Joint Petition for Partial Settlement (PDF)
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BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION PENNSYLVANIA PUBLIC UTILITY COMMISSION v. DOCKET NO. R-2018-3000164 PECO ENERGY COMPANY JOINT PETITION FOR PARTIAL SETTLEMENT August 28, 2018 DB1/ 98878048.9 TABLE OF CONTENTS APPENDICES AND STATEMENTS IN SUPPORT Appendix A Proposed Tariff (Settlement Rates) Appendix B Proof of Revenues Appendix C Residential and Low-Income Customer Issues Appendix D Gross Plant Costs Appendix E Rate Effects For Typical Customers In Each Major Rate Class Statement A Statement in Support of Joint Petition for Partial Settlement of PECO Energy Company Statement B Statement in Support of Joint Petition for Partial Settlement of the Pennsylvania Public Utility Commission Bureau of Investigation and Enforcement Statement C Statement in Support of Joint Petition for Partial Settlement of the Office of Consumer Advocate Statement D Statement in Support of Joint Petition for Partial Settlement of the Office of Small Business Advocate Statement E Statement in Support of Joint Petition for Partial Settlement of the Philadelphia Area Industrial Energy Users Group Statement F Statement in Support of Joint Petition for Partial Settlement of the Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania Statement G Statement in Support of Joint Petition for Partial Settlement of the Tenant Union Representative Network and Action Alliance of Senior Citizens of Greater Philadelphia Statement H Statement in Support of Joint Petition for Partial Settlement of Community Action Association of Pennsylvania Statement I Statement in Support of Joint Petition for Partial Settlement of Tesla, Inc. Statement J Statement in Support of Joint Petition for Partial Settlement of ChargePoint, Inc. Statement K Statement in Support of Joint Petition for Partial Settlement of Wal-Mart Stores East, LP and Sam's East, Inc. DB1/ 98878048.9 BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION PENNSYLVANIA PUBLIC UTILITY COMMISSION v. DOCKET NO. R-2018-3000164 PECO ENERGY COMPANY JOINT PETITION FOR PARTIAL SETTLEMENT TO THE HONORABLE DEPUTY CHIEF ADMINISTRATIVE LAW JUDGE CHRISTOPHER P. PELL AND ADMINISTRATIVE LAW JUDGE F. JOSEPH BRADY: PECO Energy Company ("PECO"), the Pennsylvania Public Utility Commission's ("Commission") Bureau of Investigation and Enforcement ("I&E"), the Office of Consumer Advocate ("OCA"), the Office of Small Business Advocate ("OSBA"), the Philadelphia Area Industrial Energy Users Group ("PAIEUG"), the Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania ("CAUSE-PA"), the Tenant Union Representative Network and Action Alliance of Senior Citizens of Greater Philadelphia ("TURN et al."), the Community Action Association of Pennsylvania ("CAAP"), Tesla, Inc. ("Tesla"), ChargePoint, Inc. ("ChargePoint"), and Wal-Mart Stores East, LP and Sam's East, Inc. ("Walmart") (collectively, the "Joint Petitioners"), by their respective counsel, submit this Joint Petition For Partial Settlement ("Settlement") in the above-captioned proceeding and request that the Administrative Law Judges approve the Settlement without modification) NRG Energy Inc. ("NRG") opposes the Settlement only to the extent that it is based on PECO' s allocation of certain indirect costs to residential distribution service instead of residential default service and the effect of reallocating I ArcelorMittal USA, LLC ("ArcelorMittal"), Calpine Energy Solutions ("Calpine") and the International Brotherhood of Electrical Workers, Local 614 ("IBEW"), which are parties to this proceeding, have authorized the Joint Petitioners to represent that they do not oppose the Settlement. 1 DB1/ 98878048.9 those costs to residential default service, with a commensurate reduction in the level of residential distribution charges. This issue has been reserved for briefing by the parties. In support of this Settlement, the Joint Petitioners state as follows: I. BACKGROUND 1. On March 29, 2018, PECO filed with the Commission Tariff Electric — Pa. P.U.C. No. 6 ("Tariff No. 6"). Tariff No. 6 reflects an increase in annual distribution revenue of approximately $82 million, or 2.2% of PECO's total Pennsylvania jurisdictional operating revenues. Accompanying Tariff No. 6, PECO filed the supporting data required by the Commission's regulations (52 Pa. Code § 53.52 et seq) for a historic test year ("HTY") ended December 31, 2017, a future test year ("FTY") ending December 31, 2018 and a fully projected future test year ("FPFTY") ending December 31, 2019. The Company's supporting information included the prepared direct testimony of eight initial witnesses and the various exhibits sponsored by them. 2. PECO's proposed rate increase reflected $71 million savings in 2019 from changes in federal income tax law made by the Tax Cuts and Jobs Act ("TCJA"), which became effective on January 1, 2018.2 PECO also proposed to refund the amount of PECO's reduced tax expense in 2018, which PECO projects to be approximately $68 million under its existing rates, through a reconcilable surcharge mechanism (the Federal Tax Adjustment Credit ("FTAC")).3 3. By Order issued April 19, 2018, the Commission instituted a formal investigation to determine the lawfulness, justness and reasonableness of PECO's existing and proposed rates, 2 Tax Cuts and Jobs Act, Pub. L. No. 115-97 (2017). 