In Commission proceedings, the proponent of a rule or order bears the burden of proof. 66 Pa. C.S. § 332(a). To satisfy that burden, the proponent of a rule or order must prove each element of its case by a preponderance of the evidence. Samuel J. Lansberry, Inc. v. Pa. PUC, 578 A.2d 600 (Pa. Cmwlth. 1990). A preponderance of the evidence is established by presenting evidence that is more convincing, by even the smallest amount, than that presented by the other parties to the case. Se-Ling Hosiery v. Marqulies, 364 Pa. 45, 70 A.2d 854 (1950). Additionally, this Commission’s decision must be supported by substantial evidence in the record. More is required than a mere trace of evidence or a suspicion of the existence of a fact sought to be established. Norfolk & Western Ry. Co. v. Pa. PUC, 489 Pa. 109, 413 A.2d 1037 (1980). We note that any that we do not specifically address herein has been duly considered and will be denied without further discussion. It is well settled that we are not required to consider expressly or at length each contention or argument raised by the parties. Consolidated Rail Corporation v. Pa. PUC, 625 A.2d 741 (Pa. Cmwlth. 1993); also see, generally, University of Pennsylvania v. Pa. PUC, 485 A.2d 1217 (Pa. Cmwlth. 1984). A. Act 129 Conservation and Demand Reduction Requirements 1. Overall Conservation Requirements The Implementation Order, at 8, noted that both the 1% consumption reduction, to be met by May 31, 2011, and the 3% consumption reduction, to be met by May 31, 2013, are to be measured against the EDC’s expected consumption as forecasted
to the EDC for generation, transmission, distribution and surcharges by retail customers. 66 Pa. C.S. § 2806.1(m). In our Implementation Order, we addressed Duquesne’s concern that a significant portion of its customers receive their energy supply from an alternate supplier, or an EGS. We concluded that the General Assembly intended Act 129 to be competitively neutral and not disadvantage EDCs that had active retail electric markets. Implementation Order at 35. Duquesne’s Plan presents total annual EDC revenues for calendar year 2006 of approximately $723 million ($723,299,451), and 2% of this amount is approximately $14 million ($14,465,989). The Commission interprets “amounts paid to the [EDC] for generation, transmission, distribution and surcharges by retail customer,” set as the definition of EDC total annual revenue in 66 Pa. C.S. § 2806.1(m), to include all amounts paid to the EDC for generation service, including generation revenues collected by an EDC for an EGS that uses consolidated billing. Implementation Order at 35. Duquesne’s total annual POLR generation and transmission revenues for 2006 were approximately $254 million ($253,998,128), and 2% of this amount is approximately $5 million ($5,079,962). The combined total revenue upon which the 2% allowable program cost is measured is approximately $977 million ($977,297,579), accordingly, the 2% program cap is approximately $19.5 million ($19,545,951) on an annual basis. Duquesne Plan, Figure 46 at 109; Duquesne St. No. 1 at 8. In our Implementation we concluded that “[w]ith regard to the 2% limitation provision of the Act, we agree with PPL Electric that this limitation on the ‘total cost of any plan’ should be interpreted as an annual amount, rather than an amount for the full term of the Plan.” Implementation Order, at 34. Duquesne has relied on the Commission’s determination regarding the allowable total cost and, accordingly, has constructed its Plan using $19.5 million as an annual cost for each of the Plan’s four
Furthermore, as the General Assembly declared in the preamble of Act 129, “[i]t is in the public interest to energy efficiency and conservation measures and to implement energy procurement requirements designed to ensure that electricity obtained reduces the possibility of electric price instability, promotes economic growth and ensures affordable and available electric service to all residents.” As the EE&C Plan under review in this proceeding is in the public interest, the costs of such a Plan must be borne by the public as a whole. As such, the Commission stands by its interpretation propounded in the Implementation Order: that Section 2806.1(g) of the Act must be interpreted as an annual cost limit, not a multiyear plan cost limit. We will also clarify our position on the EDC’s ability to recover the of their respective EE&C Plans on a levelized basis over the four-year duration of their EE&C Plans. Initially, it must be noted that each EE&C plan covers four years. Section 2806.1(g) of Act 129, states that “[t]he total cost of any plan required under this section shall not exceed 2% of the electric distribution company’s total annual revenue as of December 31, 2006.” 