508 Order  

  • Order

    [34 Pa.B. 1649]

    Public Meeting held
    March 4, 2004

    Commissioners Present:  Terrance J. Fitzpatrick, Chairperson; Robert K. Bloom, Vice Chairperson; Glen R. Thomas; Kim Pizzingrilli; Wendell F. Holland

    Pennsylvania Public Utility Commission, Strategic Energy, LLC and Dominion Retail, Inc. v. Duquesne Light Company; R-00038092; R-00038092C0001; R-00038092C0002

    Order

    By the Commission:

       Before the Commission for disposition is an uncontested Proposal of the parties for the criteria and procedure that will govern the submission, evaluation, and approval of Rule 4.19 Plans in Duquesne Light Company's (DLC) service territory.

    History of the Proceeding

       On December 19, 2003, the Commission entered an Opinion and Order (December Order) at Docket Nos. R-00038092, R-00038092C0001 and R-00038092C002 disposing of the Recommended Decision of Administrative Law Judge Corbett concerning DLC's Supplier Coordination Tariff (Tariff Supplement).

       The December Order directed that the Commission's Office of Executive Director (OED) designate a lead bureau to be responsible for developing a proposal and criteria for evaluating Energy Generation Supplier Plans (EGS Plans) submitted to the Commission based on DLC's Rule 4.19 (Demonstration of Ability to Perform).

       In December 2003, the OED designated the Commission's Bureau of Conservation, Economics, and Energy Planning (CEEP), with the advice and assistance of the Law Bureau, as the lead bureau on Rule 4.19 issues.

       On January 20, 2004, CEEP issued a Secretarial Letter that presented an initial proposal and schedule for developing Rule 4.19 criteria and procedures.

       From January through February 2004, CEEP, the Law Bureau and the interested parties discussed and amended CEEP's initial proposal. In late February 2004, the parties agreed upon the general content and procedures for examining EGS Plans.

    Discussion

       DQE's initial Rule 4.19 proposal provided as follows:

    4.19  Demonstration of Ability to Perform
       Each April 1 and September 1 during the term of the EGSs Coordination Agreement, the EGS shall demonstrate to the Public Utility Commission's reasonable satisfaction that the EGS has the ability to perform its obligations in the Company's Control Area during the following calendar year. Such demonstration shall include a list of all resources, including generation assets owned or operated by the EGS and Energy purchase contracts, from which the EGS intends to obtain the Energy necessary to satisfy its forecasted load obligation, and shall provide reasonable assurance that such resources satisfy any requirements required by any Governmental Authority or applicable regional or national reliability council, including NERC or ECAR or RTO, whether or not the EGS is a member thereof. Copies of these materials must also be provided to the Company.

       (December Order at 18 citing Duquesne Exhibit JFR-4 at 11).

       In the December Order, the Commission agreed with the ALJ that this provision was an important component of the Commission's market-based approach to energy. The Commission further recognized that systems operations, due process and concerns about load, reserves, margins and transmission needed more discussion using the OCA's Comments as a starting point. (December Order at 20-21.)

       The December Order directed the OED to assign a lead bureau to coordinate the development of criteria for EGS Plans submitted under DLC's Rule 4.19. The Commission also directed the parties and staff to consider the treatment of proprietary information submitted for Rule 4.19 purposes in the course of their discussions and to determine whether the incorporation of 52 Pa. Code § 5.432 into Rule 4.19 adequately addresses this issue. The Commission alternatively indicated a willingness to consider template proprietary orders for Rule 4.19 filings. (December Order at 20-21.)

       The Commission directed the submission of a final recommendation for consideration at the public meeting of February 26, 2004. The Commission's subsequent cancellation of the February 26, 2004, public meeting required taking action at the next public meeting of March 4, 2004. The Commission staff and interested parties met during January and February and developed a proposed resolution of the issues attached as Appendices I, II and III (uncontested Proposal). We note Dominion's suggestion that we eliminate information about an EGS' reliability group membership, as opposed to providing the information if it becomes appropriate, even though Dominion is not challenging the uncontested Proposal.

       The Commission has accepted, rejected or modified prior settlements or uncontested Proposals after evaluating consistency with the Public Utility Code, the public interest and the Commission's regulations. EDC RNR Recovery Petitions, Docket No. R-00016849 to R-00016856 (December 21, 2001) (Settlement rejected as contrary to the public interest); Steven Druitt v. Bell Telephone Company of Pennsylvania, Inc., Docket No. F-000204654 (Order entered November 10, 1994) (Settlement modified, as opposed to being outright rejected, to avoid blanket approval of a settlement that would fundamentally alter existing Commission regulations); Petition for Approval of PECO Energy Company's Market Share Threshold Bidding/Assignment Process and Petition for Approval of ''The Better Choice'' Plan to Meet PECO Energy Company's Market Share Threshold Requirements, Docket Nos. P-00021984 and P-00021992 (Order entered May 1, 2003) (Contested settlement is approved consistent with the language of Paragraph 39(B), the Company's Restructuring Settlement, and a finding that the provisions were just, reasonable, and in the public interest).

