BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION Pennsylvania Public Utility Commission Office of Consumer Advocate Office of Small Business Advocate Jacquelyn and Robert Miller Gwendolyn L. LeVert Duquesne Industrial Intervenors Aimee M. Dorsten Connie Schiavo NRG Power Midwest LP, NRG Energy Center Pittsburgh LLC, and Reliant Energy Northeast LLC v. Duquesne Light Company : : : : : : : : : : : : : : : R-2013-2372129 C-2013-2379084 C-2013-2380474 C-2013-2383835 C-2013-2383980 C-2013-2385292 C-2013-2386037 C-2013-2386284 C-2013-2390562 RECOMMENDED DECISION Before Conrad A. Johnson Administrative Law Judge
offtaker of the net electric output of two small hydroelectric power generators located in Pennsylvania. 14. Per the power purchase agreements currently in place between Duquesne Light and the small hydroelectric power generators (“the PPAs”), the electric energy is purchased subject to the terms and conditions of Duquesne Light’s Tariff . . . . The price of the power so purchased by NRG Midwest is governed, under both the PPAs and the amended Revised QF Agreement, by Contract Rider No. 18 to Duquesne Light’s Tariff. 15. Because NRG Midwest’s relationship with Duquesne Light through both the PPAs and the amended Revised QF Agency Agreement is specifically governed by the provisions of Duquesne Light’s approved Tariff, and because current Tariff Rider No. 18 may present an indirect form of rate discrimination benefitting certain customer-generators, NRG Midwest’s interest in the present matter is direct, immediate and substantial. NRG Complaint ¶¶ 13-15. Duquesne Light admitted NRG’s assertions in Paragraph 13 of the complaint and admitted, in part, the agency agreement asserted in NRG’s Paragraph 14. Duquesne Light further maintained the agency agreement was subject to Duquesne Light’s FERC-approved (Federal Energy Regulatory Commission) tariff. As to Paragraph 15, Duquesne Light stated, in part, the averments were conclusions of law to which no responsive pleading was required. Duquesne Light’s Answer ¶¶ 13-15. B. Rider No. 18 Dispute Subsequent to the hearings, NRG retreated from its concerns as to the proposed allocation of the revenue increase and proposed rate design. Instead NRG reserved the right to challenge the Settling Parties’ Settlement once it was filed and focused on Rider No. 18 issues. NRG argued as follows: Upon consideration of the evidence elicited at the hearing in this proceeding, the NRG Companies have decided not to contest the various non-unanimous settlement issues identified in the common
often results in alternatives that may not have been realized during the litigation process. Determining a company’s revenue requirement is a calculation involving many complex and interrelated adjustments that affect expenses, depreciation, rate base, taxes and the company’s cost of capital. Reaching an agreement between various parties on each component of a rate increase can be difficult and impractical in many cases. For these reasons, we support the use of a “black box” settlement in this proceeding and, accordingly, deny this Exception. Pa. Pub. Util. Comm’n, et al. v. Peoples TWP, Docket No. R-2013-2355886 (Opinion and Order entered December 19, 2013, p. 28). Once the settling parties have submitted their joint settlement petition for approval, the principal issue for Commission consideration is whether the agreement serves the public interest. Pa. Pub. Util. Comm’n v. Philadelphia Electric Company, 60 Pa. PUC 1, 21 (1985); Pa. Pub. Util. Comm’n v. CS Water and Sewer Associates, 74 Pa. PUC 767, 771 (1991). 2. Burden of Proof When the Commission on its own motion initiates an investigation into a proposed or existing rate of a public utility, the burden of proof as to the justness and reasonableness of the proposed or existing rate is upon the public utility. The Public Utility Code, Section 315(a), provides as follows: (a) Reasonableness of rates. – In any proceeding upon the motion of the commission, involving any proposed or existing rate of any public utility, or in any proceedings upon complaint involving any proposed increase in rates, the burden of proof to show that the rate involved is just and reasonable shall be upon the public utility. 66 Pa. C.S. § 315(a) (emphasis added). In construing Section 315(a), the Commonwealth Court has stated:
OCA submits the Settlement provides that Duquesne Light’s monthly residential customer charge for rates RS, RH and RA will increase to $10.00, which is an increase of $3.00 as opposed to the Company’s request for an $8.00 increase. According to OCA, the $3.00 increase is a reasonable compromise between the positions of the Company, OCA and I&E. OCA submits that the residential rate design established in the Settlement is reasonable and consistent with sound ratemaking principles. OCA also states that by not unduly increasing the customer charge and reflecting costs in the commodity charge, customers have increased incentive to conserve, a benefit that is not realized through high fixed customer charges. Id. at 13. 11. Universal Service Charge and Customer Service a. Red Flags Plan and Identity Theft Prevention OCA maintains that the Settlement addresses its concerns regarding the privacy and security of customer data collected by the Company. Under the Settlement, the Company agrees to refresh its Red Flags Plan and to provide copies to interested parties within six months after the conclusion of these proceedings. The Company also agrees to no longer require Social Security numbers as a prerequisite for enrollment in its Customer Assistance Program (CAP). Id. at 14. b. Storm Communications OCA claims the Settlement addresses its concerns regarding how the Company could improve storm-related customer communications. OCA recommended that Duquesne Light develop procedures that would allow the Company to work with local social service providers and local officials to notify them of medically-needy customers who may be without service for extended periods of time and to develop a partnership with these providers to help serve these customers during an outage. OCA also suggested that the Company develop culturally-appropriate, multi-lingual media messaging during storm events, along with capacity for non-English speaking customers to contact the Company through its IVR
Table 1 Comparison of Parties’ Proposed GS/GM Increases at Settlement Revenue Level to Settlement Increases ($000) Class Per Settlement DLC OSBA OCA DII I&E USS GS $1,179 $1,155 $1,155 $963 $4,444 $1,836 $1,347 GM <25 kW $1,952 $1,914 $1,401 $2,146 $2,317 $1,708 $1,531 GM ≥25 kW $5,069 $4,969 $3,315 $6,473 $4,646 $3,964 $4,218 GMH $775 $760 $773 $957 $1,155 $812 $662 TOTAL $8,975 $8,798 $6,644 $10,539 $12,562 $8,320 $7,758 Id. at 5. As demonstrated in Table 1, OSBA contends the Settlement increases for the small business classes, particularly with respect to the litigation positions of OSBA, OCA and DII, reflect a compromise of the parties’ positions. If the commission were to have given equal weight to those positions, the overall increase to the small business classes (assuming an overall increase of $48 million) would have been (the sum of $6.644 million plus $10.539 million plus $12.562 million divided by 3) $9.915 million, which is $0.940 million or 10.5% greater than provided by the Settlement. Therefore, OSBA concludes that the Settlement revenue allocation provides meaningful benefits to small business customers. Id. 3. GMH Rate Design Concerning the General Service Medium Heating (GMH) rate design, OSBA notes that the Company serves over 97% of its customers on three rate schedules: Rate Service, Rate RH-Residential Service Heating, and Rate GS/GM-General Service Small and Medium. Mr. Kalcic testified that Rate GMH is available to commercial and industrial space heating customers (that would otherwise qualify for service on Rate GS/GM), where heating load compromises at least 25% of a customer’s total electric energy requirement during the heating season. Currently, Rate GMH contains a customer charge, a