developed by the Commission. M.B. at 12, citing, CEW St. No. 2 at 11-12; see also, 52 Pa. Code § 24.185(e)(6). The Procurement Plan In their Main Brief, the Companies argued that changed circumstances merit a transition from the Stratified Plan to the Companies’ proposal to procure DS supply through load-following full requirements (FR) contracts with wholesale suppliers. CEW M.B. at 13-28. The Companies noted that the Stratified Plan has historically satisfied the Companies’ DS obligations, but that the continued expansion of competitive retail in the Companies’ service territories will significantly reduce DS load and erode the effectiveness of the Stratified Plan. Id. at 14-18. The Companies further noted that the Commission’s End State Order, supra, introduces a preference for market-reflective DSPs. Id. at 18. As a result, the Companies proposed a new procurement plan to address these issues while reflecting the smaller load and administrative resources of the Companies. Id. at 20. The Companies proposed a three-year DSP offering an index priced energy product to residential and small C&I customers and hourly-priced service for large C&I customers with a registered peak demand above 400 kw. For all customers, the Companies’ proposed DS product would pass-through transmission and capacity costs, but fix all remaining costs through a Supplier Adder. CEW M.B. at 20-21. The detailed components of the Companies’ proposed procurement plan are as follows: Energy (as measured at the wholesale meter for the Citizens’ or Wellsboro Aggregate Bus, less kWh for customers supplied by EGSs):
The OCA excepts to the ALJ’s finding that the index plan complies with the requirements of § 2807(e)(3.1) of the Code because an RFP will be used as part of the plan for the Supplier Adder. The OCA submits that § 2807(e)(3.1) requires that “electric power acquired” for default service customers must be procured through a competitive procurement process. OCA Exc. at 17. The OCA avers that the Companies’ program does not acquire electric power (i.e. energy) through a traditional auction, RFP or bilateral contract, but only acquires the price of the Supplier Adder through an RFP. Id. The OCA notes that the Companies’ current Stratified Plan is consistent with the procurement process of other EDCs in that suppliers must bid on the price of energy the EDCs receive. The OCA recommends that the Commission must approve the continuation of the Stratified Plan to ensure that energy is acquired through a competitive process as envisioned under the law. OCA Exc. at 18. In reply to the OCA’s Exceptions, the Companies point out that although their RFP includes indexed energy supply, the only way for an interested supplier to serve the Companies’ load remains to participate in the RFP process. Therefore, Companies argue that the proposed solicitation remains consistent with § 2807(e)(3.1) of the Code. CEW R. Exc. at 14. Continuing Stratified Plan and the OCA Alternative Parties’ Positions The OCA recommended that the Companies should continue to use the current Stratified Plan in lieu of the proposed DSP IV. The OCA submits that the Stratified Plan compares favorably to other EDCs’ DSPs and works well in
(2) The default service implementation plan shall include fair and non-discriminatory bidder qualification requirements, including financial and operational qualifications, or other reasonable assurances of a supplier’s ability to perform. Companies’ Explanation: The Companies independently evaluate potential suppliers who are interested in contracting for financial and operational qualification, as well as ability to perform, in accordance with policies adopted by the Power Supply Committee (PSC) that was formed by the Citizens’ and Wellsboro Boards. Because this evaluation is highly dependent on credit market conditions that can change and would necessitate change to the PSC policies, the Companies do not propose for the PUC to approve specific qualifications in this DSP. Id. at 8 §54.187 Default service rate design and the recovery of reasonable costs. * * * * (j) Default service rates shall be adjusted on a quarterly basis, or more frequently, for all customer classes with a maximum registered peak load of 25 kW to 500 kW to ensure the recovery of costs reasonably incurred in acquiring electricity at the least cost to customers over time. DSPs may propose alternative divisions of customers by registered peak load to preserve existing customer classes. Companies’ Explanation: For customers with a maximum registered peak load up to 400 kW, the Companies will adjust the single default service rate every 6 months. For customers with a maximum registered peak load at or above 400