FES: Pennsylvania Default Service Auction Sees Higher Risk Premium, Driven by PJM Volatility, Uncertainty

Results from recent default service auctions in Pennsylvania and Ohio appear to reflect an increased risk premium, which FirstEnergy Solutions believes is, "associated with volatility and uncertainty in PJM," Leila Vespoli, FirstEnergy Corp.'s Executive Vice President, Markets, said during an earnings call.

In Pennsylvania, the FirstEnergy electric distribution companies recently held auctions for 12-month and 24-month residential and commercial products for delivery beginning June 1, 2015.

Auction clearing prices for residential products ranged from between $70.09 to $85.15 per megawatt-hour, while clearing prices for commercial products ranged from between $74.46 to $89.65 per megawatt-hour, FirstEnergy said.

Click here for full results from the auction for default service at Met-Ed, Penelec, Penn Power and West Penn Power

FirstEnergy Solutions won nine tranches in the Pennsylvania auction.

FirstEnergy Solutions also confirmed that it won four tranches in the October auction for a portion of default service for the period June 1, 2015 through May 31, 2016 at the FirstEnergy Ohio utilities, which, as previously reported, produced an average clearing price of $73.82 per megawatt-hour

Consistent with FirstEnergy Solutions' previously reported exit of the retail market except for certain large C&I and Ohio aggregation sales, FES customer count is approximately 2.3 million, a decrease of about 400,000 compared to the third quarter of 2013. Quarterly retail sales decreased 4.5 million megawatt-hours or 16% year-over-year.