Large Competitive Suppliers Oppose Shorter-Term, More Frequent Default Service Procurements

Constellation NewEnergy, Inc. and Exelon Generation Company, LLC (jointly, Exelon) have opposed a recommendation from the Ohio Consumers' Counsel to hold more frequent auctions, for a shorter delivery period, to procure energy for AEP Ohio Standard Service Offer customers, with such auctions held closer to the delivery date for the energy.

OCC had recommended that a 22-month product (August 2013 through May 2015) proposed by AEP Ohio as part of its transition to fully auction-sourced SSO be split into a 10-month product and a 12-month product.

The 10-month product would run from August 2013 through May 2014, and be procured at the same time as proposed by AEP Ohio for the 22-month product (originally June 2013).

OCC's new 12-month product (June 2014 through May 2015) would be procured under a separate auction in November 2013, OCC had recommended.

Exelon called OCC's proposal "ill-advised."

"[T]here is less laddering and more stability in rates [under the 22-month product] than would occur if the commodity is purchased at different times, as OCC proposes," Exelon said.

"[P]rocuring energy more frequently during the period likely will not be beneficial to customers price-wise because more frequent procurements (a) may lead to lower participation by prospective bidders and (b) would lower the number of tranches available," Exelon said.

"OCC's suggestion does not consider the administrative costs of a full second round of bidding, which ... would likely reduce bidder participation and raise bid prices," Exelon said.

Case No. 12-3254-EL-UNC