Pennsylvania Approves Utility Self-Supply Option for Hourly Default Service Customers

The Pennsylvania PUC approved the FirstEnergy electric distribution companies' self-procurement of supplies from the PJM spot market to serve hourly priced default service customers, after the PUC had rejected results from an earlier competitive procurement for hourly priced service.

The utilities' self-procurement of supplies for hourly customers, which the PUC will allow to continue on an interim basis until after a September procurement for hourly priced service for the term December 1, 2013 to May 31, 2015, had been opposed by the Retail Energy Supply Association, which had recommended that, consistent with the EDCs' default service plan, another competitive procurement for hourly priced service should be conducted prior to the June 1, 2013 delivery date of the original term.

The PUC noted that because it was not able to reach a decision on this issue prior to June 1, 2013, the argument that the default service plan called for alternative procurements prior to the reliance on self-supply is now moot, given that June 1, 2013 arrived without any approved alternate plan, making the last-resort self-supply option sourced from the PJM market appropriate for serving hourly default service customers.

The PUC did agree with RESA that a competitive auction should, "be held as soon as possible and that self-supply should be minimized." The PUC found that the FirstEnergy EDCs' proposal to conduct a procurement of hourly supplies in the September 2013 commercial procurement, "results in both a timely auction and minimizes self-supply."

"In addition to concerns over competitive supply markets, we are tasked with the obligation to ensure adequate and reasonably continuous electric supply within the Commonwealth. The First Energy proposal, while arguably not the most competitive option, currently represents a reasonable and prudent backstop to the difficulties encountered in the January 2013 auction," the PUC said.

"The First Energy proposal is, overall, consistent with a competitive procurement process; we will not pursue the goal of fashioning perfectly competitive markets at the expense of all other considerations," the PUC said (emphasis added).

"Therefore, we will approve the addition of an auction for industrial customer default service supply to the September 2013 auction for commercial customers; as well as, approve and continue to allow the in-house acquisition of default service supply by the Companies for industrial customer default service that began June 1, 2013, through November 30, 2013," the PUC ruled.

Docket P-2011-2273650