ML19347E669
| ML19347E669 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 02/16/1981 |
| From: | George S BUCHANAN INGERSOLL (FORMERLY BUCHANAN, INGERSOLL, PPG INDUSTRIES, INC. |
| To: | PENNSYLVANIA, COMMONWEALTH OF |
| Shared Package | |
| ML19347E637 | List:
|
| References | |
| C-80072105, C-90072106, R-80051196, R-80051197, NUDOCS 8105130204 | |
| Download: ML19347E669 (9) | |
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O BEFORE PENNSYLVANIA PUBLIC UTILITY COMMISSION IN RE:
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R-80051196
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CONSOLIDATED PROCEEDING INVOLVING
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C-80072105
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PENNSYLVANIA ELECTRIC COMPANY AND
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R-80051197
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METROPOLITAN EDISON COMPANY
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C-90072106, et al.
MAIN BRIEF OF STANDARD STEEL DIVISION AND PPG INDUSTRIES. INC.
This brief is submitted on behalf of Standard Steel Division of Titanium Metals Corporation of America and PPG Industries, Inc., each of which is a party to the within pro-ceeding.
These parties take no position on the level of revenue to be awarded Pennsylvania Electric Company and Metropolitan Edison Company at the conclusion of this proceeding, and are confining their argument to the issues discussed below concerning revenue distribution and rate design.
ST.QfENT OF THE CASE This consolidated proceeding involves general rate increases proposed by both Penelee and Met Ed as well as complaints j
filed by the same utilities against the temporary rates now in
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effect.
Since the purpose of the proceeding is to determine ggg proper rates it seems appropriate to consider the factual under-pinnings of both the temporary races and the proposed ones con-1 tained in the general rate increase filings.
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The materials of record are both voluminous and avail-able to the parties as needed.
Therefore, for present purposes all materials of record concerning both the temporary races and the proposed general race increases are incorporated by reference.
Specific references, as appropriate, will be made to certain of these materials below.
In general Standard Steel and PPG are concerned with tha rates collected and proposed under Penelec Rate Schedules GL and LP, and Met Ed Race Schedule TP.
More specifically it is these parties ' position that in neither case has the respective utility justified the changes preposed in these Rate Schedules.
STATEET OF OUESTIONS INVOLVED 1.
Whether Penelec and Met Ed have carried their burdens of proof to show that their proposed revenue distribution by customer class is proper, just, and reasonable insofar as Penelec Race Schedules GL and LP and Met Ed Rate Schedule TP are concerned?
This question should be answered in the negative.
2.
Whether Penelec and Met Ed have carried their burdens of proof to show that their proposed rate designs are kll l
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e and reasonable insofar as Penelec Race Schedules GL and LP.
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and Mac Ed Race Schedule TP are concerned?
This question should be answered in the negative.
i ARGUMENT The Pennsylvania Public Utility Code, in if315(a) and 315(b) imposes tne burden of proof upon the public utility in-volved to show that proposed races are just and reasonable, and that any lawful determination or order of the Commission has been complied with.
Penelee and Met Ed have failed to carry these statutorily imposed burdens with respect to the revenue distri-bution and rate design mteters discussed below.
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1.
Revenue Distribution - Temocrarv Rates l
The revenue distribution under Penalec's temporary rates is improper because it is not in compliance with the Commission orders establishing them.
Briefly stated these rates overcharge Race Schedule GL-Large customers at an annual race of $887,235 and overcharge Rate Schedule LP customers at an annual rate of
$436,350.
These overcharges result from Penalec's failure to follow the rate-setting methodology specified by the Commission in its order of April 25, 1979, and May 23, 1980, as more fully appears in the Statement in Lieu of a Brief filed by Standard Steel and PPG earlier in this proceeding.
The result is that the temporary rates now in effect for Penelee are improper as viola-tive of the Commission's orders.
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.h Under these circumstances, absent convincing evidence to the contrary from Penelec, there should be a finding that the overcharges have been and are now taking place.
An appropriate remedy should be devised, such as a temporary credit to the affected customers against future bills, and Penelec should be directed to i=ple=ent it in connection with this case.
With respect to Met Ed, it is not known whether the temporary rates comply with the Co=nission's orders of April 25, 1979, and May 23, 1980, or not.
Accordingly it is suggested that Met Ed be directed to demonstrate co=pliance (this might be accomplished in an infernal conference), and that a suitable remedy be fashioned as set forth above concerning Penelee to the extent that any !.r. proper overcharges are found.
2.
Revenue Distribution - Pronosed Rates lll The revenue distribution under the proposed rates is improper to the extent that appropriate line loss adjustments are not made in determining the revenue to be collected from each customer class.
Line loss figures supplied by the utilities appear in Fenelec Exhibit C-24 and in Met Ed Exhibit C-23, and show a significant variation by voltage level.
The importance of this variation is the utilities '
apparent failure to reflect it in substantial part when showing i
the races of return by customer class by omitting the energy cost
-evenues from the calculation.
The result is to understate the l
l return from higher voltage customers, and to make them susceptible 0
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to overcharges to the extent that class rates of return are used in determining races.
Such rates would be unjust and unreasonable l
when measured against a cost of service standard, and should not be permitted.
Accordingly, to the extent that customer class race of return is to be a factor in determining the revenue dis-tributions in this proceeding, both Penelee and Met Ed should be directed to =ake appropriate line loss adjustments for all energy sales in calculating the various returns.
3.
