Pa. Industrials Seek Fixed Price Default Service for Large Customers

Pennsylvania electric distribution companies (EDCs) should be required to offer a fixed-price default service option for customers with peak loads in excess of 500 kW, a group of industrials told the Pennsylvania PUC.

"To protect the Commonwealth's ability to retain existing and entice new business and industry, and in light of the General Assembly's recognition that a key to realizing this objective is linked to the cost of electricity, the Commission should mandate that EDCs or alternate default service providers offer long-term, fixed-price default service options for larger customers; otherwise, Large C&I customers will be severely disadvantaged in their ability to compete in the national and international marketplace for industry and jobs," the industrials said.

"If there is no requirement for EDCs (or other default service providers) to offer a long-term, fixed-price option for large customers, such customers will be forced into the competitive market in order to obtain fixed-price options and, consequently, the DSP [default service provider] will not be a competitive alternative. Under this scenario, Electric Generation Suppliers ('EGSs') would have the opportunity to raise their fixed prices significantly above what the market would otherwise bear merely because EGSs would control the universe of fixed-price options and, consequently, could exercise considerable leverage vis-a-vis customers seeking such options," the industrials added.

The industrial customers also, "remain concerned that the Commission's [default service] investigation does not adequately address the fundamental flaws in the wholesale markets that undermine retail customers' efforts to obtain appropriate pricing from Electric Generation Suppliers ('EGSs')."

"The Industrial Customer Groups urge the Commission to expand the investigation to include wholesale market reforms that the Commonwealth should support related to PJM Interconnection, LLC's ('PJM') Locational Marginal Pricing ('LMP') energy system and the Reliability Pricing Model ('RPM') capacity system. The Commission participates at the Federal level regarding these issues, which the Industrial Customer Groups and other customer interests believe are inflating pricing in comparison to alternative approaches that could be pursued. In the end, all EGSs provide pricing based on the PJM mechanisms, so these concepts are extremely important to attaining the goals of the Competition Act. The Industrial Customer Groups would welcome the opportunity to engage in a constructive dialogue with the Commission through this investigation to determine whether the PJM administrative pricing models for energy and capacity are helping, or hindering, the achievement of Pennsylvania's goals."

The industrials included the Industrial Energy Consumers of Pennsylvania. Duquesne Industrial Intervenors, Met-Ed Industrial Users Group, Penelec Industrial Customer Coalition, Penn Power Users Group, Philadelphia Area Industrial Energy Users Group, PP&L Industrial Customers Alliance, and West Penn Power Industrial Intervenors.