Accelerated Electric Purchases Approved For Allegheny Power To Lower Consumer Costs

The Public Utility Commission this week approved an Allegheny Power Co. plan to accelerate the purchase of some electricity supply, while wholesale energy costs are lower today, for use in 2011.

 

"As a Commission, we must be proactive in protecting Pennsylvania's consumers from high electricity prices," said Commissioner Robert F. Powelson in a motion. "It is my strong belief, therefore, that the risk of allowing Allegheny to procure power early is far outweighed by the increased certainty that comes with locking in prices closer in time to today's unarguably low rates, and that this acceleration contributes to ensuring "least cost" rates for customers."

 

The Commission voted 5-0 to approve Commissioner Powelson's motion, which authorizes a change to the company's procurement schedule. Vice Chairman Tyrone J. Christy issued a statement.

 

The change moves up the purchase of five blocks of power for residential customers from 2010 to 2009, starting in April. Accelerating the purchase of electric supply for residential customers will allow the company to take advantage of favorable pricing currently available in the wholesale energy markets where generation prices have dropped more than 40 percent since July 2008.

 

Increases in electric generation rates for Allegheny Power have been capped since the electric industry was restructured in 1996. Those caps expire December 31, 2010. The 1996 electric competition law requires electric companies, or a Commission approved competitive supplier, to provide default electric generation service to customers who have not selected a competitive generation supplier.

 

The procurement strategies for electric generation service are required to produce the least cost to customers over time. The prices are not set by the PUC, but rather are set by the wholesale market, over which the PUC exercises no jurisdiction.

 

The amended plan does not change the company's overall default service plan where the company will purchase power for residential customers using 12-, 17- and 29-month contracts and spot-market purchases, to mitigate the impact of price spikes in the competitive market. The amendment has no impact on the procurement plan for commercial and industrial customers. The initial default service plan was approved in July 2008 for service beginning January 1, 2011, and ending May 31, 2013.

 

Allegheny Power provides electric transmission and distribution service to about 703,000 customers in 23 counties in Southwestern, South Central and North Central Pennsylvania.

 

For more information, visit the PUC's Electric Rate Mitigation webpage.