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PPL To Decrease Use of Six-Month Contracts for Residential Default Service Under Settlement

July 20, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

An uncontested settlement in PPL Electric's default service proceeding for the period June 1, 2017, through May 31, 2021 would decrease the utility's reliance on six-month contracts to serve residential default service customers

The settlement remains subject to PUC approval.

Originally, PPL had proposed to continue its current procurement structure for residential customers, which relies on laddered, fixed-price, full-requirements, load-following products, with 45% of the full-requirements portfolio consisting of six-month contracts, and 55% of the portfolio consisting of 12-month contracts. An existing 50 MW block which expires in May 2021 is also used for supplies. Full requirements products were to be procured twice per year, in April and October

However, the Office of Consumer Advocate opposed PPL's approach, stating that, under the proposed approach, PPL would acquire 70-75% of its residential default service supply in each solicitation, which OCA had said exposes customers to significant price risk if a transient shock occurs during such procurement date. OCA had proposed the use of 24-month contracts as an alternative

The settlement retains the use of six and 12-month contracts exclusively for the full requirements portion of residential default service, but changes the ratio between the two contract term lengths, as a result of shifting the amount of load bid in any single procurement.

Specifically, under the settlement, 80% of the residential full requirements portfolio will be 12-month contracts, and 20% will be six-month contracts. PPL's existing 50 MW block which expires in May 2021 will also continue to be used for residential default service.

Click here for the specific procurement dates, amounts, and term lengths for residential default service under the settlement.

The settlement did not alter PPL's proposal for C&I default service.

For Small C&I customers (under 100 kW), PPL will procure layered six-month and 12-month full requirements products twice per year, in April and October, with the first procurement occurring in April 2017 for default service beginning June 1, 2017.

About 45% of the Small C&I portfolio will be served under six-month contracts, and about 55% will be served under 12-month contracts. More specifically, each semi-annual procurement will obtain 45% of supplies via six-month contract, and, depending on the specific procurement, 25% or 30% via 12-month contract.

The Residential and Small C&I Price to Compare will be fixed for six months, and will be reconciled every six months. PTCs will be posted 30 days in advance of the effective date

For Large C&I customers (over 100 kW), PPL will obtain default service supply on a real-time hourly basis through the PJM spot market. PPL Electric will issue a single annual solicitation to obtain competitive offers from suppliers to provide the default service spot market supply to the Large C&I customer class. These annual procurements will coincide with the PJM planning period. Annual solicitations will be held in April for the upcoming PJM planning period.

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