The Commission is requesting comment on the rate impact limitation of the Act To Implement the Recommendations of the Governor’s Ocean Energy Task Force that requires the Commission to conduct a competitive solicitation for proposals for long-term contracts to supply installed capacity and associated renewable energy and renewable energy credits from one or more deep-water offshore wind energy pilot projects or tidal energy demonstration projects.

Related to its interpretation of the rate impact limitation requirement of the law, the Commission asked the following questions:
"1) Should the provision be interpreted to mean that all customers, in any customer class, may have a rate impact up to 0.145 cent/kWh (assuming no change to assessment under subsection 4 and no additional assessment under subsection 5) resulting from any above-market costs that might be associated with long-term contracts; or

2) Given the exclusion in subsection 6 noted above, should the provision be interpreted to mean that transmission and substransmission customers (i.e., industrial class customers) could have no rate increase resulting from any above-market costs that might be associated with long-term contracts, while distribution level customers (i.e., medium and small commercial customers and residential customers) may have a rate impact up to 0.145 cent/kWh (assuming no change to assessment under subsection 4 and no additional assessment under subsection 5).

In addition, the Commission requests comments on the proper interpretation of the following language in the rate impact limitation provision: “the amount of the assessment charged under Title 35-A, section 10110, subsection 4 at the time that the contract is entered.”

3) Given that subsection 4 explicitly references subsection 5, should the provision be interpreted to include only the assessment specified in subsection 4 or should it include the assessment in subsection 4 and any additional assessment pursuant to subsection 5."

Comments are due August 6, 2010, and reply comments are due August 13, 2010. The full text of the Request for Comments is available on the NEM Website.

The Commission issued an ANOPR on specific issues intended to promote effective competition for natural gas supply service. The rules pertain to the reformulation of the price to compare, adoption of permanent rules for voluntary POR programs, and capacity release rules. The ANOPR continues a proposed rulemaking begun last year, incorporating changes suggested by the stakeholders at that time. Vice Chairman Christy identified a number of issues in which the ANOPR varies from the previously proposed rules:

"1. Elimination of the gas procurement reduction rate.
2. Inclusion of an NGDC's total natural gas procurement costs in the gas procurement charge (GPC).
3. The inclusion of a Merchant Function Charge (MFC) to be included within the Price to Compare (PTC).
4. Adjustment of the PTC quarterly instead of monthly.
5. Elimination of the net gas procurement adjustment.
6. A requirement that each NGDC file a tariff supplement under 66 Pa. C.S. § 1308(a) to identify the natural gas procurement costs included in base rates, to remove those costs from base rates and to recover those costs under 66 Pa. C.S. § 1307.
7. The addition of a detailed definition of natural gas procurement costs.
8. A requirement that NGSs use consolidated billing from the NGDC to qualify for a Purchase of Receivables (POR) program, except in two certain instances.
9. Changes to how the POR discount factor is to be determined.
10. Making capacity release to NGSs mandatory.
11. Elimination of the NGDC surcharge to collect the costs of implementing and promoting competition.
12. Elimination of the NGDC surcharge to collect regulatory assessments."

Vice Chairman Christy also voiced concern about the potential of the proposed rules to result in utility stranded costs.

Comments on the ANOPR are due 30 days after the ANOPR is entered. The full text of the ANOPR will be posted on the NEM Website when made available electronically. Commissioner Coleman's Motion and Vice Chairman Christy's Statement are available on the NEM Website.