       Upon consideration, we approve the uncontested Proposal of the parties and staff as consistent with the Public Utility Code and the public interest. Several factors support our determination.

       First, sections 2802(3) and 2807(d) of the Public Utility Code require the Commission to ensure that system reliability be, at a minimum, that which existed when the legislature enacted Chapter 28. Section 2807(a) further requires an electricity distribution company (EDC) to maintain the integrity of their distribution system.

       DLC proposed Rule 4.19 is consistent with Chapter 28. The uncontested Proposal submitted is a product of an EDC, several EGSs that want to provide competitive energy in Pennsylvania markets and public interest representatives. The uncontested Proposal is consistent with the reliability and competitive policy requirements of Chapter 28 and our December Order. The substantive provisions of the uncontested Proposal, which require submission and public examination of EGS Plans, provide due process while protecting the public and proprietary interests as required by Pennsylvania law. Moreover, the uncontested Proposal contains provisions, particularly governing the delivery of energy supplies and transmission, that reduce incidents of energy triage during peak demand periods. In addition, the uncontested Proposal contains provisions that establish a sound procedure for evaluating an EGS's Plan for consistency with the reliability and competitive mandates of Chapter 28. In addition, the uncontested Proposal implements Rule 4.19 with provisions that are far better than the uncertainty or possibility of further litigation that exists at the current time. Finally, the uncontested Proposal will continue until an EDC joins another independent system operator/regional transmission organization (RTO) or the Commission determines that it is no longer necessary.

       Second, the uncontested Proposal is consistent with the public interest. The proposal contains clear and predictable provisions that will facilitate the entry of multiple competitors into DLC's service territory. The presence of multiple EGSs, including those that are a party to this uncontested Proposal, goes a long way to providing more of the diverse services and prices that benefit Pennsylvania customers. In addition, there is no evidence that any of the substantive terms or procedures will produce results that are not otherwise just and reasonable.

       Third, Dominion's suggestion that we completely delete any reference to regional reliability group membership, as opposed to requiring information only if it becomes appropriate, is consistent with the uncontested Proposal. Under the terms of the uncontested Proposal, the Commission wants information on an EGS' membership in regional reliability groups only if it is appropriate. A difference between never providing information, as Dominion seeks, and providing information only if it becomes appropriate, is more a difference of degree than kind. It is not fatal to this uncontested Proposal.

       Consequently, we conclude that there is no reason to reject this uncontested Proposal as contrary to the public interest in the absence of any compelling legal or policy argument to the contrary; Therefore,

    It Is Ordered That:

       1.  The uncontested Proposal submitted by staff and the parties, following this order as Appendix I, Appendix II and Appendix III, is approved.

       2.  A copy of the uncontested Proposal be posted on the Commission's website and published in the Pennsylvania Bulletin along with this Opinion and Order.

    JAMES J. MCNULTY,   
    Secretary

    Appendix I

    EGS Plan Requirements

       Rule 4.19 of Duquesne's Supplier Tariff and the Commission's Order of December 19, 2003 at Docket Nos. R-00038092, R-00038092C0001 and R-00038092C0002 requires that each April 1 and September 1 during the term of an EGS's coordination agreement, and until Duquesne joins an appropriate RTO or the Commission determines otherwise, the EGS shall demonstrate to the PUC with reasonable satisfaction that the EGS has the ability to perform its obligation in the Company's control area. The EGS's obligation is to make all necessary arrangements for obtaining competitive energy supply in a quantity sufficient to serve its own customers, and to act in a prudent manner to ensure that sufficient energy can be delivered into Duquesne's control area.

       The standard by which an EGS's Rule 4.19 plan shall be evaluated is whether the EGS has sufficient resources available to meet its customer needs so that it is able to provide reliable service, with the understanding that there is no specific or established set of resources or facilities that must be maintained. The parties recognize that changes in an EGS' resources of facilities mix may be appropriate in response to subsequent developments.

       All Plans and all comments, reports and materials related to said plans shall be treated as Proprietary Information subject to a Protective Order. The EGS Plan must address, at a minimum, each of the following subject areas:

       1.  Each EGS must file their Plan in its entirety with the Commission and shall provide a copy to Duquesne Light Company (''DLC'') and shall provide a copy to DQE's Reliability Coordinator.

