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Pennsylvania judge says spot market purchases should not be expanded for PPL customers

PPL Electric's proposal to have power procured on the spot market for a greater number of commercial and industrial customers should be denied, an administrative law judge in Pennsylvania said in a recommended decision made public Friday.

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The Allentown, Pennsylvania-based utility made the proposal in its procurement plan for service from June 1, 2015, through May 31, 2017, for customers who have not chosen a retail supplier.

PPL proposed that the threshold size for customers who have power procured on the spot market be reduced to those with a peak demand of 100 kW or more. The current threshold is 500 kW.

The Public Service Commission has on several occasions said that customers with a demand of 100 kW or more should be converted to hourly pricing, PPL said in its April proposal. State law, however, requires that power for those customers be procured using a mix of resources to obtain the least cost.


The conflict in policy has created a dilemma, ALJ Susan Colwell said in her recommended decision to the PSC.

Since state law favors a prudent mix of long-term, short-term and spot purchases for customers between 100 kW and 500 kW, Colwell recommended that the law should be followed until a rulemaking to consider all parties' comments is undertaken.

Colwell also recommended that a proposal made by the Retail Energy Supply Association and Exelon Generation be denied. They proposed that PPL pay the non-market-based transmission charges for default service and shopping customers and recover the costs from all customers through a non-bypassable surcharge.

RESA said the proposal would reasonably and fairly spread the costs of NMB charges to all customers in a competitively fair manner without creating a competitive advantage for default service providers.

"The record in this case contains no persuasive evidence to support a modification to the present method used by PPL Electric for the collection of transmission and transmission-related costs. I recommend that the RESA/Ex-Gen proposal to have the utility collect NMB charges through a non-bypassable rider be denied," Colwell said.

The proposal to move smaller C&I customers to procurements from the spot market and the change in the transmission charges were the only two issues held for litigation under a settlement reached in September among the parties.

Colwell recommended that the settlement be approved. It accepted PPL's plan to procure power for residential and small commercial customers in April and October using layered six-month and 12-month contracts. Contracts with nine-month terms were eliminated.

The parties agreed to modify the October 2016 procurement so that 55% of the residential portfolio will expire May 31, 2017, and 45% of the residential portfolio will extend beyond that date.

The first procurement will be held in April 2015 for service beginning in June 1, 2015.

The company will continue to procure 12-month, full requirements, load following spot market contracts once a year for its large commercial and industrial customers.

--Mary Powers, newsdesk@platts.com
--Edited by Jason Lindquist, jason.lindquist@platts.com