Pennsylvania PUC Authorizes Utility To Use Financial Hedge For Portion Of Default Service Load

The Pennsylvania PUC adopted, without modification, a settlement in Pike County Light & Power Company's default service plan proceeding (DSP), which authorizes Pike County to implement a financial hedging strategy for a portion of its default service load

As previously reported by EnergyChoiceMatters.com, the settlement included the financial hedging, "to promote price stability and more closely align Pike’s DSP procurement strategy with those utilized by other Pennsylvania EDCs."

The adopted settlement establishes Pike County's default service plan for the period June 2019 to May 2021

Under the adopted settlement, Pike County will continue to procure its default supply from the NYISO spot market pursuant to the terms of the Electric Supply Agreement with O&R.

However, for each 12-month period during the plan (e.g. June 2019 - May 2020, and June 2020 - May 2021), Pike County will hedge a portion of default service load using a fixed price financial hedge. The amount of load subject to the financial hedge was redacted in the settlement. Only supply services will be hedged, not capacity or ancillary services

Under the adopted settlement, the hedging will be subject to various pricing thresholds and protections. If bids are not within a certain threshold, Pike will not accept them and will try to procure the hedge again within those parameters. The specific threshold was redacted.

Further details concerning the hedging and Price to Compare rate design can be found in our prior story (click here)

As previously reported, the adopted settlement also requires a retail market collaborative to address various operational challenges in the Pike service area, with various interim measures also included.

See our prior story for more details on the retail market enhancements

Pike, in a related case, was granted a waiver of the requirement to use EDI and to implement three-day switching (Pike will initiate customer switches using a password-protected online mechanism, and will complete switches in 5 days)

Dockets P-2018-3002709, P-2018-3005165