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Pennsylvania Requires Utility to Include 1-Year Average Price to Compare on Bills
The Pennsylvania PUC has ordered that Pike County Light & Power electric "customer bills" shall list a one-year average Price to Compare
The PUC's determination came in Pike County's default service proceeding for the period June 1, 2014 to May 31, 2016.
The PUC, in a 3-2 vote, ordered the continuation of 100% reliance on NYISO spot prices for Pike County default service, with rates which change quarterly
However, the PUC was persuaded by the Office of Consumer advocate that Pike County should provide additional average Price to Compare data on its "customer bills, so that its customers have a better understanding of the potential price variability of their default service."
As described in OCA's brief and the PUC order, it does not appear that the listing of PTC information on Pike customer bills is limited to default service bills.
"Considering that Pike County will continue to purchase default supply on a spot basis, as well as the recent quarter-to-quarter fluctuations in the default service price, we conclude that this would be a reasonable and beneficial way to enhance the ability of Pike County’s customers to make well-informed decisions. We are not persuaded by the argument of the Company that including the average annual PTC would cause customer confusion as it simply would provide customers with another piece of pertinent information that they may find beneficial when evaluating their options in the competitive electric market," the PUC said.
Under the Adopted OCA recommendation, the Pike County bills will include the text: "Please note that this charge can fluctuate significantly every three months as market conditions change. Over the past year, the Default Service Charge has averaged x.xxx/kWh."
Commissioners Gladys Brown and James Cawley dissented from the PUC's order. While recognizing that the Commonwealth Court has affirmed that a single product type can meet the definition of "prudent mix," both cited the lack of record evidence concerning the cost of hedges to allow the PUC to conclude that 100% spot-based default service constituted the prudent mix in the instant case.
"Given the recent price volatility experienced in the wholesale energy markets, it is important that in exercising its discretion, the Commission not ignore the price fluctuations experienced by Pike's default service customers in recent years. It is also important that the Commission not ignore that wholesale energy prices spiked to extraordinary levels in January of 2014. Pike's default service customers had no short or long-term hedges to soften the effect of those January 2014 price spikes. I believe that the Commission should have taken an in depth look at what hedges may be available to Pike and the cost of those hedges, as compared to the effect that unhedged spot market prices will have on Pike's default service customers. There are times when the risk premium embedded in the cost of a hedge is in the public interest. The record developed in this case failed to specify what the cost of such a hedge could be. I am reluctant to support Pike's Petition without this information, as it is part of the balance and discretion which I think the Court spoke to in the Commonwealth Court decision," Brown said.
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March 21, 2014
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Reporting by Karen Abbott • kabbott@energychoicematters.com
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