August 31, 2008
Ppl Seeks To Buy More Power Early
By Mekeel, Tim
PPL Electric Utilities wants to keep spreading the risk. The company asked the state Thursday for permission to buy power ahead of time, in four purchases per year, for use beginning in January 2011.It's using a similar approach to buy power for 2010, the first year without caps on its rates.
PPL's strategy is to buy chunks of power now for use later, when its current contracts for power - at capped rates - have expired.
This avoids having to buy all its power at once and being at the mercy of whatever the open-market price is at that time.
Some utilities that have used the all-at-once strategy have gotten stung with rate hikes as high as 70 percent.
PPL now is in the midst of making six purchases over three years for its power in 2010. Based on the initial three of those purchases, PPL projects its rates to rise 34.4 percent in 2010.
In its Thursday filing, PPL said it wants to obtain its power for 2011 through May 2014 mostly by making four purchases a year ahead of time.
These advance purchases would start in the third quarter of 2009.
Ninety percent of its power for residential and small-business customers would come through these purchases. The balance would come from hourly purchases in the open market.
For large commercial and industrial customers, all of the power would be bought on an hourly basis in the open market.
PPL notes that if competitors emerge offering cheaper prices, customers will be free to switch to them.
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