|
Consulting |
Search |
Pennsylvania PUC Adopts Final Gas Cost Unbundling, POR Regulations
June 24, 2011
Email This Story
The Pennsylvania PUC, via notational order yesterday, has adopted revised final rules related to the natural gas Price to Compare, Purchase of Receivables programs, and capacity release (L-2008-2069114).
The rules will now be resubmitted to the Independent Regulatory Review Commission.
There are no substantial revisions to the final rules versus the recent draft issued by the PUC in early June (6/10).
To briefly recap, the final regulations establish the bypassable Price to Compare (PTC) as including the (1) the natural gas supply charge determined in the distribution company's Section 1307(f) proceeding, including the reconciliation for over and under collections (e-factor); (2) the Gas Procurement Charge; and (3) the Merchant Function Charge.
The Gas Procurement Charge shall consist of natural gas supply service, acquisition, and management costs, including natural gas supply bidding, contracting, hedging, credit, risk management costs, and working capital; as well administrative, legal, regulatory, and general expenses related to those natural gas procurement activities, excluding those related to the administration of firm storage and transportation capacity.
The Merchant Function Charge shall reflect the uncollectibles related to commodity supply, which shall be removed from base rates.
"[W]e note here that because NGDCs [distribution companies] use a portfolio approach for their natural gas purchases, the PTC will likely never track exactly the current market prices for natural gas. However, the changes we have directed in these regulations to the PTC will, in our judgment, result in an improved ability for customers to know the commodity costs charge by the NGDC for default service and, on that basis, to make informed choices from among the offers to be made by competitive suppliers," the PUC said.
Purchase of Receivables programs remain voluntary under the regulations, but the regulations do establish requirements applicable to all offered POR programs.
POR programs, which will only cover basic supply costs, will subject suppliers to an all-in/all-out requirement. Suppliers may continue to serve customers, via dual billing, who are purchasing products which are not eligible for POR due to the inclusion of a service in addition to basic commodity supply.
Receivables must be billed via utility consolidated billing for eligibility in POR, "unless the [distribution company's] consolidated billing system cannot reasonably accommodate the [supplier's] billings for basic services."
The POR discount rate, which will mirror on the Merchant Function Charge for the uncollectibles portion, shall account for risk and cost differences among the utility's customer classes.
Utilities may file an update to the POR discount rate if costs of the program exceed the discount rate. This is in contrast to an earlier proposal which would have recovered such excess costs via base rates instead of reconciling them in the POR discount rate.
Existing natural gas POR programs may continue until their expiration date without modification to conform to the new rules. For existing POR programs with no defined expiration date, distribution companies will be given 36 months to conform the programs to the new regulations.
Regarding pipeline and storage capacity, the regulations state that a release of a distribution company's pipeline and storage capacity assets, "shall follow the customers for which the [distribution company] has procured the capacity, subject only to the [distribution company's] valid system reliability and FERC constraints."
A release, assignment, or transfer shall be based upon the applicable contract rate for capacity or Pennsylvania supply and be subject to applicable contractual arrangements and tariffs.
This language is intended to provide flexibility such that usable capacity is released to marketers at fair and equitable rates (not the most expensive and least usable capacity), while at the same time ensuring that such capacity releases are priced at a rate so that shopping and non-shopping customers are treated equally. Specifically, the PUC intends for this language to allow the pricing of the capacity at a rate equal to the distribution company's weighted average cost of capacity, whether or not the capacity contract rate is higher or lower than the release rate
Email This Story
Copyright 2010-
Be Seen By Energy Professionals in Retail and Wholesale Marketing
Run Ads with Energy Choice Matters
Call Paul Ring
954-
|
Consulting |
Search |