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November 5, 2024

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Pepco Goes Back to the Well

Unhappy with a $24 million rate increase approved in September, Potomac Electric Power Company asked D.C. regulators March 8 for an additional $52.1 million in distribution revenue.

Pepco said it needs the increase because its revenues have not grown enough to support increased spending on reliability improvements. In its previous rate case, Pepco — the subject of harsh criticism over its reliability — received only $24 million of the $42 million rate it requested.

Pepco said its return on equity is only 5.8%, less than half of the rate authorized by the District’s Public Service Commission.

Insulting

D.C. People’s Counsel Sandra Mattavous-Frye had no sympathy for the company’s arguments, calling the rate request “insulting.”

The company said its request would increase the bill of a District resident using 750 KWh per month by about 6%. Mattavous-Frye noted that the request would represent a 36% increase in distribution rates.

“Before the ink is dry on Pepco’s September 2012 $24 million increase … and before anyone can validate whether we have seen even the most basic long term reliability improvements promised, the company is back seeking much, much more,” she said in a statement.

Pepco has been the target of customer ire in D.C. and Maryland as a result of frequent “blue sky” outages and its restoration efforts after the February 2010 blizzard and the June 2012 derecho. The Washington Post reported in 2010 that Pepco ranked near the bottom nationally for reliability.

Outages Down

Pepco said it has reduced outage frequency in the District by 17% and outage duration by 21% since 2010, when it began increased spending in its “Reliability Enhancement Plan.” Customers on improved feeders saw a 28% cut in outage frequency and a 42% reduction in outage duration from 2011 to 2012.

Pepco got better marks for its response to Hurricane Sandy in October — when most of the 130,000 customers who lost power were restored within 30 hours — although the storm’s path spared the service territory from the worst damage.

The company is also asking for an increase in the authorized rate of return on equity (ROE) to 10.25% from 9.5%. Pepco said the increase was necessary for it to maintain investment grade credit ratings.

Maryland Rate Case

Pepco filed a $60 million rate hike request with the Maryland Public Service Commission in November that would increase the average residential bill by $7 per month, a 5% boost. In July, the PSC rejected all but $18 million of the company’s previous $68 million rate request. The commission balked at what it called the company’s effort to increase shareholder returns “before Pepco corrects its sub-par performance.”

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OPSI Calls for Extension of PJM Monitor’s Contract

The Organization of PJM States (OPSI) asked the PJM Board of Managers March 12 to extend the current contract of Market Monitor Marketing Analytics to allow enough time to correct “the serious defects” in the board’s solicitation for a replacement.

Monitoring Analytics’ six-year contract expires in June 2014.

Edward S. Finley, OPSI president and Chairman of the North Carolina Utilities Commission said the extension was needed because there isn’t enough time to revise the board’s draft request for proposal (RFP) “given the character, number and gravity of the defects, and the need for them to be cured before requesting and obtaining FERC approval.”

OPSI’s latest letter follows a 17-page critique of the RFP that OPSI sent to the PJM board on March 4 (see previous story).

At his press conference Thursday releasing the 2012 State of the Markets report, Monitoring Analytics President Joseph Bowring said he was optimistic about his firm’s chances in the competition for a new contract. “We are confident that we are very good at market monitoring,” he said.

Asked at the press conference why the board was unwilling to renew the contract without a competition, Bowring said “I have no idea what their motivations are.”

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New Jersey Board of Public Utilities to Rule on JCPL Depreciation Study

The Board of Public Utilities is scheduled to rule March 20 on whether to compel Jersey Central Power & Light Co. to conduct a depreciation study in its pending rate request. The Division of Rate Counsel requested the analysis, noting that JCPL’s last study was conducted 17 years ago.

JCPL balked, arguing that there is no requirement that a depreciation study be filed with a base rate case. The company said its depreciation rates have been updated annually since 2000, and that its depreciation rates were reviewed in its 2002 base rate case, when a change in the depreciation methodology resulted in a decrease in the allowed depreciation expense.

The board will be ruling on whether to overturn an administrative law judge ruling rejecting the Rate Counsel request. The board agreed to review the ruling Feb. 20 “given the possible impact of the calculation of depreciation on the determination of just and reasonable rates.”

