PUC Approves Distribution System Improvement Charge For PECO Gas

The Public Utility Commission Thursday approved PECO Energy Company’s plan to implement a distribution system improvement charge (DSIC) for its gas operations.

The Commission voted 5-0 to approve PECO’s DSIC petition, which was filed in compliance with Act 11 of 2012. The DSIC will allow PECO to fund the infrastructure improvements associated with its long-term infrastructure improvement plan (LTIIP), which will allow for accelerated replacement of the utility’s at-risk natural gas mains and a faster relocation of indoor meters to outdoor structures.

With this approval, PECO can file a tariff to become effective on Oct. 1, 2015, implementing the DSIC.

The Commission referred two issues from the petition to the PUC Office of Administrative Law Judge (OALJ) for hearings. One item relates to recovery of eligible investment based on the company’s over-earning situation at the time of DSIC implementation. A second issue – regarding the treatment of balancing charges as distribution in PECO’s tariff, and the proposal to include them in the DSIC calculation – also was referred to the OALJ, based on a motion by Commissioner James H. Cawley.

On May 7, 2015, the Commission approved PECO’s modified LTIIP. The company’s original LTIIP was approved on May 9, 2013. The modified plan will increase PECO’s annual LTIIP expenditures from $34 million per year under the original LTIIP to $61 million per year by 2018, increasing the total estimated cost from $371.3 million to $534.4 million, or by 44 percent over the period from 2013 to 2022.

The LTIIP also will accelerate the replacement of cast iron and bare steel mains, completing replacement by 2035 instead of 2047, and it will accomplish the relocation of indoor meters to outdoor structures by 2034. The rate of bare steel service replacement and at-risk cast iron main replacement will remain the same, scheduled to be completed by 2022.

PECO provides electric delivery service to about 1.6 million customers and natural gas delivery service to about 503,000 customers in Bucks, Chester, Delaware, Lancaster and Montgomery counties.

On Feb. 14, 2012, former Gov. Corbett signed Act 11 of 2012, which allows jurisdictional water and wastewater utilities, natural gas distribution companies, city natural gas distribution operations and electric distribution companies to petition the Commission for approval to implement a DSIC.

Under the law, the DSIC must be designed to provide for "the timely recovery of the reasonable and prudent costs incurred to repair, improve or replace eligible property in order to ensure and maintain adequate, efficient, safe, reliable and reasonable service.”

For more information, visit the PUC’s DSIC webpage.

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