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PPL Electric Files Time of Use Default Service Option for 2011-2013

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September 28, 2010

PPL Electric Utilities has filed at the Pennsylvania PUC a modified Time of Use generation rate program to cover the period January 1, 2011 through May 31, 2013.

The Time of Use (TOU) generation rates will be a separate, opt-in default service option for customers.

Actual TOU generation supply costs will be reconciled separately from default service generation supply costs for non-TOU default service customers.

PPL proposed using spot market energy purchases that are already included in its supply portfolios for January 1, 2011 through May 31, 2013 for both residential and small commercial and industrial customers as the source of supply for TOU participants.  PPL proposes to use forward market quotes to establish TOU prices for the five-month period January 1, 2011 through May 31, 2011, and then each quarterly period thereafter through May 31, 2013.  The pricing will include an adder for capacity, ancillaries, and other required services, and will be adjusted for losses.

At each price change, PPL proposes to perform a reconciliation of the prior period revenues (which reflect the forecast spot price) and actual costs to serve TOU participants (which reflect actual real-time prices), and proposes to incorporate in the forward TOU period price a credit or charge to reconcile over or under-collections from the prior period.  The reconciliations would be performed separately for residential and non-residential TOU customers.

"It is important to note that PPL Electric will only reconcile projected TOU default service costs with actual costs and will not reconcile any over/under recoveries resulting from increased/decreased revenues due to shifted demand because all TOU supply will be acquired in the spot market," PPL said.

TOU pricing would consist of two tiers, with an on-peak and off-peak price.  Prices would be seasonal (summer versus non-summer), and the months of each season, and hours for each TOU period, are the same as under PPL's current TOU program.

Customers under Rate Schedules RS, RTS(R), GS-1, GS-3 (under certain conditions), GH-1(R), GH-2(R), and IS-1(R) are eligible for the voluntary TOU pricing.  PPL would not impose any restriction between migrating to or from TOU pricing to competitive supply or standard default service, aside from the currently applicable switching timeline.

PPL is not proposing a limit on TOU participation at this time; however, PPL noted that the spot market purchases available to serve TOU customers represent 10% of the respective full requirements residential supply portfolio and small commercial portfolio.  Based on 2010 peak load responsibilities, spot market energy equates to nominal loads of about 245 MW for residential customers and 200 MW for small commercial customers.  PPL does not expect TOU participation to reach these totals, noting that, "shopping appears to be a more attractive option for customers."  PPL will still monitor the TOU load levels to determine whether load is approaching the spot market totals.

Consistent with a prior PUC order, costs to educate customers about the TOU program will be recovered only through the bypassable Generation Supply Charge.

PPL noted that it has an obligation under Act 129 to make the TOU program available, and thus must notify customers, but noted that it, "also needs to administer this program in a way that is consistent with the fact that the program is a default generation service, and, therefore, not administer it in a way that advantages the program relative to competitive offers."

Education efforts will include a bill insert, community and press outreach, and a presence on PPL's website.  On the website, information will be provided so that customers can evaluate the TOU program against the option of obtaining competitive supply from an electric generation supplier.

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