Workshop C. 1:00 p.m. to 2:00 p.m.

Transcription

1 Workshop C Met-Ed & Penelec (FirstEnergy): Electric Rates, Recent Changes, Shopping Opportunities, Capacity Updates, Transmission Charges, Energy Efficiency & Conservation Plan Opportunities, Rebates and Other Regulatory Developments Impacting Rates 1:00 p.m. to 2:00 p.m.

2 Biographical Information Vasiliki (Vicki) Karandrikas, Of Counsel McNees Wallace & Nurick LLC, 100 Pine Street, Harrisburg, PA, (717) Vicki practices in the Energy and Environmental Group. She advises commercial, industrial, and institutional customers regarding electricity and natural gas procurement. As part of her practice, Vicki counsels clients regarding energy and natural gas supply options, including Requests for Proposals for energy service, negotiating retail and wholesale energy contracts, developing onsite generation, securing federal and state regulatory approvals for self-supply arrangements, and meeting state and federal compliance obligations. Vicki also advises clients on matters involving the regulation of utility services, particularly in competitive electric and natural gas markets. She has appeared before state regulatory agencies in Pennsylvania, Connecticut, New Jersey, Maryland, and Georgia, the Federal Energy Regulatory Commission, and state and federal appellate courts. In addition, Vicki has experience with counseling clients on the jurisdictional implications of complex transactions as well as the impacts of energy related legislation and regulations and representing clients in related implementation proceedings. Charles V. Fullem, Director Rates & Regulatory Affairs/Pennsylvania, FirstEnergy Charles V. Fullem is Director- Rates & Regulatory Affairs/Pennsylvania, a position he was appointed to on January 22, In that capacity, he is responsible for developing the default service plans of 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. Mr. Fullem holds his Bachelor of Science degree in Mineral Economics from the Pennsylvania State University. Mr. Fullem is a Certified Energy Procurement Professional by the Association of Energy Engineers. He has provided expert testimony before the Public Utilities Commission of Ohio ( PUCO ), 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. Mark Chasse, Senior Engineer, East Penn Mfg. Co., 102 Deka Rd., Lyon Station, PA mchasse@dekabatteries.com Mark Chasse is the Senior Engineer for East Penn Manufacturing. In six decades, East Penn has grown from a one-room shop with a product line of five automotive batteries to one of the world s leading battery manufacturers with over 8,000 employees, 450 product designs, and hundreds of awards for manufacturing and environmental excellence. East Penn is operates a massive, 520-acre single-site battery manufacturing complex in Berks County, Pennsylvania, with world-class facilities that are the most advanced in the industry.

3 Vicki Karandrikas, Of Counsel, McNees Wallace & Nurick, LLC Chuck Fullem, Director, Rates and Regulatory Affairs Mark Chasse, Sr. Engineer, East Penn Mfg. Co. 7 th Annual Pennsylvania Energy Management Conference November 8, 2017

4 Disclaimer The information contained in this presentation material is intended to provide generally descriptive and summary information. Any conflict between the information contained 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. 2

5 Agenda Electric Rate Background Generation Transmission Distribution Energy Efficiency 3

6 Rate Schedules Met-Ed and Penelec The Companies generally have 5 Distribution rates available to Commercial and Industrial Customers. Met Ed Penelec GS Small GS Medium GS Large GP LP GS Small GS Medium GS Large GP LP Availability Below 1500 kwh Above 1500kWh Above 400 kw Above 2400 V Above 5000 kw Below 1500kWh Above 1500kWh Above 400kW Above 2400V Above 23000V Below 400 kw Below 400 kw Above 3000kW Voltage Secondary Secondary Secondary Primary Transmission Secondary Secondary Secondary Primary Transmission Customer charge (Single Phase) (Single Phase) (Three Phase) 39.38(Three Phase) Energy Charge (rkva) 0.20 (rkva) 0.20 (rkva) (rkva) 0.19 (rkva) 0.19 (rkva) Demand Charge Ride A Tax Adjsutment Surcharge x x x x x x x x x x Rider D Net Metering x x x x x x x x x x Rider F Phase III EE&C x x x x x x x x x x Rider G Smart Meter Tech Charge x x x x x x x x x x Rider H Price to Compare x x x x Rider I Hourly Pricing Default Service x x x x x x x x x x Rider J Default Service Support x x x x x x x x x x Rider N Solar Photovoltaic Requirement Charge x x x x x x x x x x Rider P Non Utility Generation x x x x x x x x x x Rider R Distribution System Improvement Charge x x x x x x x x * Rates Effective January

