ALJ Recommends Adoption of Pike County Default Service Settlement

A recommended decision by a Pennsylvania ALJ would adopt an unopposed stipulation to continue the current spot market based procurement for Pike County Light & Power default service for an additional year, through May 31, 2012 (P-2010-2194652).

As previously reported (12/27), 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 any 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 Office of Consumer Advocate website.

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.