       2.  The EGS' Plan must include, but not be limited to, discussion and evaluation of information on their DLC control area forecast obligations and resource plans for the upcoming 12-month period. If the supply identified in the EGS' Plan will use transmission delivery paths reasonably expected to be constrained based on experience in the period covered by the Plan, the EGS Plan shall also address the steps taken by the EGS to mitigate any supply deficiencies that could result from such transmission constraints. The EGS' plan must also include, but not be limited to, separately identified forecasted firm and interruptible demand and energy of its customers for the immediate 12-month period beginning June 1 by April 1 and for the 12-month period beginning November 1 by September 1 to be used for supply planning purposes.

       3.  The EGS's plan shall demonstrate how it will meet its obligation to provide reliable electric generation service to its customers in DLC's control area. The plan must identify all resources, including those located within and without DLC's service territory, and provide the general basis for the EGS's conclusion that the supplier will reliably meet its contractual obligations Each Plan must also identify the supply resources that will be used by the EGS to fulfill its load obligations for the period covered by the Plan, including a description of contracts, or specific generation units, if such are used, and the type of transmission resource that is associated with each supply resource to the extent that said resources are external to the DLC control area.

       4.  Each EGS Plan must describe contingency plans that address such occurrences as the loss of a specific supply resource or a transmission interruption that would impact an EGS's ability to supply power into the DLC control area including how the EGS expects to meet such contingencies. The discussion shall include the EGS's contingency options for obtaining additional supply. The EGS' Plan shall further address contingency plans, including reserves, contingencies, and other requirements that may become necessary, to provide service when unexpected outages occur, the utilization of firm and non-firm transmission for any resources outside of the DLC control area, the utilization of firm transmission in summer peak periods to deliver supply from resources located outside of Duquesne's control area, the offering of interruptible service to industrial and commercial customers, and address the delivery of all such resources to the control area. To the extent that an EGS provides interruptible service, its Plan shall include a complete description of that service and how it is used as a supply planning resource, including a discussion of the means by which customers are interrupted.

       5.  To the extent that the EGS's plan includes supply options that will or are likely to utilize historically constrained transmission paths, the EGS shall provide information to address such contingencies. To the extent that information concerning scheduled or anticipated transmission interruptions, or similar contingency events is publicly available, and would potentially impact an EGS's supply resources, such information and its impacts also should be addressed.

       6.  The EGS shall explain the basis on which it believes its' plan will permit it to meet its customers' supply needs and shall contrast its current plan with the plans in place during past peak periods, including the July 2002 period. The EGS Plan must identify and address, as appropriate, the measures contained in the proposed current Plan, which improve the EGS' reliability and decrease the possibility of supply curtailments similar to those experienced by some EGSs in July 2002. The EGS' plan must further identify, contrast, and present the rationale for any differences between the proposed plan and the plan in place.

       7.  Where appropriate, the EGS' Plan shall demonstrate that it has all required documentation and contracts necessary to supply power into DLC's control area, as required by the Reliability Coordinator and, to the extent required, any membership in the appropriate regional reliability council, and a commitment to comply with Commission regulations, DQE's OATT, and any supplier tariff.

       8.  Where appropriate, the EGS' Plan must be supported by a sworn affidavit, executed by the responsible corporate official, affirming a commitment to adhere to and commit its operations to comply with the operating policies, criteria, requirements and standards of NERC and the appropriate regional reliability council(s), and a commitment to comply with Commission regulations, DQE's OATT, and any supplier tariff.

       9.  The EGS' plan must contain a statement recognizing that violation of NERC and appropriate regional reliability counsel standards or the EGS' plan associated with its transactions may be grounds for increased financial security to be posted with DQE for ancillary services or the possible imposition of penalties in accordance with DLC's Commission approved Electric Generation Supplier Coordination Tariff.

       10.  Following the submission of the EGS Plans, DLC shall submit an advisory report to the Commission by May 1 & October 1 addressing in detail each EGS' Plan and, in particular, the viability of each EGS' proposed plan to meet its load obligations consistent with NERC and ECAR operating policies, criteria, requirements and standards.

       11.  Any EGS plan, DLC Advisory Report, or CEEP evaluation of an EGS Plan or DLC Advisory Report may contain suggestions for improvement including, but not limited to, proposed changes in scheduling or information deemed appropriate for Rule 4.19 matters.

