is for EV-TOU customers. Any mismatches between revenues from EV-TOU supply rates and supply costs paid to FPFR product suppliers will be recovered/refunded within the existing bypassable Rider No. 8 – DSS 1307(e) customer class reconciliation

The EV-TOU pilot was opposed by retail suppliers

The ALJ said, "The provision of TOU service by the Default Supplier is clearly permitted by Act 129 and codified in Section 2807(f)(5) of the Public Utility Code, 66 Pa. C.S. § 2807(f)(5)."

"The Company’s EV-TOU Rate pilot does not prevent an EGS from designing and offering its own EV-TOU rates, including different on-peak and off-peak periods that may benefit specific customers.89 No EGSs are currently offering a TOU rate," the ALJ said

"Therefore, there is no basis for an argument that the Company cannot provide EV-TOU service, particularly in the circumstance where there is no other supplier of such service in its market," the ALJ said

"I agree with the position of the stipulating parties regarding the EV-TOU pilot and recommend that the Commission approve the EV-TOU pilot set forth in the Default Service Plan as modified by the stipulation of Duquesne Light, CAUSE-PA, NRDC, OCA and OSBA," the ALJ said

Non-contested Issues

The ALJ recommends approval of a partial, unopposed settlement addressing non-contested issues, including the pricing and procurement of Duquesne Light's default service supplies (other than the solar PPA noted above).

Notably, the unopposed settlement recommended for adoption addresses potential bill format changes.

See our prior story here for more details on these non-contested provisions which are recommended for adoption without modification


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