§ 54.186. Default service procurement and implementation plans.
(a) A DSP shall acquire electric generation supply at the least cost to customers over time for default service customers in a manner consistent with procurement and implementation plans approved by the Commission.
(b) A DSP’s procurement plan must adhere to the following standards:
(1) The procurement plan shall be designed so that the electric power procured under § 54.184(c) (relating to default service provider obligations) includes a prudent mix of the following:
(i) Spot market purchases.
(ii) Short-term contracts.
(iii) Long-term purchase contracts, entered into as a result of auction, request for proposal or bilateral contract that is free of undue influence, duress or favoritism of greater than 4 years in length but not greater than 20 years. The default service provider shall have sole discretion to determine the source and fuel type. Long-term purchase contracts must be 25% or less of the DSP’s projected default service load unless the Commission, after a hearing, determines for good cause that a greater portion of load is necessary to achieve least cost procurement.
(A) EDCs or Commission-approved alternative suppliers may offer large customers with a peak demand of 15 megawatts or greater at one meter at a location in its service territory any negotiated rate for service at all of the customers’ locations within the service territory for any duration agreed upon by the EDC or alternative supplier and the large customer.
(B) The Commission may determine that a contract is required to be extended for longer than 20 years if the extension is necessary to ensure adequate and reliable service at least cost to customers over time.
(2) A prudent mix of contracts shall be designed to ensure:
(i) Adequate and reliable service.
(ii) The least cost to customers over time.
(iii) Compliance with the requirements of paragraph (1).
(3) DSPs with loads of 50 megawatts or less shall evaluate the cost and benefits of joining with other DSPs or affiliates in contracting for electric supply.
(4) Procurement plans may include solicitations and contracts whose duration extends beyond the program period.
(5) Electric generation supply shall be acquired by competitive bid solicitation processes, spot market energy purchases, short- and long-term contracts, auctions, bilateral contracts or a combination of them.
(6) The DSP’s supplier affiliate may participate in a competitive bid solicitation process used as part of the procurement plan subject to the following conditions:
(i) The DSP shall propose and implement protocols to ensure that its supplier affiliate does not receive an advantage in the solicitation and evaluation of competitive bids or other aspect of the implementation plan.
(ii) The competitive bid solicitation process shall comply with the codes of conduct promulgated by the Commission in § 54.122 (relating to code of conduct).
(c) A DSP’s implementation plan must adhere to the following standards:
(1) A competitive bid solicitation process used as part of the default service implementation plan must provide, to the extent applicable and at the appropriate time, the following information to suppliers:
(i) A bidding schedule.
(ii) A definition and description of the power supply products on which potential suppliers shall bid.
(iii) Bid price formats.
(iv) A time period during which the power will need to be supplied for each power supply product.
(v) Bid submission instructions and format.
(vi) Price-determinative bid evaluation criteria.
(vii) Current load data for rate schedules or maximum registered peak load groupings, including the following:
(A) Hourly usage data.
(B) Number of retail customers.
(C) Capacity peak load contribution figures.
(D) Historical monthly retention figures.
(E) Estimated loss factors.
(F) Customer size distribution.
(2) The default service implementation plan must include fair and nondiscriminatory bidder qualification requirements, including financial and operational qualifications, or other reasonable assurances of a supplier of electric generation services’ ability to perform.
(3) A competitive bid solicitation process used as part of the implementation plan will be subject to monitoring by the Commission or an independent third party evaluator selected by the DSP in consultation with the Commission. A third party evaluator shall operate at the direction of the Commission. Commission staff and a third party evaluator involved in monitoring the procurement process shall have full access to all information pertaining to the competitive procurement process, either remotely or where the process is administered. A third party evaluator retained for purposes of monitoring the competitive procurement process shall be subject to confidentiality agreements identified in § 54.185(e)(6) (relating to default service programs and periods of service).
(4) The DSP or third party evaluator shall review and select winning bids procured through a competitive bid solicitation process in a nondiscriminatory manner based on the price determinative bid evaluation criteria set forth consistent with paragraph (1)(vi).
(5) The bids submitted by a supplier in response to a competitive bid solicitation process shall be treated as confidential pursuant to the confidentiality agreement approved by the Commission under § 54.185(e)(6). The DSP, the Commission and a third party involved in the administration, review or monitoring of the bid solicitation process shall be subject to this confidentiality provision.
(d) The DSP may petition for modifications to the approved procurement and implementation plans when material changes in wholesale energy markets occur to ensure the acquisition of sufficient supply at the least cost to customers over time. The DSP shall monitor changes in wholesale energy markets to ensure that its procurement plan continues to reflect the incurrence of reasonable costs, consistent with 66 Pa.C.S. § 2807(e)(3.1)—(3.4) (relating to duties of electric distribution companies).
(e) At the time the Commission evaluates the plan and prior to its approval, in determining if the DSP’s plan obtains generation supply at the least cost, the Commission will consider the DSP’s obligation to provide adequate and reliable service to customers and that the DSP has obtained a prudent mix of contracts to obtain least cost on a long-term, short-term and spot market basis. The Commission will make specific findings which include the following:
(1) The DSP’s plan includes prudent steps necessary to negotiate favorable generation supply contracts through a competitive procurement process.
(2) The DSP’s plan includes prudent steps necessary to obtain least cost generation supply contracts on a long-term, short-term and spot market basis.
(3) Neither the DSP nor its affiliated interest has withheld from the market any generation supply in a manner that violates Federal law.
Source The provisions of this § 54.186 amended August 10, 2012, effective August 11, 2012, 42 Pa.B. 5185. Immediately preceding text appears at serial pages (330071) to (330072) and (340965).
Cross References This section cited in 52 Pa. Code § 51.12 (relating to definitions); 52 Pa. Code § 54.185 (relating to default service programs and periods of service); and 52 Pa. Code § 54.188 (relating to commission review of default service programs and rates).
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