PECO Accelerates Bid Date for Spring 2011 Default Service Procurement

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March 9, 2011  

PECO informed the Pennsylvania PUC that it is revising the schedule for its Spring 2011 RFP for default service supply to accelerate the bid date from late May to early May (P-2008-2062739).

Specifically, PECO is moving the bid date from May 23 to May 2 in order to provide sufficient time to arrange for winning bidders to serve the Full Requirements Spot Price tranches which have been added to the spring RFP. Not all of these tranches were approved or subscribed in the Fall 2010 RFP, which necessitated adding the open tranches to the Spring 2011 RFP. PECO said that the modified schedule was developed to take into account other planned default service RFPs in the region, and is supported by NERA Economic Consulting, the third-party administrator for PECO's default supply procurements.

For residential customers, 75% of default supply is procured under fixed requirements contracts, and the remaining 25% of supply is provided through a combination of block energy and spot market purchases. Because PECO serves as the load serving entity for the 25%, it has the option to receive Auction Revenue Rights (ARRs) in the upcoming annual PJM Financial Transmission Rights (FTR) auction process and receive an allocation of revenues (or charges) from the Annual FTR Auction.

PECO informed the PUC that it has evaluated its options to participate in the 2011-2012 ARR/FTR market, and said that it intended to implement a "conservative" ARR strategy that is likely to yield net positive economic benefits for residential default service customers. PECO, and its consultant, analyzed historic FTR auction outcomes and historic congestion patterns between the PECO Zone and generating units that have historically served load in the PECO Zone, and have also used a wholesale market dispatch model to forecast ARR values for the 2011-2012 PJM planning year.

PECO's intent was to participate in Stage 1 only of the ARR process (which closed March 8), and PECO intends to receive the value of the ARRs that it is successful in receiving from its nominations. PECO plans to flow the value of the ARRs to residential default service customers in the Generation Supply Adjustment (GSA). PECO is currently receiving and passing on to customers ARR revenues that have been reassigned to its Load Serving Entity accounts as of January 1, 2011. Such revenues will continue until the end of the current planning year on May 31, 2011. PECO will also recover the cost of the consultant for the ARR analysis in the GSA.

Separately, PECO announced that it is preparing for its next purchase of 340,000 alternative energy credits as part of the company's fulfillment of the Alternative Energy Portfolio Standards (AEPS). An information session will be held for prospective bidders on March 15.

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