pointed out that this was a matter that was litigated in PGW’s 2006 base rate case. Additionally, the ALJs noted that PGW’s proposed DSM cost recovery mechanism is the same as has it has been in prior years. Therefore, the ALJs ruled that PGW’s USC is the appropriate cost recovery mechanism for its LIURP program. R.D. at 29. The ALJs also acknowledged the positions of the OCA and I&E that because PGW’s proposed LIME Program may benefit more than just its low income customers, the costs of this program should not be recovered through PGW’s USC. The ALJs noted that as a result of these concerns, I&E and PGW entered into a Joint Stipulation related to the LIME program. The ALJs opined that although I&E and PGW both point out that this agreement runs contrary to our USECP 2014-2016 Order, the Joint Stipulation sufficiently addresses the concerns of the Parties regarding PGW’s LIME program. Accordingly, the ALJs recommended that PGW be permitted to continue to use its DSM cost recovery mechanism as currently structured with the modification presented in the Joint Stipulation of PGW and I&E. R.D. at 29-30. 3. Disposition No Party filed Exceptions regarding the ALJs’ recommendation on this issue. Finding the ALJs’ recommendation to be reasonable, we adopt it without further comment. D. PGW’s Proposed Conservation Adjustment Mechanism In addition to using its ECRS and USC surcharge mechanisms to recover the costs associated with its current DSM programs, in its Phase II DSM Plan, PGW proposed to include two new cost elements in its calculations of these surcharges: a CAM, discussed below, and a proposed Performance Incentive Mechanism, discussed in Section E, infra. PGW submitted that its proposed CAM and Performance Incentive
The OCA argued that PGW’s proposed Performance Incentive Mechanism should be denied and should be considered only in the context of a base rate proceeding. The OCA reasoned that because PGW is not an investor owned utility (IOU) who must answer to its shareholders, it does not have the same profit motive and does not need an incentive to implement energy efficiency services which encourage customers to reduce the wasteful use of natural gas. The OCA opined that, while promoting energy efficiency is in the best interest of PGW’s ratepayers, PGW’s proposed Performance Incentive Mechanism runs contrary to this interest because it would add to the costs of PGW’s DSM programs without PGW’s ratepayers realizing any corresponding benefits. Further, the OCA submitted that with respect to PGW’s CRP Home Comfort Program, PGW should not be permitted to collect an “incentive” for offering a universal service program that it is obligated to provide. OCA M.B. at 54-61. Similar to its position regarding PGW’s proposed CAM, the OSBA submitted that PGW’s proposed Performance Incentive Mechanism should be considered only in the context of a base rate proceeding, and not an EE&C petition. In addition, the OSBA contended that Act 129 expressly states that the proper incentive mechanism to encourage utilities to meet their EE&C program benchmarks is a penalty for Accordingly, the OSBA posited that in lieu of permitting PGW to include a Performance Incentive Mechanism in its Phase II DSM Plan, the Commission should impose a penalty structure on PGW consistent with the provisions set forth in Act 129. OSBA M.B. at 9; OSBA R.B. at 2. PICGUG submitted that PGW’s proposed Performance Incentive Mechanism should be rejected because it would generate unnecessary revenue at the expense of ratepayers. PICGUG M.B. at 6. I&E argued that PGW should not be permitted to implement a Performance Incentive Mechanism for offering energy efficiency programs that, aside from its
Program/Portfolio (Millions $) Base Plan Expanded Plan OCA Recommendations CRP HOME COMFORT (LIURP) $10.15 $13.96 $38.00 Residential Equipment Rebates $3.80 $4.17 $4.17 Efficient Building Grants $1.99 $1.99 $1.99 Commercial Equipment Rebates $1.763 $2.63 $2.63 Efficient Building Grants $1.02 $1.08 $1.08 Home Rebates $0.213 $3.82 $3.82 Portfolio Wide Costs $3.784 $4.53 $4.53 Five-Year Total $22.70 $32.2 $56.20 The OCA argued that its proposed recommended budget provides significant TRC benefits, and as a total package including the CRP Home Comfort budget of $7.6 million, the OCA’s recommended budget provides even more benefits to the system. The OCA noted that its recommended budget would still be less