7 Generation 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 an uncollectible charge and an administrative charge. Beginning in June of 2019 or June of 2021 Rider I will be the only DEFAULT SERVICE RATE FOR CUSTOMERS GREATER THAN OR EQUAL TO 100 KW. 5

8 Met-Ed, Penelec, Penn Power & West Penn June 2017-May 2019 DSP IV Auction Schedule 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 % TBD 8 12 Months 14.00% TBD 8 24 Months January % TBD 5 12 Months 16.00% TBD 5 24 Months April % TBD 2 3 Months 6.00% TBD 2 12 Months 6.00% TBD 2 24 Months June % TBD 3 3 Months October % TBD 2 3 Months 12.00% TBD 8 12 Months January % TBD 2 3 Months 12.00% TBD 5 12 Months April % TBD 2 3 Months 12.00% TBD 2 12 Months June % TBD 3 3 Months October % TBD 2 3 Months 14.00% TBD % TBD 8 January % TBD 2 3 Months * 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. 6

9 Generation Shopping Update Customers Using Alternative Suppliers Met Ed September 27, 2017 Shopping Statistics Residential Commercial Industrial Total 170,548 31, ,898 Percentage of customer base Residential Commercial Industrial Total Customer MWH from Alternative Suppliers 1,604,999 1,873,640 4,286,141 7,764,780 Total MWh 4,509,317 2,522,205 4,408,987 11,440,509 *Percentage of MWh from Alternative Suppliers Penelec September 27, 2017 Shopping Statistics Residential Commercial Industrial Total Customers Using Alternative Suppliers 148,481 39, ,876 Percentage of customer base Residential Commercial Industrial Total Customer MWH from Alternative Suppliers 1,172,235 2,184,012 4,566,732 7,922,979 Total MWh 3,693,081 3,035,751 4,692,916 11,421,748 *Percentage of MWh from Alternative Suppliers * The MWh percentage is based on a MWh from December 22, 2016 through September 25, Source: Data provided to Pa. Public Utilities Commission, PA Power Switch website 7

10 What does a change to hourly default service mean to customers? 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 ( 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. 8

11 "Supplier Equation" Supplier Offer = Energy Capacity Transmission Ancillary Services Alternative Energy Portfolio Standards ("AEPS") Compliance Risk Factor Market movement Cost changes Customer usage variability Profit 9

12 Procurement Basics Gather information Account numbers, rate schedules, historical usage Identify appropriate product structure(s) Fixed, all-in rate Fixed rate with pass-through On-peak/off-peak pricing Block & Index Establish timetable Business objectives Market and regulatory considerations Select procurement method no "one size fits all" method Request for proposals Becoming a PJM subaccount Review contracts "caveat emptor" Product definition Regulatory change clause Payment procedures & billing disputes 10

13 Transmission Certain Non-Market 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 on June 1. 11

14 Transmission Included in Default Service 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. Historically, Companies had fixed (i.e., "stated") transmission rate As of July 1, 2017, Companies use a forward-looking formula-based transmission rate 12

