PPL Electric Seeks Approval for 50 MW Long-Term Contracts Procurement

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December 6, 2010

PPL Electric Utilities filed a petition with the Pennsylvania PUC requesting approval of the procurement of a 50 MW block of fixed price default supply for residential customers through a 10-year unit contingent procurement, as provided in its default service settlement.

In order to have the long-term product available by June 1, 2011, PPL proposed including the solicitation in its next default service procurement, which is scheduled for April 18, 2011.  PPL Electric therefore requested that the Commission approve its petition at or before its public meeting scheduled for February 10, 2011.

PPL specifically sought approval for a new long-term product RFP process and rules, and for a long-term product supply master agreement.  

PPL proposed procuring the 50 MW of long-term supply through 10 tranches, with each tranche providing for a maximum delivery of 5 MW per hour.  Qualified winning suppliers would be selected on a price-only basis.

Winning suppliers under the long-term product RFP would provide PPL Electric with electric supply at a single specified firm price for each 5 MW tranche, which includes all necessary energy, transmission other than Network Integration Service, transmission losses, congestion management costs, and such other services or products (but excluding capacity, ancillary services, and alternative energy credits that are required to meet the Delivery Obligation under the long-term product supply master agreement).

Prior to a Delivery Month, a winning supplier must submit to PPL for approval a Delivery Schedule associated with each 5 MW tranche, which must satisfy the Minimum Delivery Obligations established by PPL.

The Minimum Delivery Obligation would include on-peak and off-peak capacity factors which vary by month; but on average, the Minimum Delivery Obligation equates to an overall annual capacity factor of 85%.

For example, a winning supplier serving one tranche can schedule from 0 MW to 5 MW in a given hour of the Delivery Schedule so long as its total scheduled deliveries in each month meet or exceed the minimum On-Peak and Off-Peak Capacity Factors set forth by PPL.

PPL Electric would separately purchase from the spot market the amount of default supply necessary to make up for the difference between the supply delivered by the winning supplier pursuant to the approved Delivery Schedule and 50 MW of supply delivered at 100% capacity factor each month (i.e., a 24/7 50 MW block supply).  Such spot market purchases will be separate from, and in addition to, the company's purchases pursuant to spot market contracts under the default service plan.

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