Workshop J
FirstEnergy Pennsylvania
- Met-Ed, Penelec, Penn
Power, West Penn Power: Electric Rates & Tariffs
1:45 p.m. to 2:45 p.m.
Workshop J FirstEnergy Pennsylvania - Met-Ed, Penelec, Penn Power, - - PDF document
Workshop J FirstEnergy Pennsylvania - Met-Ed, Penelec, Penn Power, West Penn Power: Electric Rates & Tariffs 1:45 p.m. to 2:45 p.m. Biographical Information Charles V. Fullem, Director Rates & Regulatory Affairs/Pennsylvania
1:45 p.m. to 2:45 p.m.
Biographical Information
Charles V. Fullem, Director – Rates & Regulatory Affairs/Pennsylvania FirstEnergy Service Co.,Box 16001, 2800 Pottsville Pike, Reading PA 19612-6001 610-921-6525 Fax: 610-921-6256 cvfullem@firstenergycorp.com Charles V. Fullem is Director- Rates & Regulatory Affairs/Pennsylvania, a position he was appointed to
Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania Power Company and West Penn Power Company, as well as all retail tariff filings and financial reports to the Pennsylvania Public Utility Commission (“PaPUC”) and the New York State Public Service Commission. He has over 35 years of experience in the energy industry, with a background in rates and regulation, marketing, unregulated retail pricing and regulated tariffs, contract development and negotiations of both wholesale and retail electric service contracts. From December 2000 through January 2006, he served in various positions, including Director of Energy Consulting Operations for The E Group, the energy consulting subsidiary of FirstEnergy Corporation (“FirstEnergy”). As Director, he managed technical staff teams and was responsible for delivering all aspects of The E Group’s client services for an over one-billion-dollar client energy spend, including energy management, bill and rate analysis, development of energy procurement strategies, preparation
analysis, and negotiations with suppliers and utilities and utility bill payment. From November 1999 through December 2000, Mr. Fullem was Director, Pricing and Regulatory Affairs, in FirstEnergy’s rate department, where he was responsible for tariff administration and pricing programs serving over 2.2 million customers in Ohio and Pennsylvania. In this capacity, Mr. Fullem developed and implemented the unbundled tariffs designed to implement Customer Choice in Ohio, coordinated the development of FirstEnergy’s Supplier Tariff and Net Metering Rider, and participated in the Operational Support Plan (OSP) workgroups. The OSP workgroups were collaborative working groups charged with establishing the various rules and policies of retail choice in Ohio. From December 1994 through November 1999, Mr. Fullem served in various roles in FirstEnergy’s marketing department, including Director, Planning and Strategy, and Director of Centerior Energy’s Competitive Analysis Department, where he developed and implemented successful marketing programs targeted to commercial and industrial customers and mass market customers in both competitive generation markets and traditional areas of competition between fully integrated electric utility providers. From 1982 through December 1994, Mr. Fullem served in various roles in rates and regulation at Centerior Energy and Cleveland Electric Illuminating Company, including the roles of Director, Planning & Strategy, and Director of Rates & Contracts. In these roles, Mr. Fullem managed and performed cost
participated in the development of revenue requirements, and performed financial analyses.
the PaPUC, The New York State Public Service Commission and the Federal Energy Regulatory Commission (“FERC”), as well as the Pennsylvania Senate Consumer Protection and Professional Licensure Committee and the Pennsylvania House Consumer Affairs Committee.
Chuck Fullem, Director, Rates and Regulatory Affairs
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The information contained in this presentation material is intended to provide generally descriptive and summary
in this material, or conveyed orally during the presentation, and the information provided in any of the Companies’ public filings, as part of Pa Public Utilities Commission Entries or Orders, or the Companies’ tariffs, or Pa Statutes and Rules, is unintentional and the docketed material controls. The information contained herein is subject to change during the regulatory process. The information contained in this presentation material is intended to provide generally descriptive and summary
in this material, or conveyed orally during the presentation, and the information provided in any of the Companies’ public filings, as part of Pa Public Utilities Commission Entries or Orders, or the Companies’ tariffs, or Pa Statutes and Rules, is unintentional and the docketed material controls. The information contained herein is subject to change during the regulatory process.
Disclaimer Disclaimer
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■ Electric Rate Background ■ Generation ■ Transmission ■ Distribution ■ Other Topics
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Met-Ed and Penelec
■ The Companies generally have 5 Distribution rates available to Commercial and Industrial Customers
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4 * Rates Effective January 2017 .
