Press Release

PUC Seeks Public Comment on Three Issues as Part of Overall Strategy for Addressing Electric Generation Rates

Published on 2/8/2007

Filed under: Electric

Harrisburg - The Pennsylvania Public Utility Commission (PUC) today asked for public comment on proposed regulations and a policy statement that will establish the criteria on how electric generation service is provided to customers who choose to not obtain generation service from an alternate supplier. The Commission also asked for input on proposed strategies to mitigate potential electricity price increases.

     As part of an overall strategy for addressing generation rates, the Commission voted 4-0 to issue an Advanced Notice of Final Rulemaking on default service regulations and a policy statement.  Commissioner Kim Pizzingrilli issued a  statement. Commissioner Terrance Fitzpatrick also issued a  statement.

    The Commission also voted unanimously on a  motion  by Commissioner Pizzingrilli to issue proposed policies to mitigate potential electricity price increases. Commissioner Fitzpatrick made a statement on the mitigation policies.  The actions represent a comprehensive strategy for addressing retail electricity rates in the context of the expiring generation rate caps.

The default service regulations are one of the most important rulemakings for the Commission since the restructuring of the electric industry. The Commission reopened the public comment period for the regulations in November 2005 to address conditions in the wholesale market and the relationship between the default service rulemaking and the Alternative Energy Portfolio Standards Act of 2004.

 Advanced Notice of Final Rulemaking for default service regulations

     About 40 parties filed comments in response to the Commission's proposed regulations. As a result, the Advanced Notice of Final Rulemaking significantly modifies the previous proposals. The changes include:

• Allowing regular adjustments to default service rates to reflect changes in the actual incurred costs of the default service provider (DSP);
• Requiring individual procurement plans to be submitted by DSPs that may include a mix of fixed term and spot market energy purchases;
• Encouraging procurement plans that include purchasing generation supplies in multiple steps to reduce risks of unusual price volatility rather than purchasing all supply at one time;
• Simplifying rate design and providing normal incentives for energy conservation and facilitating customer choice;
• Offering each default service customer a single rate option known as the "price-to-compare," which represents a blend of all generation and transmission related costs.

Policy statement

     In reviewing the comments and considering revisions to the proposed default service rules, the Commission recognized that some elements of the default service rules should be addressed in a policy statement that provides guidance to the industry rather than strict rules. The policy statement, which provides a framework for DSPs, addressed:

• Electric generation supply purchases;
• Alternative Energy Portfolio Standards compliance;
• Competitive bid solicitation processes;
• Default service cost elements;
• Interim price adjustments and cost reconciliation;
• Retail rate design and
• Rate Change mitigation.

     The proposed policy statement also establishes a Retail Markets Working Group to develop policy recommendations, which are aimed at removing barriers to retail market development including rate-ready billing, customer referral programs, uniform statewide supplier tariffs and a retail choice ombudsman at both the Commission and Electric Distribution Companies.

 Please follow the link below to read the rest of the press release:

  http://www.puc.state.pa.us/general/press_releases/press_releases.aspx?ShowPR=1707

Contact:

• Press Secretary
  717-787-5722