3 The savings of $71 million in 2019 and $68 million in 2018 are the net effect of the TCJA's reduction in the federal income tax rate from 35% to 21%, the amortization of a regulatory asset established to reflect excess accumulated deferred income taxes created by the tax rate reduction, and the elimination of bonus depreciation for public utilities. DB1/ 98878048.9 -2- rules and regulations. Accordingly, Tariff No. 6 was suspended by operation of law until December 28, 2018.4 This case was then assigned to Deputy Chief Administrative Law Judge Christopher P. Pell and Administrative Law Judge F. Joseph Brady (the "ALJs") for purposes of conducting hearings and issuing a Recommended Decision. 4. On April 4, 2018, Carrie B. Wright, Esq. entered a Notice of Appearance on behalf of I&E. On April 9, 2018, the OSBA filed a formal Complaint, Public Statement, Verification, and a Notice of Appearance on behalf of Elizabeth Rose Triscari, Esq. On April 12, 2018, the OCA filed a formal Complaint, Public Statement, and Notices of Appearance on behalf of Christy M. Appleby, Esq., Hayley Dunn, Esq., and Aron J. Beatty, Esq. Complaints were also filed by PAIEUG on April 26, 2018, and by the Trustees of the University of Pennsylvania ("UPENN") on May 2, 2018.5 A formal Complaint by West Norriton Township was docketed by the Commission on June 26, 2018.6 5. By letter dated April 20, 2018, PECO notified the ALJs and the parties that it would rely upon 52 Pa. Code § 5,61(d), which provides that answers to complaints docketed in Commission-instituted investigations of rates are not required except as directed by the Commission or presiding officer. Neither the Commission, nor the ALJs, directed the Company to submit answers to any complaints. 4 Order, Pa. P.U.C. v. PECO Energy Company, Docket No. R-2018-3000164 (Order entered April 19, 2018). In accordance with the Commission's April 19th Order and Section 53.71 of the Commission's regulations, 52 Pa. Code § 53.71, PECO filed a tariff supplement suspending Tariff No. 6. See Supplement No. 1 to Tariff Electric — Pa. PIJC No. 6 Suspending Original Tariff No. 6 Until December 28, 2018, Docket No. R-2018-3000164 (filed April 27, 2018). 5 On June 20, 2018, UPENN submitted a Petition for Leave to Withdraw Rate Complaint, which was granted by the ALJs on July 3, 2018. 6 On July 18, 2018, West Norriton Township submitted a Petition for Leave to Withdraw its Complaint. On August 3, 2018, the ALJs granted their Petition. DB1/ 98878048.9 -3- 6, The following Petitions to Intervene were filed: CAUSE-PA April 10, 2018 IBEW April 17, 2018 CAAP April 23, 2018 Delaware Valley April 27, 2018 Regional Planning Commission ("DVRPC")7 TURN et al. May 3, 2018 Tesla May 3, 2018 Walmart May 3, 2018 NRG May 4, 2018 Retail Energy Supply May 4, 2018 Association ("RESA") Laborers International May 18, 2018 Union of North America, Local 57 ("LI1UNA")9 ArcelorMittal May 24, 2018 Calpine May 24, 2018 ChargePoint July 3, 2018 7. On July 3, 2018, ChargePoint filed a Motion for Admission Pro Hac Vice which was granted in Prehearing Order #5, dated July 24, 2018. 8. A Prehearing Conference was held on May 8, 2018, at which a schedule was established for the submission of testimony and the conduct of hearings. Specifically, and consistent with Commission practice, a schedule was adopted whereby all case-in-chief, rebuttal and surrebuttal testimony would be submitted in writing in advance of hearings. Evidentiary 7 On May 16, 2018, DVRPC submitted a letter to the ALJs stating they reached an agreement with PECO and were withdrawing from the case. This request to withdraw was granted by the ALJs on July 3, 2018. 8 On July 17, 2018, RESA filed a Petition for Leave to Withdraw. On August 3, 2018 the ALJs granted the Petition. 9 On August 15, 2018, LIUNA filed a Petition for Leave to Withdraw Intervention. DB1/ 98878048.9 -4- hearings were scheduled for August 20-22, 2018, at which all testimony and exhibits would be placed in the record and all witnesses presented for oral rejoinder and cross-examination, if any, thereon. The ALJs thereafter issued Prehearing Order #1 establishing this schedule. 9. Six public input hearings were held at the dates, locations and times shown below: Date Location Time(s) June 6, 2018 Media, PA 6:00 p.m. June 7, 2018 Worcester Township, PA 7:00 p.m. June 12, 2018 Newtown, PA 6:00 p.m. June 14, 2018 Philadelphia, PA 10:00 a.m. 6:00 p.m. July 18, 2018 Oxford, PA 6:00 p.m. 10. On June 12, 2018, PECO filed a Motion to File the Supplemental Direct Testimony of Richard A.