Race Design - Industrial Time of Use Rates Both Penelec and Met Ed have proposed industrial time of use rates.
In each case the assumptions underlying the pro-
'I jected results of these rates have been seriously questioned.
Given the absence of actual data, one should move carefully in im-O plementing the proposals.
A particularly disturbing aspect of the proposals is the absence of an explicit statement of the purpose to be served by the time of use rate design.
For this reason it might be appropriate to deny the proposals at this time until more specific plans are presented for evaluation in terms of obj ectives to be accomplished.
One might assume that the primary purpose of the pro-posals is to shift consumption to the ~off-peak period.
If this is so, then provision should be made to avoid penalizing those customers who already are substantial off-peak users who are not able to shift additional load.
Further, the rate differential O __
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should be of such a dimension as to offer a true incentive to ggg shift use off-peak.
In this regard, the Met Ed proposal appears to be deficient in not affording the 2aximum differential offered to Rate TP customers.
Under these circu= stances it is suggested that indus-trial ti=e of use races, in the form proposed, not be per=itted.
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In the alternative, any such races allowed should be implemented only on an experi= ental basis for a period not to exceed one year, and should contain provisions to exempt customers having substan-tial, current off-peak consu=ption frc= the full brunt of the higher on-peak rates.
4 Race Desizn - Demand /Enertv Charges The evidence submitted by Penelec in Exhibit C-21 and by Met Ed in Exhibit C-20 show that the proposed races undercharge h,
for demand and overcharge for energy under Rate Schedule LP and TP respectively.
Given the importance of sending proper economic signals to improve load factor, these disparities should be cor-rected in the final rate design to be adopted at the conciusion of this proceeding.
5.
Rate Desizn - Penelec Rate LP Penelec proposes to modify Rate Schedule LP by adding 43 customers now served under Rate GL.
At the same time Rate GL will be eliminated.
These proposals have not been shown to be desirable, and should be rej ected.
The major reason the proposal should be rej ected is O
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that it will combine non-homogeneous customers for race-making purposes, and make it more difficult to determine the proper cost of serving the class.
Penelec Exhibit C-26-1 shows that of the exiiting thirteen LP customers, all but one is served at 23KV or j
above.
The same exhibit shows that of the forty.three customers to be added, only twenty are served at 23KV or above, and that the rest are served at voltages ranging from 2.4KV to 12.47KV.
Given the losses in both demand and energy at different voltage levels, which are set forth in Penelec Exhibit C-24, it is apparent that the higher voltage customers will be called upon to sub-sidize the lower voltage customers if the costs of serving the class are reemmred. Further the proposal operates to deprive the current Rate GL customers of a credit they now enjoy of 356 per KW
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for taking untransfor=ed service.
The elimination of this credit operates to penalize those customers who installed equipment at their own expense, and thus spared Penelec the burden of providing transformed service.
There has been no showing that these results are neces-sary, desirable, just or reasonable.
Accordingly the proposal should be directed to li=it any modification of Race LP to the addition of customers served at 23KV or above, and to restore the credit for untransformed service to existing GL customers at an appropriate amount.
6.
Rate Design - Demand Averaging Penelec Rate LP contains a demand averaging provision O
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which should be retained.
Penelec has not proposed to eliminate this feature, and offered evidence that it is a useful load con-trol tool.
The consequences of eliminating demand averaging are not known, and both Penelee and its Rate LP customers are accus-comed to its operation.
Under these circumstances, Penelee should be permitted to continue the demand averaging feature for Race LP.
7.
Rate Design - Power Factor Adjustment Under Met Ed's proposed Race TP measured demands will be adjusted to a power factor of 907. until September 27, 1981, at which time a power factor of 957. will be applied.
There is nothing of record to establish what the effect of this change will be on the affected customers in terms of increased costs or on Met Ed in terms of increw ed revenues.
g Under these circumstances it is suggested that the increase in power factor correction to 95% be rej ected.
In the alternative, if it is allowed then it should not become effective for at least one year from the date of the final order in this proceeding, and Met Ed should be directed to give early notice and warning of the change to the affected customers.
CONCLUSION The positions set forth above with respect to revenue distribution and rate design should adopted for the reasons given.
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O aesgeoefu11y subm1=ced.
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Stephen' A. George
_Al, l:)% l, QgL-1 ty, %y Buchanan, Ingersoll, Rodewald, Kyle & Buerger Professional Corporation 57th Floor - 600 Grant Street Pittsburgh, Pennsylvania 15219 Attorneys for Standard Steel Division and PPG Industries, Inc.
February 16, 1981 O
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CONCLUSION It is respectfully submitted by the American Society of Utility Investors that the proposed 76.5 million dollar rate,. increase is
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insufficient as a matter of law for the reasons set forth above, and that the Commission has the power and dtity to establish rates that are "just and reasonable", even if it is necessary to establish rates higher than those proposed by the utility.
The equity owners of GPU are entitled to a higher return than the proposed _76.5 million dolldr rate increase.will provide.
The Commission-therefore, should establish rates at a level sufficiently above the rates proposed by Met-Ed to provide the equity owners with a return to which they are entitled.
g Furthermore,- th6 American Society of Utility Investors contends.-
that, for the : purpose of establishing '.'just and reasonable" rates herein, the nuclear power plant known as TMI-1 should be included in Met-Ed's-rate base.
Respectfully submitted, MERKEL, SpANG 5 WEIDNER By:
J JeriTV J. Speichrt,pjiquire Attorneys for Ame(1can Society of Utility Investors g.
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