|
Search |
PPL Electric Proposes Linking TOU Rate to Default Service Rate, Making Prior Under-Collection Nonbypassable
September 28, 2011
Email This Story
PPL Electric Utilities has filed to revise its Time of Use (TOU) generation rate design, with a proposed effective date of March 1, 2012. PPL also proposed including prior TOU under-collections in its sought nonbypassable rider.
The filing comes after the most recently filed TOU adjustment would have led to an off-peak rate as high as 28 cents per kWh due to prior period under-collections, had the PUC not suspended the filed rates and continued the TOU generation rates previously in effect.
The large disconnect between PPL's TOU rates, which are based on spot prices as well and reconciliations, from the standard default service rates (with TOU having been both wildly over and under default rates at one time or another) prompted PUC Chairman Robert Powelson to declare the implementation of the TOU rates at PPL a "complete debacle." (see 8/26).
The main revision in PPL's new TOU generation rate design would be to link the TOU rates to default service rates.
As noted above, TOU prices are currently set independently from default service rates based on PJM spot prices, which has led to circumstances in which the on-peak TOU rate has been lower than PPL's default rate, and, at other times, circumstances in which the off-peak TOU rate was higher than PPL's default rate; in both cases destroying the intended signals from TOU rates.
PPL has proposed correcting this problem by setting TOU rates as a fixed premium or discount to the default service rate. "[I]t is now clear that any reasonable TOU plan must be designed around the applicable fixed price default service rate so that the TOU on-peak rate is higher than the fixed price default service rate and the TOU off-peak rate is lower than the fixed price default service rate."
Specifically, PPL's proposal, for residential TOU rates, would establish a year-round premium of 20% over the otherwise applicable default service rate to establish the on-peak TOU rate. The premium percentage would be fixed throughout the year, but the actual on-peak rate would change quarterly since the underlying default service rate changes quarterly.
For residential customers, the TOU off-peak rate would be set at a fixed discount of 5% off of the default service rate.
Using the current Price to Compare of 8.411 cents, the on-peak residential rate would be 10.095 cents, and the off-peak residential rate would be 7.990.
For residential customers, PPL would adjust the on-peak hours to be 12 p.m. to 7 p.m. on all non-holiday weekdays throughout the year. Off-peak hours would be all other hours.
PPL would use a similar fixed premium/discount mechanism for small commercial TOU rates. For small commercial customers, the on-peak premium would be 12%, and the off-peak discount would be 8%, versus default service rates.
On-peak small commercial hours would remain 7 a.m. to 7 p.m. on non-holiday weekdays. Off-peak hours would be all other hours.
PPL said that it would also perform, at the time of each TOU price change, a reconciliation to account for the difference between: (1) the actual fixed price default costs for the applicable quarter and (2) the pro forma revenue calculated on the basis of the cost per kWh for Fixed Price Service for the computation quarter times the actual TOU Program kWh sales for the computation quarter. "This is appropriate because the TOU rates are based on the fixed price default service rate and the reconciliation is designed to recover differences in projections of the fixed price default service costs for each quarter with actual costs. It is important to note that PPL Electric will not reconcile any over/under recoveries resulting from increased/decreased revenues due to shifted demand under this methodology," PPL said.
PPL said that it will acquire default supplies for TOU customers under its existing default service plan.
PPL currently has an under-collection of $2.35 million for residential customers, and $100,000 for small commercial customers, due to its existing TOU program. "Due to the size of the under-collection, PPL Electric does not believe that it will be able to recover this amount from TOU customers because this would add approximately 21.2 cents per kWh to residential TOU rates and 5.8 cents per kWh to small C&I TOU rates."
Accordingly, PPL said that should the PUC approve its request to impose a nonbypassable reconciliation charge on all customers for any default service under/over-collections through May 31, 2012, "PPL Electric anticipates that the current TOU rate under recovery balance would be recovered through that mechanism."
See 8/29 for discussion of the proposed nonbypassable surcharge
In the event that the Commission does not approve the nonbypassable rider, PPL requested that it be permitted to recover prior period TOU under-collections from all default service customers (by customer class) through the company's GSC-1 reconciliation mechanism.
The revised TOU program described above would apply through May 31, 2013, which is the end of PPL's current default service plan. "PPL Electric anticipates that it will file an updated TOU program to become effective on June 1, 2013, consistent with its next default service plan."
PPL would not automatically move customers on the current TOU program to the new program. "Instead these customers will be notified by mail and a follow-up phone call that the existing TOU program is ending and that they have the opportunity to: (1) shop with a competitive supplier; (2) move to fixed price default service or (3) choose the new TOU program," PPL said. Customers that do not make an affirmative election will be transferred to the company's fixed price default service.
As is the case currently, the optional TOU generation rates are available to customers served under Rate Schedules RS, RTS(R), GS-1, GH-1(R), GH-2(R), IS-1(R) and GS-3 (under 500 kW). Customers who are served under Rate Schedule RTD(R) may participate in the program by accepting service under Rate Schedule RS.
Email This Story
Be Seen By Energy Professionals in Retail and Wholesale Marketing
Run Ads with Energy Choice Matters
Call Paul Ring
954-
|
Search |
