Generation rate caps in Pennsylvania expire on December 31, 2010. Allegheny Power now has contracts for 67% of the generation supply needed to serve its residential customers next year. If the average prices of the remaining auctions were to be the same as the average of the first four auctions, a typical Pennsylvania residential customer’s bill in 2011 would increase $7.74, or 8.5% over 2010 levels, assuming usage of 1,000KWh per month.
Allegheny Power has purchased nearly half of the generation supply needed for these customers in 2011. Actual rates will not be available until all supply purchases are completed and prices are averaged together.
Seven contracts were awarded in this auction, representing approximately 2.5 million MWh of generation supply, or 8% of the auction purchases authorized by the commission for periods following the rate cap expiration.
The winning suppliers were selected from among eight competitive bidders. An independent monitoring firm, Boston Pacific, oversaw the process for Allegheny Power. Four more auctions are scheduled: two 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. Allegheny Power has a commission-approved plan in place to ease the transition to market-based rates following the expiration of rate caps, the company said.
