Stipulation Would Extend Spot-Based Default Service at Pike County for Additional Year

An unopposed settlement in Pike County Light & Power's default service proceeding would continue the current spot market based procurement for an additional year, through May 31, 2012 (P-2010-2194652).

Signatories include Pike County, the Office of Consumer Advocate, and Office of Small Business Advocate. PUC Trial Staff and Direct Energy do not oppose the stipulation.

Pike County, whose current default service plan expires May 31, 2011, was originally seeking to continue to serve default service load under New York ISO spot purchases through May 31, 2013 (8/23), but the settlement provides for only a one year extension of the current procurement methodology.

The stipulation provides that there will be no change to the current default service rate calculation, which includes a Market Price of Electric Supply charge (a quarterly forecasted price based on the spot market) and an Electric Supply Adjustment Charge (a reconciliation factor). As is current practice, for any given quarter, the Electric Supply Adjustment Charges, including Gross Receipts Tax, shall not exceed a charge or a credit of 2.0 cents per kWh (with any remaining balance deferred until the next quarter).

Pike County will procure alternative energy credits for the period June 1, 2011 through May 31, 2012 to serve default service load.

As part of the stipulation, Pike County will analyze the economic and administrative feasibility and advisability of procuring, in April 2012, a portion of its supply through a block purchase, such as a 1 MW on-peak (5 x 16) block for the period of June 1, 2012 through May 31, 2013. Pike County shall report on this analysis in its next default service proceeding. The stipulation does not commit and party to supporting use of block purchases in the next default service plan.

The analysis of the procurement, which may be either physical power or a fixed variable financial swap, will assume that the Commission may cancel the procurement if market conditions warrant and that a ceiling price would be established. The analysis is to also address the impacts from customer migration, and wholesale supplier collateral requirements.

The settlement provides that for the period of June 1, 2011 through May 31, 2012, Pike County will provide either quarterly bill inserts or quarterly articles in its customer newsletter listing the default service prices for the upcoming quarter as well as historic pricing information for the past four quarters.

Furthermore, Pike County will list on its monthly bills, for all distribution customers, information indicating where customers can obtain competitive supply pricing information; specifically, the PA Power Switch website and OCA website.

The settlement cites the unique circumstances of Pike County (its location in the New York ISO, small size, and current Direct Energy aggregation program), and the settlement provides that parties "do not intend [the] Joint Petition [to] serve as precedent in any other proceeding."

Direct Energy noted that such a statement, "may be made about any electric distribution company ('EDC') in Pennsylvania as they all have variances in their customer bases, location and operational systems."

"It is beyond dispute that so-called 'unique' facts cannot permit the Commission to approve a default service implementation plan that is otherwise illegal or inconsistent with the law," Direct Energy said.

"Direct Energy believes that the procurement plan, as presented by the Joint Petitioners, is consistent with the law and should be adopted. However, those legal determinations cannot be restricted only to PCL&P. Rather, Direct Energy submits that the legal interpretations made by the Commission may be considered in future proceedings as deemed appropriate by the Commission," Direct Energy said.

Pike County serves approximately 4,600 residential and commercial customers. For calendar year 2009, the electric requirements of Pike County's customers were 77,000 MWh with a peak demand of approximately 16 MW.

About 75% of Pike County's customers take supply from an electric generation supplier, and the "vast majority" of these customers receive generation service under the Direct Energy aggregation program.