The Public Utility Commission Thursday approved the modified long-term infrastructure improvement plan for PECO Energy Company.

The updated plan will allow for accelerated replacement of the utility’s at-risk natural gas mains and a faster relocation of indoor meters to outdoor structures.

The Commission voted 5-0 to approve PECO’s modified LTIIP, which was filed in compliance with Act 11 of 2012.

“The data shows that this pipe only makes up 12 percent of PECO’s system, yet it is responsible for 88 percent of all leaks. Removing at-risk pipeline at a faster rate greatly minimizes the risk of a catastrophic incident,” said PUC Chairman Robert F. Powelson in a statement. “I commend PECO for taking strong action to better protect their customers and urge other gas distribution utilities that have not accelerated at-risk pipeline replacement to follow PECO’s lead.”

On May 9, 2013, the Commission approved PECO’s original LTIIP. Under PECO’s original LTIIP, the 10-year plan was designed to increase its projected capital investment in order to replace all of its oldest, high-risk cast iron and all of its bare steel services in about 10 years and all of its cast iron and bare steel mains in its system in about 34 years.

On February 4, 2015, PECO filed a petition to modify its existing LTIIP. The proposed modifications will increase PECO’s annual spend from $34 million per year under the existing 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 modified 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.

According to the petition, the company proposed to modify its existing LTIIP for three reasons: 1) to further enhance the safety and reliability of its gas distribution system; 2) to address a recommendation in a recent PUC Management and Operations Audit to accelerate the replacement of unprotected bare steel mains; and 3) to address recent revisions to the Pennsylvania Public Utility Code which require the relocation of indoor meters to outdoor structures.

“I express my support for this proposed acceleration of necessary infrastructure replacement that clearly enhances reliability and safety of our natural gas infrastructure,” said Commissioner James H. Cawley in a statement. “I strongly encourage other utilities to join PECO and Columbia Gas of Pennsylvania in such strong commitments to these investments.” 

PECO provides electric delivery service to about 1.6 million customers and natural gas delivery service to about 495,000 customers in Bucks, Chester, Delaware, Lancaster and Montgomery counties.

Act 11 requires, among other things, that utilities file LTIIPs as part of any action to establish a DSIC to recover reasonable and prudent costs incurred to repair, improve or replace certain eligible property that is part of a utility’s distribution system.

As of Jan. 1, 2013, public utilities could petition the Commission for approval to establish a DSIC.

The petition must contain the following elements: 1) an initial tariff; 2) testimony and exhibits to demonstrate that the DSIC will ensure the provision of adequate, efficient, safe, reliable and reasonable service; 3) a long-term infrastructure plan; 4) certification that a base rate case has been filed within the past five years; and 5) any other information required by the Commission. 

The petition must demonstrate that granting the petition and allowing the DSIC to be charged will accelerate the replacement of infrastructure.

On February 14, 2012, 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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5/11/2015