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PUC Denies PPL Migration Rider

Providing a win to competitive suppliers, the Pennsylvania Public Utility Commission (“PUC”) at its July 19 public meeting unanimously denied PPL’s request for a migration rider for default service customers.

In a decision that should help sustain the momentum of competitive market enhancement in Pennsylvania, all five PUC Commissioners voted to reverse Administrative Law Judge Susan D. Colwell’s Recommended Decision (“RD”) in which she would have approved a migration rider proposed by PPL Electric Utilities Corporation (“PPL”). PPL had dubbed its migration rider a “reconciliation” rider, or “RR.”  Petition of PPL Electric Utilities Corporation for Approval to Implement a Reconciliation Rider for Default Supply Service, Docket No. P-2011-2256365 (Opinion and Order entered July 19, 2012).

The RR would have allowed PPL to continue to charge customers for some portion of the costs of default service for up to a year after the customer had switched to a competitive supplier and, likewise, would have excused customers who switch back to PPL’s default service from paying a potentially significant portion of those default service costs for up to a full year. Thus, the RR would have created a perverse incentive for customers to switch back to default service. The PUC denied PPL’s request for an RR but without prejudice, which would allow PPL to file another similar petition in the future.

The decision, however, may prove to be less than fully satisfying for the competitive suppliers in the case in that the PUC found only that PPL failed to carry its burden of proving that the RR was necessary and did not reach the legal argument raised by some suppliers that migration riders generally are prohibited under the statute and the PUC’s regulations.  The PUC also rejected PPL’s exceptions to a separate part of the RD in which the ALJ had rejected PPL’s request for a competitive transition rider (“CTR”),  which would have allowed PPL to charge all customers for any unrecovered default service costs incurred before June 1, 2012. The PUC similarly found that PPL had not sustained its burden of proving that the CTR is necessary and that PPL had failed to provide evidence that the CTR would recover a substantial variance that “could not be recovered through its currently existing reconciliation mechanism.”  (slip op. at 23).

As a result of this process, the PUC recognized that “traditional methods of reconciliation accounting associated with default service costs in this post-rate cap era may have resulted in excessive rate volatility and inaccurate price signals for electricity consumers in Pennsylvania.” (slip op. at 38). The PUC now believes that any revisions to the current reconciliation process that would be required to limit volatility should be made on a prospective basis in a generic proceeding where all affected utilities and interested parties would have the opportunity to participate.

Also on July 19, the PUC adopted Commissioner Cawley’s motion to open a generic proceeding on default service reconciliation issues.  Default Service Reconciliation Interim Guidelines, Docket No. M-2012-2314313

A copy of the Opinion and Order is available from the PUC’s website by clicking here.

A copy of the Commissioner Cawley’s Motion opening the generic proceeding is available from the PUC’s website by clicking here.

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