Case Background
On June 3, 2022,
Duke Energy Florida, LLC (Duke or utility) filed a petition requesting approval
of a new flat bill tariff titled My Energy Bill+ program. The My Energy Bill+ program
was originally conceptualized in a Memorandum of Understanding between Duke,
Vote Solar, the CLEO Institute, and the Southern Alliance for Clean Energy,
which was filed in Docket No. 20210016-EI.[1] In this memorandum, Duke stated its
intention to seek Commission approval of a flat bill offering that would
leverage controllable customer devices and target low-income customers. This
program would be an optional program that is similar in structure to Duke’s currently-approved
Your FixedBill tariff and would include an income qualified component.
Duke’s current Your
FixedBill (FB-1) tariff is a flat bill program that allows participating
customers to receive a fixed monthly bill for 12 months, which is calculated
using the prior 12 months of actual usage data, applying weather normalization,
plus an additional risk and usage adder. The FB-1 tariff was first approved in
2017 by Commission Order No. PSC-2017-0451-AS-EU and became effective on March 1, 2018. The
Order approving the FB-1 tariff states that the difference between the
calculated amount customers would have otherwise paid under residential rates
and what customers are actually billed under the FixedBill program will be
treated as a below-the-line revenue or expense, along with any costs to
implement and maintain the program. This regulatory treatment is designed to
hold non-participants harmless and not subsidize or be subsidized by the FB-1
tariff participants.
In Order No.
PSC-2021-0082-TRF-EI, the Commission approved modifications to Duke’s FB-1
tariff. These modifications included the implementation
of a pilot program which allows the utility to control the heating,
ventilation, and air conditioning (HVAC) thermostats of participating customers
taking service under the FB-1 tariff in exchange for a one-time $50 prepaid
gift card. The customer enrollment period for the pilot program ended in
September 2022. Currently, approximately 53,000 customers are enrolled in the
FixedBill Program, with approximately 2,000 of said customers participating in
the pilot program.
This is staff’s
recommendation on Duke’s proposed new My Energy Bill+ program. The proposed
tariffs are shown in Attachment A to the recommendation. In Order No.
PSC-2022-0304-PCO-EI, the Commission suspended the proposed tariff pursuant to
Section 366.06(3), Florida Statutes (F.S.).[5] Staff issued two data requests in this
docket on July 8, 2022, and August 24, 2022, with responses received on July
21, 2022, and September 6, 2022, respectively. The Commission has jurisdiction
over this matter pursuant to Sections 366.04, 366.05, and 366.06, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve Duke’s proposed My
Energy Bill+ program and the associated tariffs?
Recommendation:
Yes, the Commission should approve Duke’s proposed
My Energy Bill+ program and the associated tariff sheet Nos. 6.415-6.417
effective on the date of the Commission vote. The proposed program will allow
Duke to achieve peak demand reductions. Participating customers will benefit by
receiving a fixed bill with a reduced risk adder and the general body of
ratepayers will benefit by any demand reductions realized. Furthermore, the
program’s regulatory treatment is designed to hold the general body of
ratepayers harmless. (Ward, Hampson)
Staff Analysis:
Proposed My Energy Bill+ Program
Duke is proposing to establish a new, voluntary fixed bill
program that would allow the utility to have limited control of participating
customers’ thermostats. Under the My Energy Bill+ program, the utility would be
allowed to control customers’ thermostats by adjusting the temperature within a
specified range during specified demand response events. In exchange,
participating customers would pay a fixed monthly bill for a full year with no
true-up costs regardless of usage, with a lower risk adder (4 percent) compared
to Duke’s currently-approved FB-1 tariff that includes a 6 percent risk adder. Currently,
Duke estimates approximately 2,700 customers would enroll in the My Energy
Bill+ program within the first year, with no cap for enrollment.
In response to staff’s first data request, Duke explained
that the frequency, duration, thermostat adjustment, and notification
associated with demand response events would be the same as the current pilot
program. In
Exhibit C to its petition, Duke stated that there will be an average of four demand
response events each month in the summer season (June-September) and an average
of three events each month in the winter season (October-May). Duke also explained
that these events shall have a duration of 1-3 hours and thermostat temperature
adjustments shall be between 1-4 degrees Fahrenheit. Duke stated that customers
will receive at least one notice when an event is beginning using customer
information provided during enrollment. Duke stated in its petition that the
current pilot program has run peak usage management events at the monthly
system peak time in seven out of nine months.
Customers may override an event by making changes to their
thermostat at any time during an ongoing event. However, proposed tariff sheet
No. 6.417 states that customers may be removed from the proposed program due to
excessive demand response event opt outs. Furthermore, the utility would notify
customers in advance if they are at risk of being removed from the program due
to excessive opt outs. Participating customers may also be removed from the
proposed program if their actual energy usage increases above expected usage by
30 percent for at least three months. Again, Duke would notify customers in
advance if they are at risk from being removed from the program due to
excessive energy usage.
Income Qualified Program Component
Pursuant to the Memorandum of Understanding, Duke is
proposing to offer 1,000 income qualified customers who participate in the
proposed program a free smart thermostat. Duke stated that beyond the first
1,000 income qualified customers, the thermostats will be heavily discounted,
through collaboration with thermostat partners, although the final cost to
income qualified customers has not yet been determined.
For the purpose of the proposed program, Duke defines customers as income
qualified if they earn less than 200 percent of the Federal Poverty Guidelines.
