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West Penn Power Files to Institute Charge of $6 Per Utility Consolidated Bill

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November 4, 2010

West Penn Power (Allegheny) has filed with the Pennsylvania PUC changes to its electric generation supplier (EGS) coordination tariff to, among other things, institute a new charge of $6 per utility consolidated bill per month to recover programming costs for the new Purchase of Receivables program (R-2010-2207938).

The filed tariff has an effective date of January 1, 2011, and nothing indicates that the $6 consolidated billing fee would have a separate effective date.

The utility consolidated billing charge of $6 per bill per month will be calculated each month based upon the number of utility consolidated bills issued on behalf of the supplier. This charge will be collected until the programming costs for Purchase of Receivables (estimated to be $235,025 during 2011) are fully recovered.

The filed tariff also includes a new Purchase of Receivables program, which also does not indicate a separate effective date apart from January 1, 2011. As part of the pending non-unanimous settlement in the FirstEnergy-Allegheny Energy merger proceeding, a revised POR program would be implemented, within three months of the integration of West Penn Power into FirstEnergy's computer enterprise system.

The POR program as contained in the new supplier coordination tariff would purchase supplier receivables billed under utility consolidated billing at 100%, though suppliers will be subject to the utility consolidated billing fee described above.

The POR program contained in the tariff states that if the EGS's customer is on an Average Payment Plan, Allegheny shall only be obligated to purchase each month the amount of the monthly installment under the Average Payment Plan. For the Rate Ready Option of utility consolidated billing, Allegheny shall only be obligated to purchase each month the amount of the monthly installment under the Average Payment Plan. For the Bill Ready Option of utility consolidated billing, the customer's Average Payment Plan billing will be adjusted to reflect Allegheny's regulated non-basic electric supply charges and the full amount of the EGS charges submitted.

Under the program to be instituted under the FirstEnergy-Allegheny settlement, for budget billing situations, Allegheny would pay the EGS for the actual, current charges and not the budgeted amount.

Under the POR program contained in the tariff, Allegheny will only purchase charges associated basic electric supply, which includes renewable energy or RECs bundled with underlying generation service (essentially the same definition as under the FirstEnergy-Allegheny settlement).

Under the filed tariff, if an EGS is providing a customer with a service or product that does not meet the definition of basic electric supply, the EGS shall be permitted to issue a separate bill for such service or product in accordance with dual billing for that customer if the EGS provides written certification to Allegheny that the service or product cannot be billed under utility consolidated billing.

Other notable changes in the supplier tariff include a revised credit requirements section, including qualifications for unsecured credit. An EGS can satisfy Allegheny's credit requirements and receive an unsecured credit limit by demonstrating that it has, and maintains, investment grade long-term bond ratings from at least two of the following four rating agencies: Standard & Poor's, Moody's Investors Services, Fitch IBCA, and Duff & Phelps Credit Rating Company.

An EGS that is unable to meet the above credit criteria may choose from any of the following alternative credit arrangements: an irrevocable letter of credit; surety bond; cash deposit; guarantee from a parent entity with an investment-grade bond rating from at least two of the four previously identified rating agencies; including Allegheny as a beneficiary; or other mutually agreeable security or arrangement.

Allegheny will require an initial credit amount of $25,000 for an EGS that does not qualify for unsecured credit, with adjustments commensurate with Allegheny's net financial exposure to an EGS. The $25,000 credit requirement provides security for Allegheny for costs it could incur based on Allegheny's actual experience with a defaulted EGS, and the current financial exposure resulting from rebilled amounts of Allegheny consolidated billing after customers have switched to dual billing.

Section 5 of the supplier tariff has been revised to reflect customer options for the release of certain account information; describe data available from the eligible customer list and from pre-enrollment requests; outline the procedure to formalize a customer enrollment from an EGS; describe the procedure for a customer to discontinue service to an EGS or an EGS to discontinue service to a customer; and provide for an EGS-specific customer information sync list.

Per the tariff, Allegheny will begin posting historical unaccounted for energy values to the EGS support website.

Section 9 of the EGS Tariff expands the detail on the procedure for utilizing multiple scheduling coordinators performing EGS responsibilities, including capacity obligation, load forecasting, import capability, load scheduling, and reconciliation rights and responsibilities. Allegheny will increase the amount of scheduling coordinators per EGS from 3 to 10.

The tariff provides that Allegheny will fulfill a non-EDI request for customer load information available on its information system once per calendar year for no charge. Any electronically available load data, if requested in a calendar year in which Allegheny has already provided such data once for no charge, will be provided for a fee of $53 per hour, billed in 15-minute intervals. There is no charge for customer load data requested through EDI.

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