West Penn and Penn Power
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■ Generation Service Provided as part of Price to Compare Default Service Rate Rider (Rider H & I)
– Power for all Default Service customers is procured through a competitive bidding process by Class. – Rider H – changes quarterly – available to customers on GS Small, GS Medium. – Rider I – Hourly Priced Default Service Rider – Prices change Hourly available to customer on GS Large, GP and TP/LP customers - prices based on bid price, plus real-time Locational Marginal Price ("LMP"), plus a uncollectible charge and an administrative charge.
■ Beginning in June of 2019– Rider I will be the only DEFAULT SERVICE RATE FOR CUSTOMERS GREATER THAN OR EQUAL TO 100 KW
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Met-Ed, Penelec, Penn Power & West Penn June 2017-May 2019 DSP IV Auction Schedule
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* Final percentage may vary in total and by company based upon actual peak load contribution. Final schedule will be designed to be as close as possible to the presented values.
COMMERCIAL Auction Month Percent Load Tranches Months to Delivery 6/1/17 to 8/31/17 9/1/17 to 11/30/17 12/1/17 to 2/28/18 3/1/18 to 5/31/18 6/1/18 to 8/31/18 9/1/18 to 11/30/18 12/1/18 to 2/28/19 3/1/19 to 5/31/19
October 2016 14.00% TBD 8 12-Months 14.00% TBD 8 24-Months January 2017 16.00% TBD 5 12-Months 16.00% TBD 5 24-Months April 2017 28.00% TBD 2 3-Months 6.00% TBD 2 12-Months 6.00% TBD 2 24-Months June 2017 28.00% TBD 3 3-Months October 2017 28.00% TBD 2 3-Months 12.00% TBD 8 12-Months January 2018 28.00% TBD 2 3-Months 12.00% TBD 5 12-Months April 2018 28.00% TBD 2 3-Months 12.00% TBD 2 12-Months June 2018 28.00% TBD 3 3-Months October 2018 28.00% TBD 2 3-Months 14.00% TBD 8 14.00% TBD 8 January 2019 28.00% TBD 2 3-Months
Met-Ed, Penelec, Penn Power & West Penn June 2019 - May 2023 DSP V Auction Schedule
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* Final percentage may vary in total and by company based upon actual peak load contribution. Final schedule will be designed to be as close as possible to the presented values.
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9 Source: Data provided to Pa Public Utilities Commission, Pa Power switch Web-Site
* The MWh percentage is based on a MWh from December 21, 2017 through August 29, 2018.
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10 Source: Data provided to Pa Public Utilities Commission, Pa Power switch Web-Site
* The MWh percentage is based on a MWh from December 21, 2017 through August 23, 2018.
■ More customers will likely consider procuring competitive supply in lieu of hourly priced default service. ■ Such customers will likely need to identify resources to assist them with procurement methods and strategy.
– PA Power Switch
(http://www.papowerswitch.com/)
■ Competitive procurement will also entail knowledge of electricity markets and unique nature of supply contracts. ■ Hourly priced customers need to watch the market and have a plan to reduce usage when market prices spike.
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■ Thus far, FES has performed under all existing Wholesale default service contracts with FE Pa EDC’s ■ As a retail customer of FES – thus far FES has performed under my residential retail contract ■ FES has asked for permission from bankruptcy judge to sell its retail book. As of today, it appears Constellation may be purchasing its retail book. ■ As of Sept 11 – Pa Power switch has 116 offers from 47 suppliers in West Penn’s territory ■ FES has not participated in Pa Auctions for Default Service Supply while in bankruptcy ■ The Pa companies have had only
bankruptcy ■ The April auction was robust – with ample suppliers participating ■ Independent Evaluator and the Pa Commission found the results to be competitive ■ October will be our next major auction.
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■ Certain Non-Marketed Based ("NMB") Transmission Costs are recovered through Default Service Support Rider – Rider J ■ Includes charges incurred from PJM such as PJM Regional Transmission Expansion Plan charges, PJM Expansion Cost Recovery, PJM charges for Reliability Must Run generating unit declarations and charges, historical tie line, generation and retail customer meter adjustments, Unaccounted for Energy. ■ Majority of charges recovered under Rider NMB are allocated and billed on a NSPL basis – GSL, GP,TP ■ Rider J is updated annually
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■ Transmission Costs considered Market Based and included in the Price to Compare Default Service Rate Riders. ■ Today, these Costs include NITs, Congestion Costs, Marginal Transmission Losses. ■ Congestion & Marginal Transmission losses are Market Based Charges that change hourly ■ NITs rates are set to recover the Companies' transmission-related costs
– West Penn has what is known as a fixed (i.e., "stated") transmission rate – Penn Power is provided transmission service by ATSI which uses a forward-looking formula-based transmission rate – Met-Ed and Penelec are provided transmission service by MAIT which uses a forward-looking formula-based transmission rate.
