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PUC Approves Expansion of Hourly Priced Default Service at PPL

January 16, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Pennsylvania PUC, reversing an ALJ's recommended decision, has approved the expansion of hourly priced default service at PPL, in a final order on PPL's default service plan for the period June 1, 2015 to May 31, 2017.

Specifically, starting June 1, the hourly pricing cutoff for default service customers will be lowered to 100 kW, from the current 500 kW.

The change results in some 430 additional C&I customers receiving hourly-priced default service supply.

The PUC found that expanding hourly priced default service to these customers meets the current statutory provisions governing default service.

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"[T]he Competition Act does not require that multiple products necessarily be procured for each customer class of a default service provider, but rather, requires that a default service plan as a whole include a prudent mix of spot market purchases, short-term products, and long-term purchase contracts as necessary to ensure adequate and reliable service to customers at the least cost over time. See, 66 Pa. C.S. §§ 2802(e)(3.2) and 2807(e)(3.4). In addition, as PPL points out, the Commonwealth Court recently upheld the Commission's approval of a default service plan for Pike County that included only spot market purchases, finding that the Commission properly determined that a 'prudent mix' of products may include only one of the sources enumerated in 66 Pa. C.S. 2807(e)(3.2) when this is the most prudent course and is likely to incur the least cost over time," the PUC said.

"[W]e find that PPL's proposal, which will result in the expansion of hourly-priced default service to an additional group of C&I customers, will result in least-cost service over time for these customers, and constitutes part of a prudent mix of products included in PPL's overall DSP III program, consistent with 66 Pa. C.S. 2807(e)(3.2)," the PUC said.

The PUC said that its prior end-state retail market order, while expressing a preference for legislative action for changes to make default service more market reflective, does not preclude the PUC from expanding hourly priced default service.

"[W]e do not agree with arguments suggesting that we are precluded from permitting EDCs to expand the availability of hourly-priced products to C&I customers with demand between 100 kW and 500 kW because of certain pronouncements we made in the End State Order. While we expressed a preference for legislative amendments that would provide the authority to approve default service plans containing more market-based products, we also stated our belief that 'the Commission appears currently to have authority to establish shorter-term default service products that are more reflective of market conditions than existing products.' ... In the instant proceeding, we are not attempting to revise what the General Assembly has determined to constitute a prudent mix of products as enumerated in 66 Pa. C.S. 2807(e)(3.2). Rather, we are simply approving the proposed expansion of hourly-priced default service to an additional group of C&I customers who, as we stated above, appear to be 'well-equipped and educated to manage their commodity costs in an hourly spot market default service environment,' and who we believe will receive the benefits of reliable service at the least cost over time as a result, in accordance with 2807(e)(3.4)," the PUC said.

Apart from the hourly pricing cutoff, default service procurement and design for residential and small C&I customers were subject to a settlement which the PUC adopted without modification.

Default service for residential and small commercial customers will be served under laddered 6 and 12-month full requirements contracts, plus legacy block supplies. Click here for a chart of the laddering process.

The PUC approved semi-annual reconciliations for small customer default service costs, which, along with the procurement schedule, paves the way for implementation of a six-month fixed Price to Compare for residential and small C&I default service customers.

PPL Electric will issue its Price to Compare 30 days in advance of the effective date of the PTC. PPL Electric will discontinue its practice of issuing a preliminary PTC approximately 45 days before the effective date.

The PUC denied retail suppliers' petition to move certain non-market-based PJM charges (NITS, RMR, RTEP, etc.) from the bypassable Price to Compare into a nonbypassable rider (with PPL assuming the obligation for such costs for all distribution customers, relieving retail suppliers of responsibility for the charges). Retail suppliers will remain responsible for these charges.

P-2014-2417907

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