PENNSYLVANIA



PENNSYLVANIAPUBLIC UTILITY COMMISSIONHarrisburg, PA 17105-3265 Public Meeting held May 23, 2013Commissioners Present:Robert F. Powelson, ChairmanJohn F. Coleman, Jr., Vice ChairmanWayne E. Gardner, StatementJames H. CawleyPamela A. WitmerJoint Petition of Metropolitan Edison Docket Nos. P-2011-2273650Company, Pennsylvania Electric Company, P-2011-2273668Pennsylvania Power Company andP-2011-2273669West Penn Power Company for Approval ofP-2011-2273670Their Default Service ProgramsOPINION AND ORDERBY THE COMMISSION:Before the Public Utility Commission (Commission) for consideration and disposition is the Joint Petition for approval of the Second Revised Default Service Plan - Retail Market Enhancement Programs of Metropolitan Edison Company (Met-Ed), Pennsylvania Electric Company (Penelec), Pennsylvania Power Company (Penn Power) and West Penn Power Company (West Penn) (collectively, FirstEnergy or Companies) (Joint Petition) filed on April 16, 2013.Brief History of the ProceedingFollowing the transition to a competitive market for electric generation in Pennsylvania, the Companies retained the obligation to serve as the default service providers for their retail customers pursuant to 66 Pa. C.S. § 2807(e)(3.1). Accordingly, each of the Companies had previously filed plans to fulfill their default service obligation pursuant to Commission–approved default service plans (DSPs) that will expire on May?31, 2013.On November 17, 2011, the Companies filed a Joint Petition requesting that the Commission approve DSPs for the period from June 1, 2013, to May 31, 2015 (DSP?II). Following extensive discovery, evidentiary hearings and the submission of briefs, Administrative Law Judge (ALJ) Elizabeth H. Barnes issued a Recommended Decision on June 15, 2012. After consideration of Exceptions to the Recommended Decision and corresponding Reply Exceptions, the Commission issued the August 2012 Order which, inter alia, approved DSP II, in part. In the August 2012 Order, the Commission, inter alia, directed the Companies, in collaboration with interested electric generation suppliers (EGSs), to submit for Commission approval, proposals to resolve issues related to how EGSs will pay for the Retail Opt-In (ROI) Aggregation and Standard Customer Offer Referral program costs, as well as matters related to the implementation of the ROI Aggregation program.Several parties filed Petitions for Clarification, Reconsideration and/or Rehearing of the Commission’s August 2012 Order and corresponding Answers. At our Public Meeting held September 13, 2012, the Commission acted to grant the Petitions, pending further review of, and consideration on, the merits of the Petitions. On September 27, 2012, the Commission entered an Opinion and Order that addressed the Petitions on the merits. The issues raised in the petitions included: inclusion of generation deactivation charges in the default service support rider, ROI issues, the Standard Offer Program discount, participation in the RME programs by Customer Assistance Program (CAP) customers, implementation of the New/Moving Customer Program, and a request for authorization to proceed with procurements. On October 11, 2012, the Commission entered an Amended Opinion and Order providing further clarification on the Petitions for clarification, Reconsideration and Rehearing. In resolving the issues raised by the petitions, the Commission decided that generation deactivation charges should remain with the EGSs, the standard offer program customer will be offered the rate of seven percent below the prevailing price to compare at the time the offer is made and that rate will then be fixed for a period of twelve months, CAP customers are to be allowed to participate in the RME programs, the New/Moving Customer referral program should be implemented as soon as possible, and regarding procurements, that the Commission can only clarify that the August 2012 Order is a final disposition of the Companies’ DSP II, subject to the Commission’s disposition of the Revised DSP II. (ROI issues are no longer relevant as the program has been suspended - as discussed below.) On October 11, 2012, FirstEnergy filed a request for a thirty-day extension to submit its proposals to resolve several issues identified in the August 2012 Order. By Secretarial Letter issued on October 12, 2012, the Commission granted the Companies’ request by extending the filing deadline to November 14, 2012.On November 14, 2012, the Companies filed a Revised DSP II Plan (Revised DSP II or Revised Plan) to address the directives