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Majority of Residential Default Service Load at PECO Would Be Served Under 24-Month Contracts Under Settlement

September 17, 2014

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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

A partial settlement in PECO's default service proceeding for the period commencing June 1, 2015 would rely on 24-month contracts to supply the majority of residential default service load.

Specifically, the settlement provides that for residential customers, the default supply portfolio will reflect the following:

   • 96% of the load is supplied by a mix of products representing a transition to:

       -- 40% of this total served under 1-year fixed price full requirements products with delivery periods that overlap (laddered) on a semi-annual basis

       -- 60% of this total served under 2-year fixed price full requirements products with delivery periods that overlap on a semi-annual basis

   • The other 4% of the load is initially supplied by the pre-existing five-year block energy product purchased in DSP I and associated spot purchases; this block product expires on December 31, 2015, at which time the supply for this portion of the load is replaced by a fixed price full requirements product spanning 17 months (approximately 3% of the supply) and spot purchases (approximately 1% of the supply)

• All products are procured approximately 2 months before the start of delivery of that product

The duration of the full requirements contract replacing the block product starting in January 2016 has been shortened from the originally proposed 53 months to the 17 months noted above.

The settlement also moves the default service supply procurements proposed for January/February of 2015 and 2016 to March 2015 and 2016, so that all products are procured approximately 2 months before the start of delivery of that product

The settlement would adopt PECO's original proposal to continue to adjust default service rates for the residential, small commercial, and medium commercial classes on a quarterly basis, but reconcile the over/under collection component of the GSA for those customers on a semi-annual basis instead of a quarterly basis

The issue of medium commercial customer default service is reserved for litigation. The Retail Energy Supply Association favors expanding hourly pricing to this class, which is opposed by the Office of Small Business Advocate.

Also left to litigation is the treatment of certain non-market-based PJM charges, and whether they should be the responsibility of the LSE (bypassable) or utility (nonbypassable).

The settlement was joined or unopposed by all parties except the Philadelphia Area Industrial Energy Users Group, which opposes the settlement.

Docket P-2014-2409362

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