Allegheny Power Awards Initial Contracts For Post-2010 Electricity Supply In PA

Allegheny Power, the electricity delivery unit of Allegheny Energy, Inc. announced this week the Public Utility Commission approved the results of Allegheny’s first auction to purchase power for residential customers for 2011 and beyond.

 

The contracts awarded in this auction represent approximately 2 million megawatt-hours of generation supply, or about five percent of the purchases authorized by the Commission for periods following the expiration of rate caps on December 31, 2010. The three 17-month and two 29-month contracts have an average weighted retail generation supply price of $72.80 per megawatt-hour.

 

To enable residential customers to benefit from the recent decline in power prices, Allegheny accelerated its first auction by two months. If the average prices of the remaining auctions were to be the same as this auction, a typical Pennsylvania residential customer’s bill in 2011 would increase about $7.75, or 8.5 percent over 2010 levels, assuming usage of 1,000 kilowatt-hours per month.

Actual rates will not be available until all supply purchases have been completed and prices are averaged together.

 

Additional auctions approved by the Commission are scheduled for June and October of this year, with three more scheduled in 2010 and two in 2012. The multiple auctions are designed to shield customers against overexposure to market conditions at any single point in time.

 

“We’re pleased that we were able to purchase power for our customers at attractive, competitive prices,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “This is a very positive first step towards a smooth transition from rate caps to market-based generation rates.”

 

The winning suppliers were selected from among seven competitive bidders. An independent monitoring firm, Boston Pacific Company, Inc., oversaw the process for Allegheny Power. The five contracts awarded today begin on January 1, 2011.

 

Included in the full-requirements contract pricing cited above are energy, capacity, Pennsylvania gross receipts taxes, line losses, renewable energy requirements, ancillary services and other provisions.

Allegheny also has a Commission-approved plan in place to protect customers from the possibility of significant rate increases immediately following the expiration of rate caps.

 

 

Allegheny Power’s Watt Watchers program offers information and programs to help its customers manage their electricity bills and use energy more efficiently.

 

For more information on the company’s rate mitigation plan, visit the company’s website.