    Appendix II

    EGS Plan Evaluation Procedures

       1.  After the EGSs file their entire Plan with the Commission, the EGS' Plan shall be assigned to CEEP and Law Bureau for evaluation. All plans and any other documents generated by this procedure, which contain information from an EGS Plan, shall be deemed proprietary and subject to a protective order issued by the Commission via Secretarial Letter prior to the submission of the first plans. All parties shall be afforded the opportunity to review and submit comments regarding the text of the proposed protective order prior to its issuance by the Commission. All entities receiving copies of the EGS Plans and any supporting documents, as well as any other documents generated by this process, which contain information from an EGS Plan, shall be deemed to have agreed to abide by the protective order and to maintain the Plan and all of its contents as proprietary.

       2.  DLC shall file its Advisory Report of any EGS' Plan to CEEP in accordance with the schedule that CEEP establishes.

       3.  All parties will be provided an opportunity to discuss any proposed changes to the plans. Following those discussions, CEEP will provide the EGS with a preliminary opinion of the 'technical fitness' of an EGS' Plan.

       4.  All parties shall be given the opportunity to discuss with CEEP its opinion and attempt to reach a consensus on any contested portions, prior to CEEP's issuance of its opinion on the technical fitness of the plan. If after such informal discussions CEEP issues its opinion and any party objects to its contents, the party shall have the right to request that the matter be referred to an ALJ for review, and hearing, if appropriate.

       5.  The ALJ will issue an opinion after hearing as soon as possible. Any party may appeal the ALJ's determination to the full Commission for expedited review. All parties to proceedings before an ALJ shall have the opportunity to file exceptions and reply exceptions to the ALJ's determination. The hearing and exception process shall be conducted on an expedited basis by CEEP and Law Bureau.

       6.  If an EGS' Plan is found to be unacceptable or the discussions do not produce a Settlement, CEEP and the Law Bureau may recommend that if an EGS supply shortage causes a Shed Load situation, as defined in DLC's Supplier Tariff (and such supply shortage is not due to a Force Majeure, as defined in DLC's Supplier Tariff), the EGS shall be deemed to have failed to make ''best efforts'' to avoid the supply shortage and therefore will be subject to the $1,000/Mwh penalty authorized by section 4.7(iv) of DLC's Supplier Tariff for any Shed Load associated with the EGS's non-delivery.

    Appendix III

    Generic Protective Order

    [PARTIES OF RECORD]
    DOCKET NOS. R-00038092, R-00038092C0001, R-00038092C0002

    PROTECTIVE ORDER

       AND NOW, to wit, this [DATE], upon consideration of the Submission of the Energy Supplier Plan (EGS Plan) of NAME and the resulting necessity for a Protective Order, [FILED pursuant to Section 5.423 of the Commission's Rules of Administrative Practice and Procedure, 52 Pa. Code § 5.423, requesting restrictions on the disclosure of competitive, proprietary and confidential information that [NAME] and other parties may file, discuss, analyze, present or disclose, and upon consideration of the comments and/or revisions that other have made or proposed, IT IS HEREBY ORDERED THAT:

       1.  This Protective Order, as herein revised, is granted with respect to all materials identified in the following paragraphs herein, which are filed with the Commission, become the subject of discussion or analysis, are produced in discovery or otherwise presented during this proceeding. All persons now and hereafter granted access to the information identified in this Protective Order shall use and disclose such information only in accordance with this Protective Order.

       2.  The Proprietary Information subject to this Order includes all correspondence, documents, data, information, studies, methodologies and other materials, which a party or an affiliate of a party pursuant to the Commission's rules and regulations, any discussion or analysis, discovery procedures, or cross-examination or provides as a courtesy to the active parties in this proceeding, which are claimed to be of a proprietary or confidential nature and which are designated ''PROPRIETARY INFORMATION.'' Proprietary Information shall include, but is not limited to: information involving transmission, energy, or load, independent system operator or regional organization matters, of NAME, NAME customer identification information concerning electric service, including cost and price and contract terms, and conditions and service and pricing data of Electric Generation Suppliers operating in NAME control area. Proprietary Information also shall include market-sensitive fuel or power price forecasts; methodologies for power or fuel price forecasts, heat rates or heat rate curves; methodologies for supply forecasts; and business generation, wholesale transactions information and/or market-sensitive marketing plans or financial information that is commercially sensitive. All persons, including counsel, who intend to view Proprietary Information on behalf of any party, shall sign an acknowledgment confirming their knowledge of and agreement with the provisions of this Protective Order. Such signed acknowledgment shall be served upon all other parties.

