The Pennsylvania Public Utility Commission, in an Oct. 22 order, approved PECO’s March petition for approval of its Long-Term Infrastructure Improvement Plan, which is a five-year plan, spanning the years 2016-2020 that accelerates infrastructure improvements in order to enhance system resiliency and reliability.
The PUC said that it also approves the proposed distribution system improvement charge calculation and tariff subject to certain modifications, including that PECO modify the language in the proposed tariff to specify that customers will be billed for the DSIC on a bills-rendered basis.
According to the order, Pennsylvania Gov. Thomas Corbett in February 2012 signed into law Act 11 of 2012, providing utilities with the ability to implement a DSIC to recover reasonable and prudent costs incurred to repair, improve or replace certain eligible distribution property that is part of the utility’s distribution system. The law states that as a precondition to the implementation of a DSIC, a utility must file an LTIIP with the PUC.
The state Office of Consumer Advocate, Office of Small Business Advocate OSBA and Philadelphia Area Industrial Energy Users Group petitioned to intervene in PECO‘s DSIC proceeding, and there were requests to hold an evidentiary hearing on several aspects of the DSIC.
“Accordingly, we will refer the matter of PECO proposing to apply the DSIC to all rate schedules, including transmission voltage rates, to the [Office of Administrative Law Judge (OALJ)] for hearing and recommended decision,” the PUC said. “We shall also refer the issue of whether revenues associated with riders in PECO’s tariff are properly included as distribution revenues.”
To the extent that PECO elects to implement a DSIC mechanism prior to resolution of those matters, the PUC said, any recovery will be subject to refund or recoupment consistent with final determinations on those matters referred to the OALJ.
According to the order, the LTIIP consists of three main project areas and a fourth category related to unreimbursed facility relocations:
· Storm hardening and resiliency measures
· Underground cable replacement
· Building substation retirements
· Facility relocations
During the five-year LTIIP period, the PUC added, PECO’s increased expenditures will amount to $324.3 million, with $274.3 million for the above reliability projects and $50 million for facility relocation.
Over the past 10 years, PECO’s service territory has experienced 10 major storm events, including Hurricanes Irene in 2011 and Sandy in 2012. The PUC also noted that PECO’s LTIIP will accelerate spending for storm hardening and resiliency projects by $123.9 million, or 45 percent. The balance of the LTIIP investment will be spent on the other reliability improvement initiatives.
Of PECO’s Building Substation Retirement project, the PUC said that the project is focused on the retirement and removal of building substations and the upgrade of the associated distribution facilities supplied by those substations. PECO avers that the substations are becoming more difficult to maintain, the PUC said, adding that the $13 million accelerated upgrade will begin in 2019.
The LTIIP also included a section on a possible future LTIIP program involving microgrids and distributed generation, with PECO saying that it may choose one or more projects for development at an expected cost of $50 million to $100 million to be spent in the 2017-2020 timeframe. The PUC added that as that section is speculative and the LTIIP does not contain any proposed plans or expenditures in that regard, the order does not address that provision of PECO’s LTIIP.
In a separate Oct. 22 statement, PUC Commissioner Pamela Witmer said she is encouraged by PECO’s proposal given that innovations like microgrid technology may help enhance reliability and resiliency.
“I would, however, note that broader implementation of microgrid technology is not without its challenges,” Witmer said. “To name a few, these include rate structure, questions about ownership of generation and maintenance of the grid, and the issue of cross-subsidization given that traditional customers could arguably shoulder a greater portion fo the cost to maintain the system when some customers shift to a microgrid. I am hopeful that PECO’s pilot, if effectuated, may help to shed some light on how we can effectively address these challenges.”