The board ordered JCPL to file the rate case in response to a Rate Counsel petition alleging the company was earning an unreasonable return on its rate base.

The company responded Nov. 30 with a request for a $31 million increase. It followed up with a supplemental request Feb. 22 seeking to recover the $630 million it spent on Hurricane Sandy. The company asked for $345 million in capital expenditures and $258 million in non-capital costs, which it proposed to recover over a six-year period. JCPL said it would continue to have the lowest residential electric rates among the states four electric distribution companies even after the rate increase, which would result in a 4.5% increase for an average residential customer. Docket Nos. ER12111052 and OAL PUC 16310-12.

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North Carolina: Progress Energy Reaches Partial Settlement in Rate Case

The North Carolina Utilities Commission will hold a hearing March 18 to consider a proposed settlement that would grant Progress Energy Carolinas an average 5.7% base rate increase.

The settlement between the company and the North Carolina Public Staff would boost rates by $151.4 million in the first year and $183 million the second year.

The increase in year two includes $31.4 million for construction of new natural gas combined-cycle generation at the Sutton Plant in Wilmington, N.C. The company has requested that new rates go into effect June 1.

The average increase is about half the 11% ($359 million) request the company had sought in a rate request filed in October. The settlement includes a return on equity (ROE) of 10.2%, down from the requested 11.25%.

The settlement did not resolve the allocation of the increase among customer classes, the company’s change to a single coincident peak cost allocation factor, or the industrial economic recovery rider proposed by the company.

The settlement is likely to be challenged by the North Carolina Attorney General, which has appealed rate settlements with Duke Energy Carolinas and Dominion North Carolina Power that included ROEs of 10.5% and 10.2% respectively. The attorney general said the regulators failed to balance the needs of the utility’s investors “against the economic conditions and returns that … customers are experiencing.”

The North Carolina Supreme Court heard oral arguments in the Duke case (# 268A12) Nov. 13. The attorney general filed its challenge to the Dominion settlement Feb. 18.

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North Carolina: Duke Energy Carolinas Seeks Energy Efficiency Rate Increase

Duke Energy Carolinas filed a request with the North Carolina Utilities Commission Wednesday for an increase in rates to cover its energy-efficiency programs. Customers using 1,000 kWh per month would see rates rise by $2.86 (residential) to $3.87 (non-residential) effective Jan. 1, 2014.

Duke asked for no change in its fuel charge. The company said the increased use of gas-fired generation and economies from the joint dispatching of Duke Energy Carolinas and Progress Energy Carolinas offset higher commodity prices. Progress will make its annual fuel and energy efficiency filings in June.

This request is separate from a proposed $446 million annual hike the company filed Feb. 5 to recover $3.8 billion in capital investments, including retirements and replacements of generation plants and transmission and distribution systems.

The capital investments include $1.5 billion for two new generating stations at Cliffside steam station, an 825 MW advanced coal-fired plant in Rutherford and Cleveland Counties and the 620 MW Dan River combined cycle natural gas plant in Rockingham County. The company also has invested $650 million in its Oconee and McGuire nuclear plants and $590 million in maintenance and upgrades to other existing generators and $722 million on its transmission and distribution systems.

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Pennsylvania Approves PPL, Duquesne, FirstEnergy Efficiency Plans

The Pennsylvania Public Utility Commission approved the energy-efficiency plans for PPL Electric Utilities Corp., Duquesne Light Co. and FirstEnergy’s affiliates, rejecting an effort by UGI Utilities Inc. to modify the plans to boost natural gas use.

The PUC required Duquesne, PPL and FirstEnergy operating companies Metropolitan Edison Co., Pennsylvania Electric Co., Pennsylvania Power Co. and West Penn Power Co. to modify their tariffs for recovering the costs of their “Phase II” efficiency programs.

The energy-efficiency requirements are a result of a 2008 law that required electric distribution companies with at least 100,000 customers to reduce electric consumption by at least 3% percent of expected consumption by May 31, 2013 (Phase I). The PUC’s Phase II implementation order, issued in August, requires EDCs to reduce consumption by between 1.6% (West Penn Power) and 2.9% (PECO Energy).