66 Pa. C.S. § 2806.1(g). As the EE&C plans cover four years and the 2% of total annual revenues can reasonably be interpreted as an annual cost limit, the “total cost” of any four year plan cannot exceed the aggregate of the four annual 2% limit amounts. The contrary interpretation would not be reasonable because it would either not allow sufficient funds to accomplish the objectives of the act or would require EDC shareholders to the majority of the funding. Section 2806.1(k) of Act 129 directs that the EDCs “shall recover on a full and current basis from customers, through a reconcilable adjustment clause under section 1307, all reasonable and prudent costs incurred in the provision or management of a plan provided under this section.” 66 Pa. C.S. § 2806.1(k). This section directs that the EDCs are to recover the total reasonable and prudent costs of a four year plan, which is of
Furthermore, Section 2806.1(k)(1) states that each EDC shall recover all reasonable and prudent costs incurred in the provision or management of its EE&C plan on a full and current basis through a reconcilable surcharge. Therefore, the cost recovery of the statewide evaluator should be included in the reconcilable surcharge that will be used to recover those costs of the individual EE&C plans. We conclude that the expense related to the statewide evaluator is not a cost component of the EDCs’ individual Rather, it is a cost component of the overall program instituted by the Commission. Accordingly, we find that Duquesne’s cost recovery for its respective share of the cost for the statewide evaluator will not be subject to the 2% cap on the cost of its Plan. Duquesne properly excluded these costs from their EE&C Plan. 2. Cost Effectiveness/Cost-Benefit Issues Two areas that require review and analysis relate to the cost effectiveness of Duquesne’s Plan. First, it is important to verify that Duquesne follows the methodology set forth in the TRC Test Order in preparing its cost-benefit analysis. Second, verification is required that Duquesne’s Plan passes the TRC Test with a total plan ratio of greater than 1.0. a. Positions of the Parties No parties offered comments on the overall TRC or disputed the analysis. b. Disposition Performing a cost effectiveness analysis the Commission-approved TRC required the use of many assumptions regarding current and future energy prices. benefit
reasonable and prudent costs incurred in the provision or management of [an EE&C] plan.” 66 Pa. C.S. § 2806.1(k). The Act states: The plan shall include a proposed cost-recovery tariff mechanism, in accordance with Section 1307 (relating to sliding scale or rates; adjustments), to fund the energy efficiency and conservation measures and to ensure full and current recovery of the prudent and reasonable costs of the plan, including administrative costs, as approved by the commission. a. C.S. § 2806.1(b)(1)(i)(H). a. Separate Line Item on Customer’s Bill Positions of the Parties Duquesne has proposed five separate surcharges, which are proposed to be add-ons to its current distribution rates, to recover its budgeted EE&C costs of $78 million. Duquesne performed customer research and evaluation and found that customers preferred a simpler bill that was easy to understand. Based upon that preference, Duquesne proposes to roll the surcharges into existing distribution rates in lieu of establishing a separate line item on each bill. Duquesne MB at 13, 14; Duquesne Exh. WVP – 9. The five surcharges are: (1) residential; (2) small and medium commercial; (3) small and medium industrial with metered demand up to 300 kW; (4) large commercial with metered demand over 300 kW; and (5) large industrial with metered demand over 300 kW. Duquesne asserts that this segmentation of C&I customers is appropriate because it aligns programs and program costs with current rate structure. Duquesne St. No. 4 at 5. C&I program costs are assigned based on program description (e.g. Office Buildings – Large). Common program costs of the C&I classes are allocated based upon projected savings. Duquesne St. No. 4 at 5.