Press Release

Settlement Brings Relief to Capacity Issue

    Harrisburg, Pa.- PECO residential customers shopping for an electric generation supplier should see lower prices and more offers in the coming weeks under an agreement signed today between the Public Utility Commission (PUC) and the Philadelphia utility.

    At issue is the price suppliers must pay for installed capacity through the Pennsylvania-New Jersey-Maryland (PJM) regional power pool, based in Valley Forge, Pa. Utilities own capacity - one component of wholesale electricity - and sell it to suppliers doing business in the PJM region. The suppliers, in turn, sell the electricity at the retail level to consumers. In September, the PUC received complaints that capacity was either not available or was being priced unjustifiably high.

    Under today’s agreement, when specific conditions are met, PECO will sell capacity to suppliers serving PECO residential customers at a fixed price in 1999. This is expected to prompt suppliers to lower their prices, providing greater savings to PECO residential customers. PECO customers are already guaranteed an 8 percent rate cut in 1999, regardless of whether they shop for electricity.

    PUC Chairman John Quain said today’s agreement will provide an extra boost to the already growing residential electricity market in PECO’s territory. "The PECO territory is currently the most competitive in the state, with about a dozen suppliers actively offering prices to residential customers," he said. "PECO’s action will allow some of those suppliers to lower their prices and it should encourage several others to enter the PECO residential market."

    The key elements of the agreement include:

• A threshold amount that triggers the sale of capacity at set prices for suppliers serving PECO residential customers. When the total amount of capacity associated with PECO residential customers who have switched to a new generation supplier (including PECO’s affiliate Exelon Energy) exceeds 1050 megawatts, PECO will sell capacity at predetermined prices. The prices are $19.72 per kilowatt-year prior to June 1, 1999, and $22.41 per kilowatt-year from June 1, 1999, through December 31, 1999. The set prices will be offered only to suppliers serving PECO residential customers.

• The triggering mechanism takes into account the fact that the capacity issue has not been as severe in the PECO territory as it has been in other PJM areas. PECO has been actively selling capacity in the PJM market and has several contracts to deliver wholesale capacity in 1999, which include suppliers already serving the residential market.

• PECO’s agreement to support the visible, liquid capacity credit market that has been developed within PJM. This market facilitates the availability of capacity for competitive suppliers.

• PECO’s agreement to withdraw its state lawsuit filed against the PUC.

    As a result of this agreement, the PUC voted 5-0 today to withdraw a prior Interim Order as to PECO. The September 21, 1998, Interim Order reiterated the PUC’s position that the price of capacity that utilities charge electricity suppliers should reflect the $19.72 per kw-year charge contained in utility restructuring proceedings.

    For recent news releases, or more information about the PUC, visit our Internet home page: http://puc.paonline.com. Additional information on electric competition can be found at www.electrichoice.com or by calling 888-PUC-FACT.

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