Press Release

PUC Certifies Penn Power Competitive Bidding Process for Residential, Commercial Rates as Transparent, Non-Discriminatory, Reflecting Market-Based Prices

Published on 2/3/2009

Filed under: Electric

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) has certified that the process used to determine default service rates for Pennsylvania Power Co. (Penn Power) residential and commercial customers was transparent and non-discriminatory, and reflected market-based prices.

The competitive bidding process was conducted by an independent group on behalf of Penn Power for the procurement of the commercial customers load for June 1, 2009 through May 31, 2010 and the residential customer load for June 1, 2009 through May 31, 2011.

The bidding process for the residential customer group consisted of four phases, one in April, May, October and January. For the entire four phase process the successful bidders for the residential class were Sempra Energy Trading LLC, Constellation Energy Commodities Group, Inc and FPL Energy Power Marketing, LLC at an average bid of $74.80.

The bidding process for the commercial customer group consisted of two phases, one in mid-October and the other in mid-January. For the entire two phase process, the successful bidders for the commercial customers were Sempra Energy Trading LLC, American Electric Power Supply Corp and DTE Energy Trading Inc at an average bid of $67.58.

The Commission verified that the new prices accurately reflect the results of the competitive bidding process and checked Penn Power’s calculations to ensure the new retail electricity prices accurately reflected the electricity costs resulting from the competitive bidding process.  The prices are not set by the PUC, but rather are set by the wholesale market, over which the PUC exercises no jurisdiction.

The 1996 electric competition law requires electric companies, or a Commission approved alternative supplier, to provide default electric generation service to customers who have not selected an alternative generation supplier.  The default service prices for electric generation service are required to result in a procurement strategy to produce the least cost to customers over time. 

The prices below compare the current average total bill to an average total bill using the new tariff prices effective June 1, 2009. The actual numbers are as follows:

• Residential customer using 750 kwh a month will decrease $12.52 (-10.96 percent) from $114.21 to $101.69.
• Residential heating customer using 2,000 kwh a month will increase $13.04 (7.77 percent) from $167.97 to $181.01.
• Commercial customer with a demand of 10 kw and 2,000 kwh a month will decrease $29.58 (-12.85 percent) from $230.12 to $200.54.
• Commercial customer with a demand of 300 kva and 60,000 kwh a month will decrease $887.29 (-13.90 percent) from $6382.92 to $5495.63.

After considering comments from all stakeholders in the process, the Commission approved a competitive bidding process in March 2008, which was designed to provide consumers with the best possible price by encouraging participation in a competitive bidding process by potential suppliers.

The PUC continues with efforts to monitor and participate in proceedings dealing with the wholesale electric market, over which the PUC has no jurisdiction. The Commissioners presided over three special en banc hearings in 2008 on the current and future wholesale electricity markets. The Commission also has taken steps to mitigate prices increases such as promoting energy efficiency, rate mitigation programs and demand side response; directing default service supply procurement; updating low-income programs; removing barriers to retail choice; and promoting consumer education.

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities to ensure safe and reliable utility service at reasonable rates; protect the public interest; educate consumers to make independent and informed utility choices; further economic development; and foster new technologies and competitive markets in an environmentally sound manner.

For recent news releases, audio of select Commission proceedings or more information about the PUC, visit our Web site at www.puc.state.pa.us.

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Docket No. P-00072305

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