Exelon 2014 Annual Report Download - page 25

The PAPUC issued its Phase II EE&C implementation order on August 2, 2012, that provides energy consumption reduction
requirements for the second phase of Act 129’s EE&C programs, which went into effect on June 1, 2013 with a three-year
cumulative consumption reduction target of 1,125,852 MWh.
On November 14, 2013, the PAPUC issued a Tentative Order on Act 129 demand reduction programs which seeks comments on a
proposed demand response program methodology for future Act 129 demand reduction programs as well as demand response
potential and wholesale prices suppression studies. In its February 20, 2014 Final Order, the PAPUC stated that it does not expect
to make a decision as to whether it will prescribe additional demand response obligations until 2015. Any decision reached would
affect PECO’s EE&C Plan subsequent to its Phase II Plan.
On February 28, 2014, PECO filed a Petition for Approval to amend its EE&C Phase II Plan to continue its DLC demand reduction
program for mass market customers from June 1, 2014 to May 31, 2016. PECO proposed to fund the estimated $10 million annual
costs of the program by modifying incentive levels for other Phase II programs. The costs of the DLC program will be recovered
through PECO’s Energy Efficiency Program Charge along with other Phase II Plan costs. The PAPUC granted PECO’s Petition in an
Order that became final on May 5, 2014.
Pennsylvania Retail Electricity Market. The extreme weather experienced in early 2014 resulted in increased commodity costs
causing certain shopping customers to receive unexpectedly high utility bills. In response to a significant number of customer
complaints throughout Pennsylvania, on April 3, 2014, the PAPUC unanimously voted to adopt two rulemaking orders to address the
issue. The first rulemaking order requires electric generation suppliers to provide more consumer education regarding their
contracts. The second rulemaking order requires electric distribution companies to enable customers to switch suppliers within three
business days (known as accelerated switching). The improved customer education and accelerated switching were to be in place
within 30 days and six months of approval of the orders, respectively. The orders became final on June 14, 2014. On December 4,
2014, the PAPUC approved PECO’s implementation plan (known as Bill on Supplier Switch), allowing PECO to implement
accelerated switching by the December 15, 2014 deadline.
See Note 3—Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information.
Natural Gas
PECO’s natural gas sales and distribution service revenues are derived through natural gas deliveries at rates regulated by the
PAPUC. PECO’s purchased natural gas cost rates, which represent a significant portion of total rates, are subject to quarterly
adjustments designed to recover or refund the difference between the actual cost of purchased natural gas and the amount included
in rates without markup through the PGC.
PECO’s natural gas customers have the right to choose their natural gas suppliers or to purchase their gas supply from PECO at
cost. At December 31, 2014, the number of retail customers purchasing natural gas from a competitive natural gas supplier was
78,400, representing approximately 15% of total retail customers. Retail deliveries purchased from competitive natural gas suppliers
represented approximately 22% of PECO’s mmcf sales for the year ended December 31, 2014. PECO provides distribution, billing,
metering, installation, maintenance and emergency response services at regulated rates to all its customers in its service territory.
Procurement-Related Proceedings. PECO’s natural gas supply is purchased from a number of suppliers primarily under long-term
firm transportation contracts for terms of up to three years in accordance with its annual PAPUC PGC settlement. PECO’s aggregate
annual firm supply under these firm transportation contracts is 32 million dekatherms. Peak natural gas is provided by PECO’s
liquefied natural gas (LNG) facility and propane-air plant which provide 1.2 billion cubic feet and 181,441 dekatherms, respectively,
on an annual basis. PECO also has under contract 21 million dekatherms of underground storage through service agreements.
Natural gas from underground storage represents approximately 29% of PECO’s 2014-2015 heating season planned supplies.
Gas Main Extension Program. On November 6, 2014, PECO filed a plan with the PAPUC requesting approval of three initiatives to
provide more incentives to customers interested in switching to natural gas service. If approved, local customers would pay
significantly less initially to have natural gas installed at their homes and businesses.
See Note 3—Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information.
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