NERA provided advice on the design of a competitive procurement process to transition rates for customers to market prices when generation rate caps expired under Pennsylvania’s electricity industry restructuring. NERA has served as the Independent Evaluator since the Pennsylvania Public Utilities Commission’s (PECO’s) first Default Service Program in 2009, managing two to three requests for proposals (RFPs) each year.

The product procured is full requirements service, which includes energy, capacity, ancillary services, certain transmission services, and Alternative Energy Portfolio Standard (AEPS) requirements. The results of the RFPs translate directly into prices for PECO’s residential, small commercial and large commercial, and industrial customers.

The NERA team tailored its design to the regulatory context by understanding PECO’s needs and having a deep understanding of prevailing legislation and regulations at the state and federal levels. NERA developed transparent governing rules that promote fairness and transparency and employ a well understood sealed-bid format. NERA manages an open and non-discriminatory qualification process including promoting the RFP, serving as the interface for bidders, training bidders, and reviewing materials to ensure bidders can comply with the terms of the supplier contract. NERA also prepares two confidential reports for the Pennsylvania Public Utilities Commission (PUC): a market report containing visible market prices for components of the full-requirements product and changes in trends in the wholesale markets and a report containing the results of the RFP.

PECO is now on its fifth Default Service Program. This longevity speaks to the success of the design in producing market prices, mitigating price impacts for customers, and maximizing competition. The Pennsylvania PUC has consistently approved the results of the RFPs.