The Public Utility Commission this week certified that the process used to determine the provider of last resort rates for Pennsylvania Power Co. residential customers was transparent and non-discriminatory, and reflected market-based prices.

The competitive bidding process was conducted by an independent group on behalf of Penn Power. The bidding process for the residential customer group consisted of two phases, one in mid-April and the other in mid-May.

The three successful bidders for Penn Power's procurement of the residential group load for June 1, 2008, through May 31, 2010, were Constellation Energy Commodities Group Inc., FirstEnergy Solutions Corp. and Sempra Energy Trading LLC. The average price of the winning bids was $80.48 MWh.

The Commission verified that the new prices accurately reflect the results of the competitive bidding process and checked Penn Power's calculations to ensure the new retail electricity prices accurately reflected the electricity costs resulting from the competitive bidding process. The prices are not set by the PUC, but rather are set by the wholesale market, over which the PUC exercises no jurisdiction.

The 1996 electric competition law requires electric companies, or a Commission approved alternative supplier, to provide default electric generation service to customers who have not selected an alternative generation supplier. This is commonly called provider of last resort, or POLR. The POLR prices for electric generation service are required to reflect "prevailing market prices," according to the law.

The prices below compare the current average total bill to an average total bill using the new tariff prices effective June 1, 2008.

The monthly bill for an average residential customer using 750 kWh a month will increase from $111.62 to $114.21 (2 percent).

The monthly bill for an average residential heating customer using 2,000 kWh a month will decrease from $186.26 to $167.97 (10 percent).

After considering comments from all stakeholders in the process, the Commission approved a competitive bidding process in March 2008 that was designed to provide consumers with the best possible price by encouraging participation in a competitive bidding process by potential suppliers.

For more information, visit the PUC’s Electric Price Mitigation webpage

NewsClip: Penn Power Rates to Rise 2 Percent

5/23/2008