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■ Stated Rate
– “Traditional” rate making – Fixed $/MW charge based on ‘test year’ of costs and plant balances – Charge is static and only changes with a new rate filing
■ Formula Rate
– Transmission rate calculated utilizing a specific formula template approved by FERC
– Historical or projected costs and plant balances input into a formula each year result in an annual revenue requirement – True up adjustments between actual and projected values
– Transmission rate is updated each year
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■ Transmission rate will vary each year. ■ Based on Companies' anticipated transmission investments, transmission rates are expected to increase over time. ■ Transmission rate changes may impact procurement strategy and supply agreements.
– Important to know if Transmission Rate is a pass through – If fixed price includes Transmission – is there a significant premium in the price for potential price changes – Rates can go up or down annually
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■ Launched in 2014 to modernize transmission system across its 10 operating companies, ensuring customers benefit from smarter, stronger, more secure power grid in years ahead
– From 2014 through 2017, invested $4.4 billion on grid improvement projects, completing 600 to 700 projects per year primarily in Ohio and Penn Power in PA – Rebuilt or replaced more than 1,200 miles of aging transmission lines – Plan to invest more than $1 billion/year to modernize aging infrastructure from 2018 through 2021 to enhance reliability
■ Investments resulted in 37% reduction in equipment-related transmission outages in ATSI zone from 2014-2017
– Expecting similar results as we expand the program eastward into Met-Ed and Penelec service areas
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Upgrade Aging Infrastructure Enhance System Performance Add Operating Flexibility Rebuild older lines and equipment to make facilities more resilient and reduce future maintenance costs Expand network communication, digital analytics, and cyber/physical security to harden the system Add redundancy and system features that allow system operators to more swiftly react to changing conditions on the grid
■ No base distribution rate case filed before January 2019 ■ Effectively, rates are frozen until Oct/Nov 2019 ■ For Commercial and Industrial Customers charges based on monthly peak demand
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■ Commission Orders were issued on May 17, 2018
– A generic order that stated how each utility should handle the TCJA – Company specific orders setting forth the surcharge amount as calculated by the Company and filed on March 9, 2018 with the Commission
■ Each company filed a reconcilable tariff rider to credit customers for the difference in taxes between 35% and 21%
– Surcharge credit is on a bills rendered basis – Rates will be changed each January 1 and will be fully reconcilable
■ Each Company will also deal with tax savings incurred from January through June 2018
– In their next base rate case or in a separate proceeding in 3 years, whichever comes first
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■ Jobs and Economic Impact
– According to a Report produced by Brattle premature closure of Ohio & Pa Nuclear plants could add $285 million per year to Pa consumers electric bills and $1.5 billion annually across PJM.
■ Potential Loss of Major Source of Clean Emission – Free Electric Power
– Per Senate Resolution 227 Nuclear provides 93% of Pa’s emission free generation
■ Potentially less secure power supply
– More eggs in one basket – Potential for fuel supply disruptions
■ Pa Senate Resolution 227 of 2017 – by a vote of 42 – 8 recognized the following
environment and security depend on a reliable, resilient electric grid powered by an "all of the above" mix of energy generation resources, including traditional baseload generation that is produced from long-term fuel sources located onsite;
meet demand for electricity because a significant amount of generation was not available to run due to weather related
employ thousands of workers in high-paying jobs and contribute significantly to State and local economies
a vital contributor to the State's economy, providing support through direct, indirect and induced impacts, including approximately 36,100 full and part-time jobs, and $4.1 billion in total value added to the Commonwealth's economy;
generation resources be properly compensated for providing these positive attributes and under the current design of the wholesale electric markets, prices are set in a manner that undervalues fuel-secure generation resources;
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Distributions Improvement Charge (“DSIC”) Distributions Improvement Charge (“DSIC”) Long-Term Infrastructure Investment Plan (“LTIIP”) Long-Term Infrastructure Investment Plan (“LTIIP”) Act 11 of 2018 Act 11 of 2018 Legislation on Nuclear Subsidies Legislation on Nuclear Subsidies Legislation on Microgrid and Energy Storage Program Legislation on Microgrid and Energy Storage Program
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