Duke explained that eligibility for income qualified customers would be
determined by customers presenting documentation which shows participation in
certain government programs. In
its petition, Duke explained that it conducted a survey of customers and the
utility found that there was interest among income qualified customers in a
fixed bill program and in receiving a smart thermostat. Duke stated that the
costs for income qualified thermostats will be accounted for as below-the-line.
In response to staff’s first data request, Duke stated
that no ratepayer money will be used to fund the free smart thermostats.
Instead, the thermostats would be partially funded through Duke’s Share the
Light fund, as well as thermostat donations from partners. Customers
and employees can contribute to the Share the Light fund and Duke works with
agencies to distribute these funds to qualifying customers in order to pay their
energy bills.
Program Eligibility
To be eligible to enroll in the My Energy Bill+ program, the
proposed tariff requires customers to take service under the standard
residential rate schedule, to have lived in their current residence for the
past 12 months, to have a load profile that can be modeled with reasonable
predictability, to be current on their bill payments, and to have an eligible
thermostat that is active, installed, and connected to Wi-Fi. In response to
staff’s second data request, Duke stated that eligible thermostats are defined
by the utility as those with a make and model that is on the list of
thermostats that the Demand Response Management System can communicate with.
Furthermore, to be eligible for the proposed program,
within the last 12 months customers may not have defaulted on a payment
arrangement, entered into a multi-month payment arrangement, had a payment that
was not honored by a financial institution, or been disconnected for
non-payment of electric service. However, the proposed tariffs allow Duke to
waive some or all of these four requirements for income qualified customers.
Customers who enroll in the My Energy Bill+ program would
need to enter into a Service Agreement with Duke for a term of 12 months. Prior
to end of the 12-month term, Duke would calculate a new fixed monthly bill amount
for the following year and would notify the customer of the new monthly bill amount.
The customer would be automatically renewed at the new monthly bill amount for the
following year unless the customer notifies Duke of their intent to be removed
from the program.
Fixed Monthly Bill Calculation
Eligible customers who enroll in the proposed program
would have their fixed monthly bill calculated starting with 12 months of
actual energy usage data, applying weather normalization and any applicable
usage and risk adders. Fixed monthly bills for the proposed program would be
calculated using the same method as Duke’s currently-approved FB-1 tariff.
Specifically, proposed tariff sheet No. 6.415 provides the
formula Duke would use to calculate a customer’s fixed monthly bill for the
year. Duke would begin by multiplying a customer’s predicted weather normalized
monthly kilowatt hour (kWh) usage by the expected non-fuel energy charge
(including expected cost recovery factors, expected fuel cost recovery factor,
and expected asset securitization charge). Duke would then multiply this amount
by the risk adder, deduct any expected applicable credits, and add the expected
monthly customer charge. Applicable taxes and other charges, such as service
charges, lighting, and non-regulated services are not included in the fixed
monthly bill calculation, but will be applied and included in the total amount
due.
Duke stated in its proposed tariffs that the risk adder is
used to compensate the utility for the risk associated with weather-related
consumption and non-weather-related impacts. The initial risk adder would be
applied annually and would be capped at 4 percent. Furthermore, the risk adder
may be lowered based on a participating customer’s individual load profile and
behavioral responses. Duke’s currently-approved FB-1 tariff uses a risk adder
that is capped at 6 percent. In response to staff’s second data request, Duke
stated that it considered various factors in the decision to reduce the risk
adder offered in the proposed program.
Duke also explained that the proposed 4 percent risk adder was the best balance
in garnering customer interest in participation and the risk borne by the
utility to effectively control customer demand.
Similar to the current FB-1 tariff, during a customer’s
first year participating in the proposed program, an additional usage adder would
be applied to the customer’s predicted weather normalized (based on the
utility’s historical seasonal heating and cooling degree days) monthly kWh
usage. Duke stated in its proposed tariffs that the usage adder would be used
to compensate the utility for the risk associated with increased usage by the customer
in their first year of participating in the proposed program not associated
with the weather. The usage adder would be capped at 6 percent.
As with the current FB-1 tariff, the difference between
the amount the customer would have paid under the residential rates and the
fixed bill amount will be treated as a below-the-line revenue or expense. This
regulatory treatment is designed to hold non-participants harmless and not
subsidize or be subsidized by the participants in the proposed program. In
addition, as with the current FB-1 tariff, administrative and operating costs
such as enrollment processing costs and marketing costs, will be accounted for
as below-the-line to hold the general body of ratepayers harmless from the
optional program.
Conclusion
Having reviewed the petition and staff data request
responses, staff recommends that the Commission should approve Duke’s proposed
optional My Energy Bill+ program and associated tariff sheet Nos. 6.415-6.417
effective on the date of the Commission vote. The proposed program will allow
Duke to achieve peak demand reductions. Participating customers will benefit by
receiving a fixed bill with a reduced risk adder and the general body of
ratepayers will benefit by any demand reductions realized. Furthermore, the
program’s regulatory treatment is designed to hold the general body of
ratepayers harmless.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If Issue 1 is approved and a protest is filed
within 21 days of the issuance of the order, the tariff should remain in effect
pending resolution of the protest. If no timely protest is filed, this docket
should be closed upon the issuance of a consummating order. (Brownless)
Staff Analysis:
If Issue 1 is approved and a protest is filed within
21 days of the issuance of the order, the tariff should remain in effect
pending resolution of the protest. If no timely protest is filed, this docket
should be closed upon the issuance of a consummating order.
