|
Consulting |
Search |
Pa. PUC to Require All Gas POR Programs to Include All-In Requirement, Under Final Retail Gas Market Order
Email This Story
February 24, 2011
More than one month after voting on the final rules, the Pennsylvania PUC has served on parties a final written order concerning the competitive retail gas market, addressing issues such as the Price to Compare, Purchase of Receivables, and capacity release (Docket L-2008-2069114).
Though the PUC described some of the rules' provisions in adopting them in January (see 1/14), the final language issued yesterday represents parties' first ability to see the final cuts.
Under the final rules, the gas Price to Compare or commodity rate will be adjusted on a quarterly basis and will consist of the following elements on a per MCF or DTH basis: the gas cost rate determined in the natural gas distribution company's (NGDC) Section 1307(f) proceeding; the e-factor reconciliation for over and under collections in accordance with Section 1307(f); the NGDC’s avoidable natural gas procurement costs (determined via a Section 1308(a) tariff filing); and a class-specific Merchant Function Charge for uncollectibles (determined via a Section 1308(a) tariff filing or prior rate case). These elements shall be the components of a single PTC rate on the customer’s bill.
To reduce litigation and uncertainty as to the scope of bypassable gas procurement cost to be shifted from the delivery rates to commodity rates, the final regulations specify the management, contracting, scheduling, administrative and other costs that are directly associated with the NGDC’s natural gas procurement function. These costs will include the following items:
• Natural gas supply management costs, including natural gas supply bidding, contracting, hedging, credit, risk management costs, and administrative and general expenses related to those activities.
• Non-choice and SOLR related administrative costs, including education, regulatory, litigation, tariff filings, working capital, information system and associated administrative and general expenses.
• Applicable taxes, excluding sales tax.
The Section 1308(a) tariff filings to remove these gas procurement costs from delivery rates shall be filed within 90 days pursuant to a schedule to be established by the Commission, or in the NGDC’s next base rate case, whichever occurs first.
Procurement costs related to storage and transportation capacity, which is used for SOLR service or assigned to NGSs (natural gas suppliers) serving their shopping customers, have not been unbundled.
Answering concerns that making SOLR-related administrative costs bypassable could leave fewer customers to pay for such costs as migration increases, the PUC said that, "in the future, the NGDC’s SOLR function decreases to such an extent that its gas procurement costs recovered through SOLR rates are not adequate to support its residual gas procurement role, that situation can be addressed by future rate changes or designation of an alternative SOLR supplier under the provisions of Section 2207(a)(1). 66 Pa. C.S. § 2207(a)(1)."
As noted above, the e-factor, or migration rider, will be included as part of the gas cost rate portion of the Price to Compare, "as it will allow for a more accurate comparison between competitive supplier offers and the current rates charged by NGDCs for default service."
"While the e-factor does relate to prior period costs, these are nonetheless gas commodity costs charged by the incumbent NGDC, paid by each default service customer and, thus, includable in the PTC," the PUC said.
However, the final rules require NGDCs to file shortened migration riders, specifically directing NGDCs to use a 90-day migration rider, as opposed to the current annual migration rider.
With respect to POR, the final order maintains that such programs are not mandated; however, the rule does establish uniform designs for any voluntary POR program offered by an NGDC. Furthermore, to the extent a current, negotiated POR program is inconsistent with the final regulations, the existing POR program shall be modified upon its expiration, or if it has no set expiration date, within 36 months.
Notably, the final regulations impose an all-in requirement for the use of POR, which may not necessarily exist in all of the current negotiated POR programs.
The final rule states, "an NGS electing to sell its receivables to an NGDC shall include all of its accounts receivables related to choice residential and small business basic natural gas supply service in the POR program."
Based on such language alone, it is not clear whether the all-in requirement is universal, or only applies to specific classes (i.e. residential and non-residential, separately). Class-specific discount rates will be developed, so, from a policy perspective, there would be no reason to mandate that a supplier use POR for small commercial customers as a condition of using it for residential customers, since the dual billing of small commercial customers would not impact the residential discount rate.
Additionally, the rule provides that, "in order to qualify for participation in an NGDC’s POR program, an NGS shall use consolidated billing from the NGDC, unless the NDGS’s [sic] consolidated billing sytem [sic] cannot reasonably accommodate the NGS’s billings for basic supply service."
Furthermore, the rule provides that, "an NGS participating in an NGDC’S POR program may separately bill a customer for a specific service or product if that service or product does not meet the definition of basic natural gas supply service."
In the final regulations, the PUC deleted proposed Section 62.224(a)(9), which would have allowed the NGDC to recover or collect losses from distribution customers if actual uncollectible costs exceeded the POR discount. "We believe that if an NGDC offers a POR program, the increased uncollectible expense it incurs should not be borne by ratepayers. See 66 Pa. C.S. §1402. The ratepayers should not be guarantors of the business risk of an NGS. Variations between projected and actual uncollectible expenses can be addressed by tariff updates to the POR program," the PUC said.
Regarding capacity release, the final rules hold that, "a release, assignment or transfer shall be made on a nondiscriminatory basis as to price, reliabilty [sic] and functionality."
"A release of an NGDC’s pipeline and storage capacity assets shall follow the customers for which the NGDC has the procured the capacity, subject only to the NGDC’s valid system reliablity [sic] and FERC constraints," the rule states.
The release, assignment or transfer shall be "based upon" -- rather than "at" -- the applicable contract rate for capacity or Pennsylvania supply and be subject to applicable contractual arrangements and tariffs. This new "based upon" language is intended to provide NGDCs with flexibility to ensure that shopping and non-shopping customers are treated equally, such as by pricing the capacity at a rate equal to the NGDC's weighted average cost of capacity, whether or not the capacity contract rate is higher or lower than the release rate.
Email This StoryCopyright 2010-
Be Seen By Energy Professionals in Retail and Wholesale Marketing
Run Ads with Energy Choice Matters
Call Paul Ring
954-
|
Consulting |
Search |