than the Phase I budget of $63.7 million for the period of 2011 through 2015. OCA M.B. at 63. PGW argued that the OCA’s proposal that the budget for the non-LIURP programs should be consistent with PGW’s expanded scenario without simultaneous approval of PGW’s CAM was untenable. PGW R.B. at 48-49. I&E, the OSBA, CAUSE-PA and TURN et al. took no position on PGW’s proposed budgets for its non-LIURP DSM programs. I&E M.B. at 14; I&E R.B. at 18; CAUSE-PA M.B. at 18; CAUSE-PA R.B. at 9; and TURN et al. M.B. at 11. b. ALJs’ Recommendation In their Recommended Decision, the ALJs recommended the approval of the PGW proposed budget for Non-LIURP programs, with the exception of the Efficient Fuel-Switching program which they stated would be discussed later in their
Finally, the OCA argued that, since the Fuel-Switching program is solely designed as a load growth program, it does not meet the requirements for a DSM program. Accordingly, the OCA maintained that, rather than invest in load growth programs, the DSM program goals would be better met by directing the proposed budget of $2.29 million towards the CRP Home Comfort Program. OCA M.B. at 21; OCA R.B. at 8. b. ALJs’ Recommendation In their Recommended Decision, the ALJs found that they agreed with the OCA that PGW’s proposed Efficient Fuel-Switching program will increase gas demand and consumption within PGW’s service territory and, as such, should not be part of PGW’s Phase II DSM Plan. The ALJs stated that while they understood that PGW’s goal for this program is to help small and mid-sized commercial and industrial customers improve the overall net energy efficiency of their buildings, they agreed with the OCA that this proposal is a load growth program for PGW that would increase, rather than reduce, existing natural gas usage. The ALJs concluded that unlike EDCs such as UGI Electric or PECO, who shifted load off of themselves to natural gas as part of their energy efficiency plans, the end result of PGW’s proposal will be to shift load away from PECO Electric (the EDC in PGW’s service territory) to itself. According to the ALJs, this is clearly a load growth program. R.D. at 126. The ALJs maintained that the General Assembly has established that the purpose of an EDC’s energy efficiency program is “to reduce energy demand and consumption within the service territory of each electric distribution company in this Commonwealth.” 66 Pa. C.S.A. § 2806.1(a). The ALJs concluded that, although PGW is an NGDC rather than an EDC, they agreed with the OCA that the stated purpose of energy efficiency, even as it relates to PGW, should be to reduce the utility’s own energy demand and consumption. The ALJs found that since PGW’s proposal will only have the
CAUSE-PA also opposed PGW’s proposed OBR for PGW’s residential customers. CAUSE-PA noted that PGW would implement a final OBR model developed through the discussions of the proposed working group if “all critical PGW criteria are met.” CAUSE-PA is concerned that PGW has not defined which criteria it considers to be critical and under what circumstances it would utilize its “veto” to not pursue the OBR proposed by the working group. CAUSE-PA urged rejection of this proposal, in part because it is contingent upon CAM approval, and in part because the proposal does not define the “critical criteria” PGW would use in its decision making. CAUSE-PA M.B. at 12-13; CAUSE-PA R.B. at 7. b. ALJs’ Recommendation In their Recommended Decision, the ALJs stated that while they understood the opposing Parties’ concerns that there are a variety of issues that must be resolved before an OBR program can be implemented, they believed that a collaborative process would be a positive start to pursuing an OBR proposal that all Parties might find agreeable and beneficial to PGW’s ratepayers. The ALJs asserted that they would be inclined to recommend the direction of such a collaborative process. However, the ALJs concluded that as PGW had specifically stated that its OBR proposal is contingent upon approval of the CAM, and since they recommended that PGW’s proposed CAM be denied, the OBR issue is moot. R.D. at 127. c. Disposition No Party filed Exceptions regarding the ALJs’ recommendation on this issue. Finding the ALJs’ recommendation to be reasonable, we adopt it without further comment. As we have previously denied the implementation of the CAM, we conclude that this issue is moot.
