Duquesne Light Files New Default Service Plan With Changes To Reduce Rate Volatility -- EnergyChoiceMatters.com

Duquesne Light Files New Default Service Plan With Changes To Reduce Rate Volatility

Proposes New Green Tariff Option For Non-Shopping Customers

April 19, 2024

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Copyright 2010-24 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Duquesne Light has filed with the Pennsylvania PUC a proposed default service plan covering the period June 1, 2025 through May 31, 2029 (DSP X) under which Duquesne Light proposes changes to the supply portfolio for the Medium C&I customer class to reduce rate volatility

Currently, for the Medium C&I customer class, which includes customers with demands of at least 25 kW but under 200 kW, Duquesne Light procures all of the default service supplies via three-month full requirements contracts which do not overlap, with default service prices changing every three months

For the Medium C&I customer class, Duquesne Light proposes a change in the supply mix and proposes to serve half of the default service load under 12-month full requirements contracts, and to serve half of the load under 6-month full requirements contracts, with the 6-month contracts having two 3-month price periods for bidders (wholesale suppliers would bid two prices, one price for the first 3 months, and another price for the second 3 months)

The Medium C&I supply that is procured for 12-month contracts will be split across two separate delivery terms and procurements, such that the 12-month contract delivery periods will overlap on a semi-annual basis.

For the 6-month Medium C&I contracts, there will be no overlaps, and 100% of the 6-month requirements will be acquired in each procurement

Rates for Medium C&I customers will continue to be reset quarterly, and Duquesne Light proposes to continue to reconcile costs for these customers on a semi-annual basis.

Duquesne Light said that the proposed change for Medium C&I supply procurement, "will provide greater price stability for Medium C&I <200kW customers, which is especially important given the higher underlying wholesale market volatility experienced recently."

Duquesne Light further said that the change is designed, "to better encourage greater supplier participation and better ensure successful solicitations."

Duquesne Light said that the current use of three-month contracts for Medium C&I default service results in two procurements annually that are solely for Medium C&I supplies (since other customer classes have longer contracts and no tranches to be filled in these auctions).

"This may discourage some supplier participation because, all else equal, suppliers may be less likely to be interested in investing time and resources in a solicitation if the amount of supply that they can be awarded is small," Duquesne Light said

Duquesne Light does not propose any changes to the procurements for Residential & Lighting; Small C&I; and hourly customers.

As done currently, for the Residential & Lighting class, and the Small C&I (under 25 kW) class, Duquesne Light will procure default service supply through overlapping twelve-month (50% of the portfolio) and twenty four-month (50% of the portfolio) full requirements contracts.

Rates for the Residential & Lighting class, and the Small C&I class, would change every six months

Click here for a chart showing the proposed default service procurement dates, products, and term lengths

Green Tariff For Non-Shopping Customers

Duquesne Light is proposing a pilot for an optional Green Tariff for residential customers who are served under default service

Under the Green Tariff, an additional 7% of the participating customer’s annual consumption would be matched with carbon-free electricity (CFE) sourced within Pennsylvania.

Duquesne Light proposes to use the U.S. government’s definition of CFE, where CFE is electrical energy produced from resources that generate no carbon emissions. Among other sources, this includes nuclear as well as electrical energy generation from fossil resources to the extent there is active capture and storage of carbon emissions that meets the EPA’s requirements.

In order to acquire the additional CFE, Duquesne Light proposes to conduct an auction, and retail suppliers (electric generation suppliers, or EGSs) and other third parties will be allowed to bid for the right to provide energy attribute certificates (EACs) to serve Green Tariff customers, Duquesne Light said

Although not explicit, Duquesne Light's testimony suggests that only a single provider will be selected to provide EACs under the Green Tariff.

While a proposed Green Tariff was developed by Duquesne Light, which could provide further clarity, a copy of the tariff was not attached (perhaps inadvertently) to Duquesne Light's default service plan filing package as posted to the PUC's docket site, and it was not immediately available as a separate filing or otherwise as of press time

Among other things, Duquesne Light states, "The supplier who bids the lowest price ($ per EAC) in this [Green Tariff] solicitation will be selected to provide the additional EACs."

Duquesne Light states that an "auction" will be conducted to procure EACs. Duquesne Light's testimony did not specifically describe the auction or indicate a process that would be used if (as may even occur under a descending clock auction) there are multiple suppliers who bid the same price in a round, but the next round (the next lower price) results in zero bidders

"The winning Green Tariff provider of EACs will be determined solely on price and will be paid the per unit price that they bid," Duquesne Light said

Duquesne Light also states, in discussing costs of the Green Tariff program, "The third set of administrative costs would cover contingency costs if the winning supplier were to default, and the Company would have to provide the balance of the EACs through spot market purchases until such time that a new supplier was selected."