of the August 2012 Order, including the following:Revised TOU Riders for West Penn and Penn Power (see, August?2012 Order at 93);An ROI Aggregation Program to replace the Companies’ originally proposed ROI Auction Program (see, August 2012 Order at 111);Procedures for EGSs to pay the costs of the ROI Aggregation Program and the Customer Referral Program (see, August 2012 Order at 136 and 137); and Revisions to the RME Programs to reflect: (1) the Commission’s directive to include small commercial customers; and (2)?recommendations from stakeholders to clarify procedures for EGS participation and customer enrollment in the Customer Referral Program (CRP). (see, August 2012 Order at 101-154)On February 15, 2013, the Commission entered an Opinion and Order?(February 2013 Order) approving the revised RME proposals, with modifications. The February 2013 Order directed the Companies to file a revised plan within 60 days. The Met-Ed Industrial Users Group, the Penelec Industrial Customer Alliance, the Penn Power Users Group, and the West Penn Power Industrial Intervenors filed a petition jointly seeking clarification that large commercial and industrial customers will not be responsible for RME program costs. The Companies filed a petition for clarification requesting approval of the CRP excluding Appendix B of the CRP which required an EGS to use the Companies’ Customer Disclosure Statement. The February 2013 Order was subsequently clarified by Order entered April 4, 2013 (April 2013 Clarification Order). The April 2013 Clarification Order clarified that (1) the allocation of CRP costs is limited to customer classes that are eligible to participate in the program and (2) the requirement that EGSs use the Companies’ form of Consumer Contract and Disclosure Statement was rejected. On April 4, 2013, the Commission entered a Final Order on Reconsideration (April 2013 ROI Order) which directed the Companies along with PECO Energy Company, PPL Electric Utilities Corporation, and Duquesne Light Company to postpone implementation of the ROI Programs, stop all activities relating to the ROI Programs and submit revisions to their Default Service Plans within thirty days. The Commission determined that simultaneous implementation of both the ROI and Standard Offer CRP could present concerns about customer confusion as well as EDC implementation. The Commission directed the affected electric distribution companies to postpone implementation of the ROI Programs. On April 16, 2013, the Companies submitted the Second Revised Default Service Plan to comply with the requirements of the February 2013 Order. The Second Revised DSP includes the modifications required by both the February 2013 Order and the April 2013 ROI Order suspending the ROI Program. The Second Revised DSP includes the following: A revised TOU aggregation agreement allowing customers to select a specific EGS for TOU service,Suspension of the ROI Program, Revised Electric Generation Supplier Coordination Tariffs (Supplier Tariff) to require EGSs participating in the CRP to pay a fee, not to exceed $30.00 per referred customer, and aRevised CRP Agreement eliminating the requirement for the EGS to use the Companies’ version of Consumer Contract and Disclosure Statement. The Office of Consumer Advocate (OCA) filed comments. The Retail Energy Supply Association (RESA), FirstEnergy Solutions Corp. (FES) and the Companies filed reply comments.DiscussionCost Recovery for the Customer Referral Program Background The Companies proposed in their Second Revised DSP that they will suspend the Retail Opt-In program pursuant to the Commission’s April 2013 ROI Order. The Companies also proposed revising the start date of the Customer Referral Program for residential and small commercial customers from June 1, 2013, to August 1, 2013. The Companies have provided a revised CRP Agreement and revised Supplier Tariff to reflect the addition of an EGS participant fee not to exceed $30 per referred customer. The Companies have estimated total cost per customer for the CRP as $38.58 per customer. Costs in excess of the $30 fee will be collected through a non-bypassable surcharge to be applied to the bills of customers eligible to participate in the CRP as already provided for in the Companies’ Default Service Support Charge Riders included in the Companies’ Revised RME proposals. OCA’s PositionOCA submits that steps must be taken to minimize the costs of the CRP so that costs remain within the $30 cap per referred customer. OCA further maintains that for any costs over $30, the