Allegheny Power, the electricity delivery unit of Allegheny Energy, has said that the Pennsylvania Public Utility Commission approved the results of Allegheny’s third auction to purchase power for 2011 and beyond.

Allegheny awarded five contracts in this auction, representing approximately 1.8 million megawatt-hours of generation supply, or 6% of the auction purchases authorized by the commission for periods following the expiration of rate caps on December 31, 2010.

Included in the average weighted retail generation pricing are energy, capacity, Pennsylvania gross receipts taxes, line losses, renewable energy requirements, ancillary services and other provisions. The contracts awarded begin on January 1, 2011.

If the average prices of the remaining auctions were to be the same as the first three auctions combined, a Pennsylvania residential customer’s bill in 2011 would increase $8.74, or 9.6 % over 2010 levels, assuming usage of 1,000KWh per month.

For small and medium non-residential customers, the increase in rates in 2011, assuming future auction prices were the same as existing results, would be 2.9% and 4.9%, respectively, over 2010 levels. Actual rates will not be available until all supply purchases have been completed and prices are averaged together.

Paul Evanson, chairman, president and CEO of Allegheny Energy, said: “By purchasing power at these attractive prices, we’re easing our customers’ transition to market-based rates.

“We now have contracts for about 60% of the electricity supply we need to serve our Pennsylvania residential customers in 2011, when the existing cap on generation rates expires.”

In auctions held to date, the percentage of generation supply purchased on behalf of small and medium non-residential customers for 2011 is 24% and 22%, respectively.

The winning suppliers were selected from among six competitive bidders. An independent monitoring firm, Boston Pacific, oversaw the process for Allegheny Power. Five more auctions are scheduled: three 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.

The company said that it has a commission-approved plan in place to protect customers from the possibility of rate increases immediately following the expiration of rate caps.

Headquartered in Greensburg, Pennsylvania, Allegheny Energy is an investor-owned electric utility.