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ALJs Would Deny Bid To Increase Cutoff Separating Fixed Priced Default Service Versus Hourly SOS Rates To 3 MW, From Current 100 kW Cutoff
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Two Pennsylvania ALJs would deny a bid from Penn Renewables, LLC to increase the cutoff for fixed-price default service rates at UGI Utilities - Electric Division to 3 MW, from the current 100 kW threshold, and would also deny Penn Renewables' argument that hourly priced default service violates Pennsylvania's default service rules established by the Pennsylvania PUC
The ALJs addressed Penn Renewables' arguments concerning the cutoff for hourly priced default service at UGI as part of a recommended decision that would adopt, without modification, a settlement among UGI, the Office of Consumer Advocate, and the Office of Small Business Advocate to establish UGI's electricity default service plan for the term June 1, 2025 through May 31, 2029 (DSP V)
See background on the settlement here
The only contested issue in the proceeding was UGI's proposal to modify how it determines whether a customer is above or below the 100 kW cutoff for small customer default service.
Small customer SOS (GSR-1), for customers under 100 kW, prices default service at a rate that is fixed. Currently, the GSR-1 rate is fixed for 3 months, but the GSR-1 rate would become fixed for 6 months under the new default service plan.
For customers at or above 100 kW (GSR-2), hourly pricing, based on wholesale market prices, is used to establish default service rates
UGI did not propose any change to the size threshold which determines whether a customer receives fixed price SOS or hourly priced SOS
However, as previously reported, UGI did seek to change how the 100 kW cutoff is measured for net metering customers
Specifically, as proposed by UGI, the settlement would place a net metering customer into either GSR-1 or GSR-2 based on supply peak load impact
Under the settlement, if a net metering customer’s supply peak load impact is assessed to be less than 100 kW, that customer would be included in the small customer GSR-1 group. If a net metering customer’s supply peak load impact is greater than or equal to 100 kW, that customer would be assigned to the large customer GSR-2 group.
Penn Renewables objected to this sought modification, due to the impact on prices that would be paid for excess generation from net metered customers, for those customers formerly assigned to the GSR-1 group, but who would now be assigned to the GSR-2 group under UGI's proposed change
In general, Penn Renewables argued that moving relevant customers to GSR-2 hourly pricing would make payments for excess generation volatile, with the potential for negative pricing due to negative wholesale prices
Penn Renewables had also proposed to increase the cutoff between the small customer GSR-1 class and large customer GSR-2 class to 3 MW, from the current 100 kW.
Under the recommended decision, the ALJs would deny this proposal to increase the hourly pricing cutoff to 3 MW, finding that Penn Renewables did not meet its burden of proof to support its proposal
Additionally, during the proceeding, Penn Renewables had argued that hourly priced default service violates the Pa. Code because hourly priced default service does not provide customers with a single price to compare
52 Pa. Code § 54.187 provides in part that, "a default service customer shall be offered a single rate option, which shall be identified as the PTC [price to compare] and displayed as a separate line item on a customer’s monthly bill."
Penn Renewables said that hourly rates cannot be a "single rate" under default service, as required by the Pa. Code
Although the ALJs themselves did not squarely address the question of the "single rate option" in their own narrative discussion, the ALJs generally said that UGI successfully rebutted Penn Renewables' arguments, and quoted UGI's position on the single rate option
UGI had argued that hourly priced default service is a "single rate option" because it recovers all of the costs of default service, and because there are no separate charges related to default service that must be paid by a GSR-2 default service customer other than the hourly priced default service rate
Moreover, UGI noted that hourly priced default service is a "single rate option" because it is the only (single) pricing available to a GSR-2 default service customer; there is no menu of default service options for these customers
UGI further noted that hourly priced default service has routinely been accepted by the PUC, at UGI and other utilities, as compliant with the Pa. Code
The ALJs would find that hourly priced default service, as contained in the settlement, has not been shown to contradict the Public Utility Code or any PUC rule
More broadly, the ALJs would accept the settlement without modification, again stating that Penn Renewables has not met its burden of proof in seeking changes from the provisions set forth in the settlement
The terms of the settlement that the ALJs recommend should be adopted without modification were extensively discussed in our prior story here
Under the settlement, UGI will newly implement fixed 6-month retail default service prices for GSR-1 customers. Currently, UGI's GSR-1 default service rates change quarterly
Under the non-unanimous settlement, UGI would establish unique residential and non-residential SOS rates under GSR-1 by applying an allocation factor to the Energy Cost supply rate component resulting from the GSR-1 procurements (the GSR-1 procurements are not customer type-specific). Currently, all GSR-1 customers pay the same default service rate
UGI's small customer SOS portfolio (GSR-1) will include 20 MW in ATC blocks of energy, along with staggered 12-month full requirements load-following contracts, and a long-term supply arrangement between UGI and the Allegheny Electric Cooperative, Inc. (about 250 kW)
Full details concerning the SOS portfolio and residential and non-residential default service rates can be seen in our prior story here
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ALJs Deny Argument That Hourly Default Service Rates Violate PUC Regulations
December 3, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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