exclude CRP customers with program arrearages greater than two months from CRP Home Comfort eligibility. PGW M.B. at 70. The OCA argued that PGW’s current policy to limit eligibility to CRP participants excludes a substantial portion of the confirmed low-income customer population in the Company’s service territory. The OCA’s position is that the LIURP budget should include a specific set-aside so that up to twenty percent of the total budget is available for, and targeted toward, confirmed low-income customers who are not CRP participants. The OCA stated that PGW’s existing program is directed exclusively to low-income customers who participate in the Company’s CRP program. The OCA alleged that there is a significant unmet need for energy efficiency measures for the low-income population within Philadelphia. According to the OCA, the opportunities for energy efficiency measures for low-income customers should be driven primarily by the customer’s usage levels and need. As such, the OCA proposed that the program be structured so that usage levels are within the top thirty to fifty percent of the target population eligible to participate. OCA M.B. at 72-73. TURN et al. maintained that there should be an expansion of the CRP Home Comfort program to include de facto electric heating customers and former CRP customers. TURN et al. M.B. at 14. Similar to TURN et al., CAUSE-PA argued for the expansion of the CRP Home Comfort program to include de facto heating customers and former CRP customers. CAUSE-PA asserted that de facto and former CRP customers are currently ineligible for PGW’s LIURP, despite strong evidence that these programs are capable of producing deep savings for low-income customers and residential ratepayers alike, and could resolve significant public health and safety issues which persist in vulnerable, communities. CAUSE-PA M.B. at 23-24. income
panels). The requested waivers and the justification for the waivers are set forth in Appendix A to the Petition. Petition at 13. No Party opposed PGW’s waiver request for 52 Pa. Code §§ 58.9, 58.11, and 58.16. However, several Parties were opposed to PGW’s waiver request for 52 Pa. Code §§ 58.4(a), 58.10, and 58.14. Specifically, the OCA, CAUSE-PA, TURN, et al. and the CAC opposed PGW’s waiver request of 52 Pa. Code § 58.4(a). The OCA, CAUSE-PA and TURN, et al. opposed PGW’s waiver request of 52 Pa. Code § 58.10, while only the OCA opposed PGW’s waiver request of 52 Pa. Code § 58.14. With regard to PGW’s requested waiver of 52 Pa. Code § 58.5 (relating to program funding), while no Party objected to this waiver request, the OCA expressed concerns about PGW’s administrative cost levels. Nonetheless, because PGW’s CRP Home Comfort program is projected to yield a positive TRC and because PGW expects a rise in the percentage of LIURP funds for customer installations once cost reductions are identified and implemented, the OCA’s concern became a non-issue. PGW M.B. at 79. 1. Exemption Pursuant to 52 Pa. Code § 58.18 PGW’s waiver request relies on the exemption provision set forth in Section 58.18 of the Commission’s LIURP Regulations. Section 58.18 allows a covered utility alleging special circumstances to seek an exemption for its usage reduction program from the LIURP Regulations. 52 Pa. Code § 58.18. a. Positions of the Parties PGW averred that its LIURP has operated within the DSM Plan since its inception in 2011, and is consistent with the goals set forth in the Commission’s LIURP Regulations at 52 Pa. Code § 58.1. According to PGW, its CRP Home Comfort program
would deprive the public from having a meaningful opportunity to weigh in on the adequacy of PGW’s LIURP budget and the appropriateness of a budget reduction. TURN et al. agreed with CAUSE-PA that PGW’s arguments for a waiver of Section 58.4(a) are unpersuasive and amount to circular reasoning. TURN et al. M.B. at 15-16. According to TURN et al., even if the Commission agrees that the LIURP budget must be approved before the requirements of Section 58.4(a) become applicable, PGW has failed to provide a persuasive explanation to justify granting a waiver of this provision of Section 58.4(a). Id. at 16. The CAC noted that PGW has agreed to work with BCS regarding an appropriate public notice consistent with 52 Pa. Code § 58.4(a). The CAC strongly supported public notice and participation in all forms. CAC R.B. at 8. b. ALJs’ Recommendation The ALJs found merit with the OCA’s argument that the public needs to be notified and should be given an opportunity to comment on the reduction in PGW’s program funding. R.D. at 173-174. Although PGW argued that it filed its Petition more than a year ago, and the public advocates could have requested a public input hearing during the period of this proceeding, the ALJs disagreed. According to the ALJs, public notice and due process are fundamental requirements of Section 58.4(a), and PGW has not established any “special circumstances” that warrants a waiver of this section. The ALJs, therefore, denied PGW’s request for a waiver of Section 58.4(a) of the Commission’s Regulations. Id. c. Exceptions and Replies In its Exceptions, PGW disagrees with the ALJs’ recommendation regarding its waiver request of 52 Pa. Code § 58.4(a). PGW requests that the
