PPL Seeks Approval to Extend Default Service Contracts

PPL petitioned the Pennsylvania PUC for approval to extend the contract terms for the final default service procurements for the residential and small commercial and industrial customer classes under its current default service plan, to be procured in October 2014, by an additional six months.

As currently designed, the October 2014 procurement is to obtain default service supplies for the residential and small C&I customers under six and three-month fixed-price, full-requirements, load-following contracts, rather than under the twelve and nine-month contracts utilized for prior procurements, in order to provide a "hard stop" to contracts on May 31, 2015.

Such an approach was designed in light of potential changes to Pennsylvania default service structure, and to avoid legacy contracts, but since such changes are not forthcoming, PPL says that the hard stop on May 31, 2015 only serves to require PPL to procure all of its June 1, 2015 default supply at the same time.

PPL therefore is seeking to procure twelve and nine-month contracts in the October 2014 procurement, rather than six and three-month contracts, to introduce layering between the two default service periods.

PPL said that extending the terms of the October 2014 contracts by six months, "will avoid procuring 100% of its Default Service supplies at one time."

"This will provide appropriate layering and laddering of supply, which will reduce the risk for potential extreme price spikes and volatility between Default Service procurement periods that could result if all supplies are procured at the same time, and allow for a smooth transition between Default Service periods," PPL said.

The potential extension was contemplated in the approved default service plan for the period ending May 31, 2015.