Pennsylvania Denies Assignment of Default Supply Contract to Utility Affiliate

The Pennsylvania PUC has denied, via Secretarial letter, the request of two distribution companies to assign default service tranches from the winning bidder to a utility affiliate.

Specifically, Met-Ed and West Penn Power had requested Commission approval of the assignment of Default Service Supplier Master Agreements (SMAs) and the associated four tranches of residential default service supply obligations from an unaffiliated successful bidder to their affiliate FirstEnergy Solutions. Though not made explicit in the Secretarial letter, presumably the unaffiliated winning bidder is seeking to assign the contracts to FirstEnergy Solutions.

Under the SMAs, the unaffiliated successful bidder, which was not identified, has contracted to deliver two tranches of full requirements service for both Met-Ed and West Penn Power residential electric customers, each for delivery during the period June 1, 2013 to May 31, 2015

In their application, the utilities had noted that the Commission previously approved a request for assignment of a Default Service Program Supply Master Agreement between PECO Energy Company and a successful default service supplier to an unaffiliated entity. The assignment approval was requested by PECO Energy Company, on July 7, 2010, at Docket No. P-2008-2062739 and involved the assignment of 4 tranches from Conectiv Energy Supply, Inc. (Conectiv) to EDF Trading North America LLC.

"The need for that assignment was the divestiture of the wholesale generation businesses of Conectiv's public parent, Pepco Holdings, Inc., including Conectiv's interests. Because of the particular circumstances involved in the Conectiv matter, a major business event involving a complete divestiture of wholesale generation, we believed that approval of that assignment request was appropriate. The approval was granted by Secretarial Letter on July 12, 2010," the PUC said.

"Based upon the information provided by you with regard to the proposed assignment, we believe that the reasons and/or circumstances involved in the current request do not appear to be a similar business event, when compared to the reasons and/or circumstances involved in the Conectiv matter," the PUC said in the Secretarial letter. "You have not established that your proposed assignment of the Met-Ed and West Penn tranches is in the public interest. Therefore, approval of your assignment request is not appropriate, and we decline to approve the assignment."