further opined that prioritization based on arrearages and income deficit would help PGW meet its universal service objectives. The ALJs, therefore, denied PGW’s request for a waiver of Section 58.10 of the Commission’s Regulations. Id. c. Exceptions and Replies In its Exceptions, PGW disagrees with the ALJs’ recommendation. PGW questions the ALJs’ denial of its waiver request despite their recognition of the fact that the receipt of LIURP treatment generally does not have a financial impact on the CRP customer who receives the treatment. PGW argues that the ALJs’ suggested prioritization should be rejected because adopting such a recommendation would erode the effectiveness of its LIURP and would produce no greater financial benefit for the CRP customers receiving the LIURP services. PGW Exc. at 39-40. First, PGW asserts that its current prioritization strategy for LIURP weatherization treatment fully satisfies its universal service objectives. PGW states that while the ALJs focused on PGW’s universal service objectives in support of their recommendation, they failed to explain their interpretation of the specific requirements of the objectives. According to PGW, the ALJs failed to address the fact that the Commission had already acknowledged that “performing extensive and costly weatherization services on a premise with questionable bill payment history is likely “not a prudent investment of funds.” Id. at 40, citing USECP 2014-2016 Order at 55. PGW asserts that its program complies with the stated LIURP goals and the mandated universal service objectives by; (1) assisting low income customers to conserve energy and providing them LIURP services that results in improved health, safety and comfort levels; and, (2) ensuring that its LIURP is managed in a cost-effective manner in order to provide the greatest financial benefit to its non-CRP low income customers, and customers who pay for the LIURP treatments and subsidize CRP customers’ usage. Id. at 40-41. Further, PGW questions why the ALJs’ incorrectly stated that CRP customer
With regard to CAUSE-PA’s argument that the de facto heating proposal would “reduce the high number of PGW service terminations,” PGW retorted that there is no validity to this claim. PGW alleged that if a customer cannot pay his or her CRP asked-to-pay bill, then whether or not the home receives LIURP weatherization services will not make a difference because the CRP bill will be the same with or without the weatherization services. PGW concluded that the de facto electric heating proposal would not fulfill the regulatory purposes CAUSE-PA and TURN et al. rely on in their support of the proposal. PGW also contended that the reference to Section 58.4(d) of the Commission Regulations does not apply in this case because this section discusses pilot programs “for achieving the purposes of residential low income usage reduction.” 52 Pa. Code § 58.4(d). PGW argued there is no legal mandate in the Commission’s LIURP Regulations for PGW to implement CAUSE-PA’s de facto electric heating proposal. PGW R.B. at 86. The OCA is not opposed to CAUSE-PA’s de facto electric heating proposal. OCA M.B. at 84. I&E did not object to the de facto electric heating proposal. I&E R.B. at 25. The OSBA, PICGUG and the CAC did not take any specific position regarding the proposal. 2. ALJs’ Recommendation The ALJs recommended denial of the de facto electric heating proposal advocated by CAUSE-PA because they did not believe it was an effective use of resources. Moreover, they did not think it is workable under the circumstances because the proposal failed to take into consideration the fact that many of the affected customers already have large arrearages. R.D. at 186. First, the ALJs noted that PGW’s CRP program is a percentage of income program which requires CRP customers to pay a specific amount based on their level of
PGW’s CRP enrollment and encouraged PGW to focus its efforts to increase CRP on those off customers. Id. at 37. TURN et al. supported CAUSE-PA’s Restore Service proposal. TURN et al. averred that PGW should establish the Restore Service program in conjunction with its LIURP because it would address PGW’s termination crisis, reduce PGW’s uncollectible expenses, and increase public health and safety. TURN et al., in support of the proposal, reiterated most of the arguments put forth by CAUSE-PA and requested that the Commission direct PGW to establish CAUSE-PA’s Restore Service proposal. TURN et al. M.B. at 22-24. PGW opposed CAUSE-PA’s Restore Service proposal. PGW contended that although CAUSE-PA argued that its proposal would remediate PGW’s high number of involuntary residential service terminations, the proposal failed to address how the customer arrearages would be paid. According to PGW, the cost of the program does not qualify as a PGW LIURP cost because the Restore Service program would be offered to non-PGW customers. PGW further argued that there is no statutory or any other obligation for PGW to offer non-LIURP conservation programs, especially, since the proposal has the potential to unreasonably increase PGW and its ratepayers’ costs. PGW M.B. at 82. PGW also contended that weatherization services do not change the CRP customer’s asked-to-pay amount, there is, therefore, no proof that customers receiving weatherized services are shut off less frequently than those who do not. PGW also dismissed CAUSE-PA and TURN et al.’s claim that the Company is in a “termination crisis” noting that PGW has the highest proportionate number of low customers of all the electric and gas utilities in the state, yet its average termination rate is lower than every other gas and electric utility in the state. PGW does not believe the Restore Service program would address its declining CRP enrollment because customers enroll in