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PPL Electric Utilities Files Electricity Purchase Plan for 2011 and Beyond
PPL Electric Utilities on Thursday (8/28) filed a plan with the Pennsylvania Public Utility Commission to purchase the provider-of-last-resort electricity supply that it will need for 2011 through mid-2014.
While all electricity customers in Pennsylvania have the right to choose the company that provides their generation supply, state law requires PPL Electric Utilities to provide electricity supply for customers who do not choose a generation supplier.
In its plan, PPL Electric Utilities proposes to buy this electricity for January 2011 through May 2014 four times a year, beginning in the third quarter of 2009. Under the plan, the company proposes to solicit supply contracts for 12- and 24-month increments as well as for hourly purchases in the open market during the contract years.
"We are seeing significant competition among suppliers to provide the electricity we need to serve customers in 2010," said David G. DeCampli, president of PPL Electric Utilities. "We are confident that robust competition will continue in the years beyond 2010 and result in competitive prices for our customers."
DeCampli said the company is proposing to spread out the purchases over four solicitations a year to lessen the price risk associated with buying power all at once or through one contract.
Under the company's proposal, an independent third party would administer the process of securing power supply contracts and, with PUC oversight, select the suppliers that will provide generation supply at the lowest cost to PPL Electric Utilities' customers. PPL Electric Utilities also will seek bids from other companies to manage its hourly purchases in the competitive electricity market.
For residential and small-business customers, 90 percent of the supply would be acquired through fixed-price contracts of 12 or 24 months and 10 percent through hourly purchases in the open market. All of the power for large commercial and industrial customers would be purchased on an hourly basis in the open market.
PPL Electric Utilities does not own power plants or produce electricity. By law, the company must buy power in the competitive electricity market for customers who don't choose another supplier and pass these costs directly to customers without profit. These charges appear on customers' bills as the Generation Charge and currently account for more than half of the total electric bill.
The plan proposed by PPL Electric Utilities will not affect purchases the company is making for 2010 under a plan previously approved by the PUC. Those purchases began in 2007 and will continue through 2009. The company already has awarded contracts to competitive bidders for half the electricity that it will need in 2010.
"The proposal we have filed will enable us to meet our obligation to provide electricity supply at competitive prices for customers who don't choose their own alternative generation supplier," DeCampli said. "We also expect that our customers will have additional choices as we complete the transition to fully competitive electricity markets.
"In other parts of Pennsylvania that have completed the move to fully competitive markets, customers are choosing other suppliers and saving money compared with the default supply price charged by their local utility," he said.
The company's plan must be reviewed and approved by the Public Utility Commission. That review is expected to take about seven months.
PPL Electric Utilities Corporation, a subsidiary of PPL Corporation (NYSE: PPL) that provides electricity delivery services to about 1.4 million customers in Pennsylvania, has consistently ranked among the best companies for customer service in the United States. More information is available at http://www.pplelectric.com/.
First Call Analyst:
SOURCE: PPL Electric Utilities
CONTACT: Dan McCarthy of PPL Corporation, +1-610-774-5758, Fax,
Web site: http://www.pplelectric.com/