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Allegheny Power Residential Bills Include Weighted Average SOS Prices for Two Periods, But Only Single Actual SOS Rate
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March 8, 2011
Allegheny Power in Maryland is currently including two weighted average prices of SOS service on its residential bills, but has not yet included recently accepted actual SOS rates through May 31, 2012, according to materials submitted by Allegheny in response to a petition from the Office of People's Counsel to further revise the SOS price comparison methodology.
As only noted in Matters (see 2/11), OPC alleged that several of the utilities were not reporting SOS price comparison information in the manner established by the Commission in a June order in Case 9228.
Allegheny has a unique procurement schedule for SOS, and, as a result, has already procured all of its residential supplies through May 31, 2012. The PSC's prior order on SOS price comparison information does not appear to have contemplated Allegheny's unique schedule. Regardless, Allegheny's bill and website appear to exclude known information that is contemplated to be included on the bills, while also including a unique situation of having two weighted average SOS prices listed.
Specifically, the Commission in Order No. 83423 issued in June held that the following disclosure should appear on all bills:
"Supply Price Comparison Information: The current price for Standard Offer Service electricity is x.x cents/kWh, effective through [date]. Standard Offer Service electricity will cost x.x cents/kWh beginning on [date] through [date]. The price of Standard Offer Service electricity after [date] has not yet been set. The weighted average price of Standard Offer Service electricity will be x.x cents through [date]."
The Commission further said that, "[t]he weighted average shall be calculated in the manner that BGE and PHI calculate their current PTCs, but the IOUs shall update it (and the SOS price figures) as soon as possible after every SOS procurement auction so that the numbers reflect all known SOS rates."
As has been repeatedly pointed out by Matters, the issue of "known" SOS rates has never been adequately established, given that while base supply charges obtained through the RFPs are known under a set schedule, transmission rates do not have an established schedule for modification (nor a specific sunset date), nor do the reconciliation components (although when set they will have a specific end date associated with each update). However, it has generally been taken that the utilities shall treat any updated base supply charges resulting from fully subscribed RFPs as "known" SOS prices, and list them on bills accordingly, with any future adjustment needed to reflect modified transmission or reconciliation rates addressed at the time of such modification.
However, Allegheny's March residential bill provides the following information, which is also contained on Allegheny's website:
"Generation, Transmission and Energy Cost Adjustment Price Comparison Information: The current price for Standard Offer Service (SOS) electricity is 8.206 cents/kWh, effective through May 31, 2011. The 12-month weighted average price of SOS electricity will be 8.387 cents/kWh through May 31, 2011. The 12-month weighted average price of SOS electricity beginning June 1, 2011 is estimated to be 7.048 cents/kWh."
This disclosure: 1) lacks "known," actual SOS rates for the SOS periods beginning June 1, 2011 and October 1, 2011 (e.g. not weighted averages), despite these base SOS rates having been adopted by the Commission in late February, and 2) includes two distinct weighted averages for SOS prices, which results from Allegheny's unique procurement schedule (and the availability of future SOS rates much earlier) but which was seemingly not contemplated under the PSC's June order. Also note that the weighted average for the period beginning June 1, 2011 is an estimate, likely reflecting the fact that the Energy Cost Adjustment has not yet been set for this period, and that transmission rates may change in the future.
To be clear, it does not appear the lack of "known" SOS prices for the period after June 1, 2011 on the Allegheny bill is due to any timing issue (e.g. the turnaround from the PSC's order approving the rates in late February and March 2 billing date), because these known SOS rates are apparently used to develop the weighed average starting June 1, 2011, and the same information appears on Allegheny's website, which, if the information on bills had been omitted due to a turnaround issue, could reflect more recent information.
As to OPC's specific allegations against Allegheny, the utility noted, as Matters had in our earlier story, that the future SOS information that OPC complained was not listed on Allegheny bills in early February was in fact appropriately omitted, since these rates, although their amount had been calculated based on the most recent RFP, had not at that time been accepted by the PSC, and thus the rates were not final.
Pepco and Delmarva said that they have made various changes recommended by OPC, and will reflect updated known SOS information going forward on their bills and website. Specifically, on the next-issued bill, Pepco and Delmarva will list the current SOS price through May 31, 2011; the SOS price for June 1, 2011 through September 30, 2011; a statement that SOS rates beyond September 30, 2011 have not yet been set; and the weighted average SOS price through September 30, 2011.
Pepco and Delmarva were the only utilities to substantively address the timing issue raised by OPC related to the weighted average price; specifically, situations where the period of current and known SOS prices are greater than 12 months, and how to establish a 12-month weighted average in such circumstances.
Pepco and Delmarva said that, when known, they will use the weighted average of the prices for the next two SOS seasons to determine the weighted average SOS price. For example, the SOS prices for June 1, 2011 through September 30, 2011 are already known, and the SOS price for October 1, 2011 through May 31, 2012 will become available in May 2011. "Thus, for a latter portion of May 2011, the weighted average prices will be calculated using the next known seasonal prices for the following two seasons," meaning the periods June 1, 2011 through September 30, 2011 and October 1, 2011 through May 31, 2012, and ignoring the SOS price for the current period (e.g. May 2011) in this calculation.
OPC also proposed several deadlines and tariff filing requirements for updated SOS rates. Pepco and Delmarva did not oppose the proposal provided that OPC's deadlines are measured in business days. Allegheny and Baltimore Gas & Electric generally opposed the requirements as unnecessary in light of current practice, but said that, if adopted, more time should be provided for filings than OPC suggested. Washington Gas Energy Services supported the recommendations made by OPC.
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