PSC Removes Costs From Bypassable SOS Admin. Charge, Changes SOS Rates -- EnergyChoiceMatters.com

PSC Removes Costs From Bypassable SOS Admin. Charge, Changes SOS Rates

May 2, 2024

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

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The District of Columbia PSC has ordered Pepco to remove from the bypassable SOS administrative charge certain costs related to Community Renewable Energy Facilities (CREF), with the revised SOS administrative charge to be effective with the updates to the SOS rates on June 1, 2024, requiring Pepco to modify its previously filed June 1, 2024 SOS rates to reflect this change

In filing an update to the SOS administrative charge as part of the proposed June 1, 2024 SOS rates, Pepco said that CREF related expenses for the period June 1, 2022, to May 31, 2023, are reflected in the SOS administrative charge, and that the SOS administrative charge also includes estimated CREF administrative and billing costs, including IT costs related to the implementation of a billing system to capture generation from CREF meters, for the period June 1, 2024, to May 31, 2025.

Pepco stated that the forecasted CREF costs for June 2024 through May 2025 are $1,776,537, while the actual CREF costs for June 2022 through May 2023 are $763,372.24.

Of the $1,776,537 forecasted CREF costs, Pepco stated that $775,000 are forecasted labor costs related to the productive time spent on the following administrative responsibilities performed by Pepco employees for DC CREF: program oversight, subscription and subscriber organization management, billing support, and reporting. Pepco stated that $499,945.92 are forecasted operating and maintenance costs related to the implementation of the system to capture generation from CREF meters made up of licensing fees, as well as maintenance and vendor operations for receiving, formatting, and managing meter data. The final $501,590.66 are for amortization of capital costs placed in service estimated for the period October 2024 through May 2025, with Pepco indicating that these capital costs relate to developing an interim and permanent solution for integrating CREF meter data into utility systems in order to perform billing activities.

The PSC issued an order allowing the inclusion of the $775,000 forecasted CREF administrative labor costs and $499,945.92 forecasted CREF recurring operating and maintenance costs in the SOS administrative charge, "because these are incremental costs for procuring and providing the service, which can be recovered through the SOS administrative charge."

"Nevertheless, the Commission is concerned about the increase in costs. The majority note that these are forecasted costs, and this will be trued up at a later date. The Commission will review these costs very carefully as changes to the CREF landscape continue to develop," the PSC said

In contrast, the PSC "is not inclined" to allow the $501,590.66 forecasted CREF capital costs in the SOS administrative charge.

"These costs relate to implementing and developing a system for CREFs. These costs should not be recovered through the SOS administrative charge. Pepco may recover these implementation costs 'solely through a rate assessment of the subscribers' as prescribed by D.C. Code § 34-1522. Thus, if deemed appropriate, recovery of these costs will be determined in Pepco’s next base rate case," the PSC said

Pepco was directed to remove the $501,590.66 in forecast CREF capital costs from the SOS administrative charge.

The PSC ordered Pepco to file updated June 1, 2024 SOS rates to reflect this change. The PSC otherwise approved the other components of the June 1, 2024 update to SOS rates

While revised SOS rates must be filed, the updated rates will only change minimally from those previously filed, given the small size of the total admin. charge, and that only about $500,000 was removed.

For context, the proposed $1,776,537 in forecasted CREF costs constituted 69% of the entire administrative charge for SOS, while the PSC's approval of $1,274,945.92 in forecasted CREF costs constituted 62% of the originally filed administrative charge for SOS

The originally proposed (which must be changed) SOS admin. charge for Residential customers had been, in total, 0.48 cents per kWh.

Pepco was further ordered to demonstrate that actual incurred CREF costs contained in the SOS administrative charge do not include costs related to reading, billing, or removal of Pepco’s installed meters at the CREF locations for June 1, 2022, until the present

"We emphasize that in accordance with Rule 4103.2, the SOS Administrator must submit to the Commission 'a detailed calculation and explanation of an administrative charge.' For future SOS filings, the Commission expects Pepco to submit detailed calculations and explanations for these costs rather than just a topline number. This is especially important when certain costs, such as CREF costs, constitute a significant portion of the SOS administrative charge. If sufficient cost details are not provided, cost recovery will be denied," the PSC said

FC 1017

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