Companies should split these costs evenly (50/50) between default service customers and the POR discount. OCA describes the 50/50 approach as “more reasonable and less harmful to customers” than the non-bypassable surcharge proposed by the Companies, but provides no further information to justify this assertion.FES’ PositionFES disagrees with OCA regarding the CRP costs. FES avers that the Companies’ proposal to recover costs above the $30 cap is expressly permitted by the Commission in the February 2013 Order and should be approved. RESA’s PositionRESA disagrees with OCA regarding the use of the non-bypassable surcharge to recover the excess per customer costs of $8.58. RESA states that allocating a reasonable portion of the costs of the CRP to all consumers is appropriate and reasonable because the program benefits all stakeholders. RESA submits that the Commission offered the EDCs two options to collect program costs exceeding the cap, including the method proposed by the Companies.FirstEnergy’s PositionFirstEnergy avers in its Reply Comments, that the Commission expressly allowed the use of the non-bypassable surcharge to collects customer costs in excess of $30. FirstEnergy also states that OCA does not explain how the 50/50 approach is more reasonable or less harmful to customers. FirstEnergy maintains that program costs could exceed the capped EGS amount and the Commission made provisions for costs exceeding the $30 cap in the February 2013 Order. DispositionThe February 2013 Order included the following regarding CRP cost recovery:As to the CRP, we agree with RESA that a fee of the lesser of thirty dollars per customer or actual costs per referred customer is appropriate. Any remaining costs should be recovered in either one of two ways: (1) through a non-bypassable surcharge, as proposed by RESA; or (2) shared with fifty percent from the POR discount and fifty percent from residential and small commercial default service customers. The Companies have provided a $30 fee and the additional cost of $8.58 will be recovered through option (1) above – a non-bypassable surcharge – as included in the Revised RME programs filed by the Companies on November 14, 2012. We take note of the OCA’s concerns regarding the Companies’ proposed CRP cost recovery, however, we conclude that the Companies’ proposed CRP cost recovery is in compliance with the February 2013 Order.Additional Second Revised DSP IssuesRegarding the revised TOU aggregation agreement allowing customers to select a specific EGS for TOU service, no comments were received. We agree with the Companies’ proposal to allow customers to select a specific EGS for TOU service as the Companies were directed to make this change in the February 2013 Order. We approve of the suspension of the ROI Program, and the removal of the ROI Program from the Second Revised DSP as the Companies were directed to make these changes in the April 2013 ROI Order. The Revised CRP Agreement which eliminates the requirement for the EGS to use the Companies’ version of Consumer Contract and Disclosure Statement is approved as the February 2013 Order directed the Companies to revise the CRP to remove the requirement.? ??CONCLUSIONBased on the foregoing discussion, we shall grant approval of the Second Revised DSP as set forth in this Opinion and Order; THEREFORE,IT IS ORDERED:That the Petition for approval of the Second Revised Default Service Plan Compliance Filing is granted, consistent with this Opinion and Order.That Pennsylvania Power Company’s Supplement No. 98 to Tariff Electric – Pa. P.U.C. No. 35 is hereby permitted to become effective on June 1, 2013.That Metropolitan Edison Company’s Supplement No. 39 to Tariff Electric – Pa. P.U.C. No. 51 is hereby permitted to become effective on June 1, 2013.That West Penn Power Company’s Supplement No. 228 to Tariff Electric – Pa. P.U.C. No. 39 and West Penn Power Company’s Supplement No. 169 to Tariff Electric – Pa. P.U.C. No. 37 is hereby permitted to become effective on June 1, 2013. That Pennsylvania Electric Company’s Supplement No. 38 to Tariff Electric – Pa. P.U.C. No. 80 is hereby permitted to become effective on June 1, 2013.6.That a copy of the Order shall be served on the Office of Consumer Advocate, the Office of Small Business Advocate, the Commission’s Bureau of Investigation and Enforcement and all active Parties to this proceeding. 2438400165100BY THE COMMISSION,Rosemary ChiavettaSecretary(SEAL)ORDER ADOPTED: May 23, 2013ORDER ENTERED: May 23, 2013 ................
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