PPL Receives Approval to Extend Default Service Contracts

The Pennsylvania PUC recently granted a petition from PPL Electric Utilities 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 originally designed, the October 2014 procurement was 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 said 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 sought 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. The PUC approved this request.

"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.

"In our judgment, PPL Electric’s request to exercise the option to extend the final procurements under the currently effective default service procurement plan by an additional six months appears to be in the best interests of its customers. We agree with PPL Electric, as well as the comments of both CAUSE-PA and OCA, that this provides the appropriate layering and laddering of supply purchases," the PUC said in approving PPL's petition

Docket P-2012-2302074