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Pennsylvania PUC to Investigate Rate Increase Requests by Peoples, FirstEnergy

The Pennsylvania Public Utility Commission (PUC) plans to launch separate investigations into a tariff filing by Peoples Natural Gas Co. LLC and its Equitable Gas division, and distribution rate increase requests by four electric utilities owned by FirstEnergy Corp.

The PUC voted 4-0 to launch both investigations.

In March 2015, the PUC unanimously approved a five-year pilot program -- officially, the Rider Service Expansion Tariff (SET) -- which was designed to expand natural gas service to underserved areas of the state, but at a minimal cost to consumers (see Daily GPIMarch 30, 2015). Under SET, Peoples and its affiliates charged customers a fixed monthly fee of $55, rather than requiring an upfront payment of thousands of dollars.

According to the PUC, Peoples told the commission that SET "led to confusion and resistance from customers," adding that the company was "unable to enroll sufficient new natural gas customers in 2015 to initiate any new service expansion projects." Despite that setback, the PUC approved three expansion projects between Peoples Natural Gas Co. LLC and Peoples TWP LLC in December 2015.

With SET foundering, the PUC said Peoples is now proposing a new, permanent program called Rate MLX. According to the company, MLX would replace the SET pilot program and eliminate the need for service expansion agreements, like the three approved last December, for future new projects.

"According to the request, MLX would be offered to residential and commercial customers wishing to convert from alternate, more costly fuels to natural gas," the PUC said. "As proposed under MLX, Peoples would charge a customized delivery rate, in lieu of the standard tariff delivery rates, which would be unique to and applicable to all customers within each project area. Delivery rates for residential projects could be as low as $6.79/Mcf or as high as $10.32/Mcf." MLX would also eliminate the need for a fixed monthly charge, such as the one imposed under SET.

The PUC suspended Peoples' request for up to seven months and referred it to the PUC's Office of Administrative Law Judge (OALJ). The commission said the OALJ will hold public hearings and make a recommended decision or settlement by Dec. 28.

In recent years, the PUC has approved similar pilot programs by PECO Energy Co., UGI and Columbia Gas of Pennsylvania to expand natural gas service in the state (see Daily GPISept. 11, 2015Feb. 26, 2014July 10, 1998). According to the PUC, Peoples and its affiliates provide natural gas service to approximately 700,000 customers in western Pennsylvania.

The PUC will also look into whether a proposal by four FirstEnergy companies to collectively raise their annual electricity rates by a cumulative $439 million is justified, potentially impacting up to 2.02 million customers. The companies are Pennsylvania Power Co. (Penn Power), Pennsylvania Electric Co. (Penelec), Metropolitan Edison Co. (Met-Ed) and West Penn Power Co. (West Penn Power).

According to the PUC, Penn Power has requested an annual increase in rates of $42 million, a 9.5% increase over current rates. Meanwhile, Penelec has requested an annual increase of $158.8 million (an 11.4% increase over current rates), Met-Ed has proposed a $140.2 million increase (9.5%) and West Penn Power has requested $98.2 million (5.7%).

Under those scenarios, the monthly bill for an average Penn Power residential customer using 1,000 KWh per month would increase from $130.06 to $148.51, a 14.2% increase, while similar customers at Penelec would see their bills increase from $137.89 to $161.50 (a 17.1% increase), Met-Ed bills would climb from $129.82 to $147.34 (13.6%), and West Penn Power customers' bills would increase from $112.99 to $123.88 (9.6%).

The PUC suspended the utilities' request for up to seven months and referred it to the OALJ for public hearings and a recommended decision or settlement by Jan. 27, 2017.

According to the PUC, Penn Power provides electric service to about 163,000 customers in six counties in western Pennsylvania, Penelec serves 584,000 customers in 31 of the state's counties, Met-Ed serves 558,000 customers in 13 counties in eastern Pennsylvania and West Penn Power serves 721,000 customers in 23 counties in the western and central parts of the state.

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