Pa. PUC Allows Utility To Procure Default Service Entirely Through Spot Market

The Pennsylvania PUC adopted a final order approving without modification an application from Pike County Light & Power to continue to rely on New York ISO spot market purchases for all default service load for the period June 1, 2016 through May 31, 2018

In doing so, the PUC rejected calls from the OCA for use of a hedge for default service supply.

"We find that in this proceeding, there is no record evidence demonstrating the cost of the proposed hedge to know whether such costs are outweighed by the overall benefit of reduced instability of the default service supply prices created by the proposed hedge. Instead, we are persuaded by the arguments proffered by the Company that its unique characteristics warrant the continuation of its dependence on spot market purchases to serve its default service customers," the PUC said

Under the PUC's order, Pike County Light & Power will continue the current default service rate setting mechanism which includes: (1) the Market Price of Electric Supply, and (2) the Electric Supply Adjustment Charge.

The Market Price of Electric Supply will be determined quarterly based on the utility's forecast of the wholesale supply costs for the quarter.

The Electric Supply Adjustment Charge will be calculated quarterly to reconcile the monthly over- or under-collections of the preceding three months.

As is current practice, for any given quarter, the Electric Supply Adjustment Charges, including Gross Receipts Tax, will not exceed a charge or a credit of 2.0 cents per kWh. In the event the 2.0 cents per kWh limit is imposed, any remaining over- or under-collection balance is included in the subsequent quarter's Electric Supply Adjustment Charges to the extent possible within the 2.0 cents per kWh limitation.

Docket P-2015-2490141