15 Recent Changes: New Transco - MAIT Met-Ed and Penelec gained the following approvals from the Pennsylvania Public Utility Commission ("Commission"): Transfer of Met-Ed's and Penelec's transmission assets to a newly formed FirstEnergy transmission company, Mid-Atlantic Interstate Transmission, LLC ("MAIT"); Designation of MAIT as public utility; Transfer will not result in anti-competitive behavior; Met-Ed and Penelec to lease the land associated with the transmission assets to MAIT through a ground lease; and Modification of Affiliated Interest Agreements to include MAIT. 13

16 MAIT's Stated Objectives Investment of $2.5 to $3.0 billion in the transmission system as part of "Energizing the Future" program Transparency Higher Credit Ratings Efficiency Reduced Competition for Capital Lower cost of debt - $135 million over life of bonds Enhanced transmission system reliability Jobs over NJ/PA footprint 14

17 MAIT Seeking Formula Rates for NITS 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 15

18 What does a formula rate for NITs mean for customers? 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. New formula rate framework anticipates customer review of the Companies' informational and reconciliation filings. Awareness of formula rate process and schedule is important for seeking clarification and future planning. 16

19 Distribution No base distribution rate case filed before January 2019 Effectively, rates are frozen until Oct./Nov Charges based on monthly peak demand 17

20 Energy Efficiency Phase III Plan Overview Plan runs from June 1, 2016 through May 31, 2021 Budgets are 2% of 2006 annual revenue, each year, same as Phase I & Phase II Projected Industrial Cost Met-Ed Penelec Industrial Cost (Final Year Phase II) = $4,636,946 = $3,305,068 First Year Industrial Cost (Phase III) = $3,340,117 = $2,571,535 Second Year Industrial Cost (Phase III) = $5,156,155 = $3,108,177 Low Income target is 5.5% of energy savings and Government/Nonprofit/Institution target is 3.5% of energy savings Each customer class must be offered at least one EE program Requires at least one comprehensive program for the Residential and Commercial/Industrial sectors Demand reduction goals return after being removed for Phase II 18

21 Energy Efficiency Phase III Programs for Commercial, Industrial, Government and Institutional Customers Energy solutions for business program combines: Energy Efficient Equipment program - provides incentives to customers who implement qualifying high efficiency measures, recycle inefficient appliances or retrofit specialized processes Energy Efficient Buildings program provides incentives to customers who construct a new building, complete major renovations or a combination of upgrades such as insulation & cool roof Government & Institutional program provides financial incentives to the Government, Education and Non-profit tariff customers to purchase or install qualifying high efficiency measures and recycle inefficient appliances. Demand Response program Met-Ed only provides incentives to customers who reduce demand during the months of June through September (4-year program). 19

22 Energy Efficiency Phase III Programs for Commercial, Industrial, Government and Institutional Customers Examples of measures for these programs are: Lighting replacements with high-intensity lights or LEDs Motors and drives for industrial/commercial applications Energy audits and technology assessment programs Commercial HVAC, chillers, air conditioning, heat pumps Street lighting and traffic signal upgrades Food service equipment upgrades such as vending machines, ice machines, steam cookers, fryers Appliances and electronics such as refrigerators, freezers, water heaters, monitors, computers Agricultural measures such as dairy scroll compressors, efficient fans, automatic milker takeoffs 20

23 Energy Efficiency Phase III Program Resources Website = Calculators and Application Solutions by Facility Type Program Ally Resources Eligibility and Documentation Requirements 21

24 Energy Efficiency Phase III Application Requirements Apply online force.com/fepa Request pre-approval before purchasing equipment to ensure it meets program requirements and is eligible for incentives. Or Apply for incentives no later than 180 days from the date of project completion. Documentation as required on the website. Signed letter of attestation. Measurement and verification of project postinstallation, may include on-site inspection of data monitoring. 22

25 Other Developments Distributions Improvement Charge ("DSIC") Long-Term Infrastructure Investment Plan ("LTIIP") Legislation on Nuclear Subsidies Legislation on Microgrid and Energy Storage Program 23

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