Pennsylvania Utility Proposes Alternative To Spot Market To Fill Unsubscribed Default Service Supply Tranches

Duquesne Light ("the Company") has proposed an alternative contingency plan for its medium commercial customer class (25 - 200 kW) default service, for the period December 1, 2022 through February 28, 2023, in lieu of relying on the spot market

As first reported by EnergyChoiceMatters.com, only 3 of the 4 tranches were filled to supply the medium commercial customer class in Duquesne Light's most recent procurement, which had been seeking 100% of supplies for the class

Under the utility's Commission-approved contingency plan, any unfilled tranche must be supplied through the spot market until the Commission approves an alternative supply arrangement.

"Duquesne Light is concerned about the volatility of the spot market at this time and believes that obtaining supply through the spot market should only be undertaken if other options are not successful. Therefore, the Company seeks Commission approval of this Emergency Contingency plan, which provides for 3 options as follows," Duquesne Light said

Specifically, Duquesne Light proposed the following:

(i) Duquesne Light would implement a "Step-Up" offer whereby the Company’s independent third-party Auction Manager would offer the two wholesale suppliers that won the 3 Medium C&I tranches in the recent procurement the opportunity to accept the unsubscribed tranche at the auction clearing price. If both wholesale suppliers are willing to Step-Up, then the Auction Manager would allocate a pro-rata share of the unsubscribed tranche to each supplier based upon the percentage of load that each supplier won in the initial auction that was conducted on September 19, 2022.

(ii) If neither wholesale supplier accepts the Step-Up offer, Duquesne Light would modify the unsubscribed 3-month tranche to a 12-month tranche and the auction manager would conduct a sealed bid auction for the 12-month product. If the Company procures a 12-month product, it will reduce the number of 3-month tranches from 4 to 3 during the following 12-month period (e.g. in future procurements).

(iii) If neither of the above options succeed, it will not be feasible to pursue another option, and therefore, the Company would fill the 3-month unsubscribed tranche from the spot market.

As previously reported, Duquesne Light on September 30, 2022 filed its default service supply rates, including the Medium C&I rate stated at Rider No. 8 – Default Service Supply, effective December 1, 2022. The Company stated that the Medium C&I rate stated therein was calculated using the average price of the three Medium C&I supply tranches procured on September 19, 2022 as a proxy price for the Unsubscribed Tranche.

Duquesne Light further noted that to the extent future procurement(s) of Unsubscribed Tranche supply produce a different actual price, the Company will file a tariff supplement to adjust the Medium C&I rate accordingly, and will address any over- or under-recoveries as part of its applicable reconciliation statements under 66 Pa. C.S. § 1307(e).

Docket No. P-2020-3019522