Allegheny Power 2013 Annual Report Download - page 144

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PPUC-approved Riders SMT-C. Evidentiary hearings were held and briefs were submitted by the Pennsylvania Companies and
the Office of Consumer Advocate. On November 8, 2013, the ALJ issued a Recommended Decision recommending that the
Pennsylvania Companies' Deployment Plan be adopted with certain modifications, including, among other things, that the
Pennsylvania Companies perform further benchmarking analyses on their costs and hire an independent consultant to perform
further analyses on potential savings. On December 2, 2013, the Pennsylvania Companies submitted exceptions in which they
challenged, among other things, certain recommendations in the ALJ’s decision, and requested approval of a modification to the
deployment schedule so as to allow the entire Penn smart meter system (170,000 meters) to be built by the end of 2015, instead
of the original proposed installation of 60,000 meters by the end of 2016. The Office of Consumer Advocate took exception to one
issue and both parties filed replies to exceptions on December 12, 2013. The case is now before the PPUC for consideration.
A decision is expected during the first quarter of 2014.
In the PPUC Order approving the FirstEnergy and Allegheny merger, the PPUC announced that a separate statewide investigation
into Pennsylvania's retail electricity market would be conducted with the goal of making recommendations for improvements to
ensure that a properly functioning and workable competitive retail electricity market exists in the state. On April 29, 2011, the PPUC
entered an Order initiating the investigation and requesting comments from interested parties on eleven directed questions
concerning retail markets in Pennsylvania to investigate both intermediate and long term plans that could be adopted to further
foster the competitive markets, and to explore the future of default service in Pennsylvania following the expiration of the upcoming
DSPs on May 31, 2015. A final order was issued on February 15, 2013, providing recommendations on the entities to provide default
service, the products to be offered, billing options, customer education, and licensing fees and assessments, among other items.
Subsequently, the PPUC established five workgroups and one comment proceeding in order to seek resolution of certain matters
and to clarify certain obligations that arose from that order.
The PPUC issued a Proposed Rulemaking Order on August 25, 2011, which proposed a number of substantial modifications to the
current Code of Conduct regulations that were promulgated to provide competitive safeguards to the competitive retail electricity
market in Pennsylvania. The proposed changes include, but are not limited to: an EGS may not have the same or substantially
similar name as the EDC or its corporate parent; EDCs and EGSs would not be permitted to share office space and would need to
occupy different buildings; EDCs and affiliated EGSs could not share employees or services, except certain corporate support,
emergency, or tariff services (the definition of "corporate support services" excludes items such as information systems, electronic
data interchange, strategic management and planning, regulatory services, legal services, or commodities that have been included
in regulated rates at less than market value); and an EGS must enter into a trademark agreement with the EDC before using its
trademark or service mark. The Proposed Rulemaking Order was published on February 11, 2012, and comments were filed by
the Pennsylvania Companies and FES on March 27, 2012. If implemented these rules could require a significant change in the
ways FES and the Pennsylvania Companies do business in Pennsylvania, and could possibly have an adverse impact on their
results of operations and financial condition. Pennsylvania's Independent Regulatory Review Commission subsequently issued
comments on the proposed rulemaking on April 26, 2012, which called for the PPUC to further justify the need for the proposed
revisions by citing a lack of evidence demonstrating a need for them. The House Consumer Affairs Committee of the Pennsylvania
General Assembly also sent a letter to the Independent Regulatory Review Commission on July 12, 2012, noting its opposition to
the proposed regulations as modified.
WEST VIRGINIA
MP and PE currently operate under a Joint Stipulation and Agreement of Settlement reached with the other parties and approved
by the WVPSC in June 2010 that provided for:
• $40 million annualized base rate increases effective June 29, 2010;
• Deferral of February 2010 storm restoration expenses over a maximum five-year period;
• Additional $20 million annualized base rate increase effective in January 2011;
• Decrease of $20 million in ENEC rates effective January 2011, providing for deferral of related costs for later recovery in
2012; and
• Moratorium on filing for further increases in base rates before December 1, 2011, except under specified circumstances.
The WVPSC opened a general investigation into the June 29, 2012, derecho windstorm with data requests for all utilities. A public
meeting for presentations on utility responses and restoration efforts was held on October 22, 2012 and two public input hearings
have been held. The WVPSC issued an Order in this matter on January 23, 2013 closing the proceeding and directing electric
utilities to file a vegetation management plan within six months and to propose a cost recovery mechanism. This Order also requires
MP and PE to file a status report regarding improvements to their storm response procedures by the same date. On July 23, 2013,
MP and PE filed their vegetation management plans, which provided for recovery of costs through a surcharge mechanism. A
hearing was held on December 3, 2013, and briefing followed but the WVPSC has not yet issued an opinion in this matter.
MP and PE filed their Resource Plan with the WVPSC in August 2012 detailing both supply and demand forecasts and noting a
substantial capacity deficiency. MP and PE filed a Petition for approval of a Generation Resource Transaction with the WVPSC in
November 2012 that proposed a net ownership transfer of 1,476 MW of coal-fired generation capacity to MP. The proposed transfer
involved MP's acquisition of the remaining ownership of the Harrison Power Station from AE Supply and the sale of MP's minority
interest in the Pleasants Power Station to AE Supply. FERC authorized the transfers on April 23, 2013 and the financing on May
13, 2013. A Joint Settlement Agreement was filed by the majority of parties on August 21, 2013. On October 7, 2013, the WVPSC