However, certain instances where a singular term is used to describe the Green Tariff provider could be read as meaning "the specific provider" selected for a portion of the EAC requirements, and may not necessarily mean only one provider may be selected

Other statements could be read as contemplating more than one Green Tariff provider, such as Duquesne Light's statement that, "The Green Tariff will allow EGSs and/or third-party suppliers to offer green services to default service customers who may be reluctant to leave utility default service." This statement uses suppliers (plural) when it could have been phrased differently if only a single provider will be selected (either stating "EGSs will be provided an opportunity to bid for the right to offer green services" or that the Green Tariff will allow, "the selected EGS and/or third-party supplier...")

"Duquesne Light will list the name of the EGS or provider on customer bills who participate in the Green Tariff," Duquesne Light said

The customer's cost for the additional EACs would be fixed for an annual period (June 1 to May 31) on a per kWh basis, based on the results of the auction.

Green Tariff customers remain default service customers for supply and would continue to pay the applicable default service rate in addition to the Green Tariff rate

Green Tariff program administrative costs would be recovered through bypassable Rider No. 8.

Participation in the Green Tariff would be capped at 5,000 customers under the proposed pilot

CAP customers would not be eligible for the Green Tariff.

"The Green Tariff will allow EGSs and/or third-party suppliers to offer green services to default service customers who may be reluctant to leave utility default service. ... The Company’s Green Tariff will allow EGSs and/or third-party suppliers and aggregators an opportunity to reach customers that they may not otherwise be able to serve," Duquesne Light said

Also notable (and unclear) is that, in its petition and testimony, Duquesne Light emphasizes that, under the Green Tariff, the customer will receive 25% of their energy from alternative energy and/or CFE (with 18% sourced from default service suppliers under the mandatory AEPS, applicable to all default service customers, with the Green Tariff CFE being 7% as noted above)

Without being able to review the proposed tariff, it's unclear if the Green Tariff will be positioned to customers as being a 25% green offering (due to combining the mandatory AEPS and the Green Tariff), or if only the additional 7% CFE under the Green Tariff will be used in marketing.

Standard Offer Customer Referral Program & Other Retail Issues

Duquesne Light proposes to continue its Standard Offer Customer Referral Program (SOP) without any changes

However, Duquesne Light said in its filing that, "the Company believes that the Commission should revisit the SOP program given that over ten years has passed since its inception and Duquesne Light has experienced disruptions in the ability to offer SOP during a seven month period of elevated prices and price volatility."

Other than noting varying levels of participation in the residential SOP, and no participation in the small C&I SOP, Duquesne Light did not further elaborate on the issue of revisiting the SOP, nor did Duquesne Light itself propose any changes to the SOP

Duquesne Light reported that, from June 1, 2021 through January 31, 2024, Duquesne Light had 7,462 residential referrals and 6,751 residential enrollments under the SOP program

Duquesne Light proposes to continue the purchase of receivables (POR) program for Residential, Small C&I, and Medium C&I customers without any changes

Duquesne Light's petition states that it is proposing certain changes to the Electric Generation Supplier Coordination Tariff's language and applicable riders necessary to implement the EDC's proposed default service plan

Duquesne Light said in testimony that the proposed EGS Coordination Tariff changes, "consist of housekeeping updates administerial in nature and are necessary to implement the proposed default service plan in this proceeding and recover the associated costs."

A copy of the proposed modified EGS Coordination Tariff was not included in a filing package (perhaps inadvertently) and was not immediately available.

New EV-TOU Default Service Rate

Duquesne Light proposes a new EV-TOU supply rate for non-shopping customers with the TOU rates applied only to EV charging

The new EV-only EV-TOU supply rate would be limited to 500 residential customers at a time

Currently, Duquesne Light offers a whole house EV-TOU supply rate for non-shopping customers, and Duquesne Light would continue to offer this whole house EV-TOU supply rate

Duquesne Light would use supplies from its standard default service procurement for the EV-TOU supply rates (no separate procurement for EV-TOU customers)

EV-TOU rates would be set by applying a rate factor to the standard supply rates to establish the TOU rates

Any mismatches between revenues from EV-TOU supply rates and supply costs paid to default service suppliers would be recovered/refunded within the existing bypassable Rider No. 8 – DSS 1307(e) customer class reconciliation.

P-2024-3048592

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