End State: PPL Latest Pa. Utility to Propose Less Frequent Changes in Price to Compare

If you thought this winter proved to be a slaughter for the Pennsylvania retail market, wait until default service rates for the major electric utilities are fixed for six months, instead of the current three, while retail supplier prices must pass-on market-reflective wholesale costs.

Specifically, PPL Electric Utilities has filed a proposed default service plan for the period June 1, 2015, through May 31, 2017.

"The main difference between the proposed default service purchase plan and the current one is how often the price to compare is adjusted," PPL said

"Under the proposed plan, the price to compare would be updated twice a year, which will provide customers more certainty around shopping and provide retail suppliers with more time and flexibility in creating pricing programs to encourage customers to shop," PPL said.

A news release from PPL was not explicit that the twice annual PTC changes would occur every six months, but this seems a logical assumption.

A spokesperson from PPL said that they could not provide PPL's complete default service petition at this time.

According to a PPL news release, "[PPL] would also continue to solicit a portfolio of laddered contracts. These contracts represent a prudent mixture of short-term (under 12 months) and long-term (one year or longer) contracts and spot market purchases."

The continued reliance on spot market purchases (no matter for how small a portion of default service) seems like a recipe for disaster in a world where the Price to Compare is updated only twice a year. Aside from migration, the reason the quarterly PTC has been so volatile has been variations in spot pricing versus forecasts, leading to large reconciliations which are reflected in the next quarterly PTC. It seems extending the time over which spot prices must be forecast would only exacerbate this issue.