       3. Proprietary Information shall be made available to the Commission and its Staff for use in this and any related proceeding and for all internal Commission analyses, studies or investigations related to the same. For purposes of filing, to the extent that Proprietary Information is placed in the Commission's report folders or files of the Commission or staff, such information shall be handled in accordance with routine Commission procedures for Proprietary Information inasmuch as the report folders are not subject to public disclosure. To the extent the Proprietary Information is placed in the Commission's testimony or document folders or comes to be provided to the Commission or staff, such information shall be separately bound, conspicuously marked and accompanied by a copy of this Order. Public inspection of the Proprietary Information shall be permitted only in accordance with this Protective Order.

       4. Proprietary Information shall be made available to counsel for parties of record in this proceeding. Such counsel shall use or disclose the Proprietary Information only for purposes of discussion, analysis, preparing or presenting evidence, cross-examination or argument in this case. To the extent required for participation in this proceeding, a party's counsel may afford access to Proprietary Information made available by another party (''the producing party'') to the party's experts provided such expert is expressly bound by the terms of this Proprietary Order. A ''party's experts'' include a party's internal experts, who will provide testimony, discussion, or analysis, in this case, and who is not otherwise involved in marketing directly to customers, unless waived by the party requesting this Protective Order, and who expressly agrees to use the Proprietary Information only for this proceeding. No other persons may have access to the Proprietary Information, except as authorized by Order of the Commission. No person, who may be entitled to receive or who is afforded access to any Proprietary Information, shall use or disclose such information for the purpose of business or competition, or any purpose other than the presentation for and conduct of discussion, analysis, or other action in this proceeding, or any administrative or judicial review thereof.

       5. The producing parties shall designate data or documents as constituting or containing Proprietary Information by affixing an appropriate proprietary stamp or typewritten designation on all such data or documents. Where only part of a compilation or multi-page document constitutes or contains Proprietary Information, the producing party, insofar as reasonably practicable within discovery and other time constraints imposed in this proceeding, shall designate only the specific data or pages of the document, which constitute or contain proprietary information.

       6.  Any public reference to Proprietary Information by the Commission or by counsel or persons afforded access thereto shall be to the title or exhibit reference in sufficient detail to permit persons with access to the Proprietary Information to fully understand the reference and not more. Proprietary Information shall remain a part of the record or discussion or analysis, to the extent admitted, for all purposes of administrative or judicial review.

       7.  Part of any record of this proceeding containing Proprietary Information, including but not limited to all exhibits, writings, direct testimony, cross-examination, argument and responses to discovery, and including reference thereto as mentioned in the above Ordering Paragraphs, shall be sealed for all purposes, including administrative and judicial review, unless such Proprietary Information is released from the restrictions of this Order, either through the agreement of the parties or pursuant to an Order of the Commission or subsequent court of review.

       8.  Parties affected by this Order shall retain the right to question or challenge the confidential or proprietary nature of Proprietary Information; to question or challenge the admissibility of Proprietary Information; to refuse or object to the production of Proprietary Information on any proper ground, including but not limited to irrelevance, immateriality or undue burden; and to seek additional measures of protection of Proprietary Information beyond those provided in this Order. If a challenge is made to the designation of a document or information as Proprietary, the party claiming that the information is proprietary retains the burden of demonstrating that the designation is necessary and appropriate.

       9.  Upon completion of this proceeding, including any administrative or judicial review, all copies of all documents and other materials, including notes, whether written or oral, which contain any Proprietary Information, shall be immediately returned to the party furnishing such Proprietary Information. This provision, however, shall not apply to the Commission or its Staff, the Office of Consumer Advocate, or any other party receiving the consent of the producing party.

       10.  All Requests for an elevated category of Proprietary Information termed ''Highly Sensitive Proprietary Information'' under this Protective Order is generally denied without prejudice. However, any party may apply for an amendment to this Protective Order, should it consider this Order insufficient to protect its interests in disclosing its competitive, proprietary and confidential information, or otherwise appeal directly to the Commission from an Order of Staff pursuant to Section 5.44 of the Commission's Rules of Practice and Procedure. In the meantime, further consideration may allow all parties sufficient time to discuss and consider how their respective interests may be protected by a less restrictive means of limitation, while according everyone a full and adequate opportunity to participate in the proceeding. See, 52 Pa. Code § 5.432(a). Should those discussions prove unavailing, an application to amend this Protective Order will allow the parties an opportunity to more fully explain their concerns and so enable a more meaningful review of those concerns before a ruling is issued thereto.

       11.  Any determination in regard to this Protective Order may be appealed directly to the Commission as an Order of Staff pursuant to Section 5.44 of the Commission's Rules of Practice and Procedure.

    [Pa.B. Doc. No. 04-508. Filed for public inspection March 19, 2004, 9:00 a.m.]

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