FirstEnergy estimated the programs will save about 1.1 million MWh (2% of expected load) by 2016 at a cost of about $234 million. PPL estimated it will spend $184.5 million to meet its savings target of 821,072 MWh (2.1%). Duquesne projects costs of $58.6 million and savings of 332,066 MWh (2.4%)

The FirstEnergy plans were the result of a settlement with the Pennsylvania Consumer Advocate, industrial and commercial consumers and several civic groups that had intervened in the case. The only intervenor that did not sign the settlement was UGI, which proposed fuel switching alternatives that it said would increase electricity savings by 17%.

UGI asked the PUC to prohibit incentives that encouraged switching from natural gas to electricity and to include incentives for efficient gas-fired water heaters and furnaces. FirstEnergy said UGI’s projected 17% savings were not credible and that the company’s intervention was an attempt to boost its own gas sales. FE said only 6% to 28% of its customers have access to natural gas.

The PUC ruled that “UGI’s testimony exaggerated the savings potential” of its proposals and that it failed to support its claim that the companies’ plans will increase electric load at the expense of natural gas. Regulators also rejected UGI’s attempt to modify PPL’s plans.

The PUC ordered FirstEnergy to revise its proposed tariff within 60 days to change the reconciliation dates and add details on how it plans to allocate program costs among customer classes. The regulators gave the intervenors five days to withdraw from the settlement if they object to the ruling. Acting Consumer Advocate Tanya McCloskey told PJM Insider that there was nothing in the order to make her office withdraw from the settlement.

PPL and Duquesne also were required to file modified tariffs. PPL also was required to modify its plans for low-income customers.

Commissioner James H. Cawley expressed concern in a statement that FirstEnergy might miss its targets because its plans rely more heavily than other EDCs on free energy kits including compact fluorescent bulbs that consumers may not use. “On a policy level, giving away entirely free products, or relying heavily on short term behavioral measures, may not be the most optimal means of promoting a sustainable energy efficiency economy,” Cawley said.

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Pennsylvania: Duquesne Agrees to Cost Savings

Duquesne Light Co. agreed to implement 10 recommendations by a Pennsylvania Public Utility Commission (PUC) management and operations audit. The PUC, which released the audit March 14, said the recommendations could save the company about $2.4 million annually. The audit recommendations include: conducting a staffing study to identify ways to reduce overtime expenses; improving tracking of third-party damage and claims to reduce such claims; enhancing efforts to reduce residential customer arrearages and rotating its external audit firm and/or audit managers and audit teams. Duquesne Light committed to completing all recommendations by the end of 2013. Docket No. D-2011-2269361

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Pennsylvania Audit: FirstEnergy Affiliates Overstated Energy Efficiency Costs

A PUC audit found that FirstEnergy Corp.’s Pennsylvania subsidiaries overstated their Energy Efficiency and Conservation Program costs in 2010 and 2011 by mistakenly applying Ohio’s higher sales tax rates on purchases of items such as home energy audit kits. The company agreed with the audit finding and has corrected the error. The audit found Pennsylvania Power Co. and Pennsylvania Electric Co. had net overcollections of more than $1 million each but Metropolitan Edison Co. undercollected by about $7.3 million despite the error.

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Virginia Electric Biennial Rate Review Due

Virginia Electric and Power Co. will initiate its biennial rate review by the Virginia State Corporation Commission in late March and file a revised transmission cost rider in May. Separately, the commission issued an order Feb. 28 changing the beginning of the calendar year for future base rate cases to Jan. 1 from Dec. 1.

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Virginia: Testimony Due on Renewable Pilot

March 19 is the deadline for filing testimony in the Virginia State Corporation Commission’s review of Virginia Electric’s proposal to create renewable generation pilot program for large non-residential customers.

The pilot would allow customers under Rate Schedule GS-3 or GS-4 with demands greater than 500 kilowatts and purchases of renewable energy of between one million and 24 million KWh annually to purchase a larger portion of their energy from renewable sources than available in the company’s existing generation mix.

The plan would be limited to planned deliveries of 240 million KWh annually in aggregate, or 100 customers, whichever is reached first.

Hearing: May 7, 10 a.m. Commission’s Courtroom, Second Floor, Tyler Building, 1300 East Main Street, Richmond. Written comments from non-witnesses are due by April 30.