Pennsylvania Power & Light Co. notified Schuylkill Energy Resources Inc. Wednesday (1/31) that PP&L will reduce the price the utility pays to purchase electricity starting May 1 because of Schuylkill's failure to comply with its contract with PP&L.
The action would reduce energy costs for PP&L customers by about $9 million a year.
Schuylkill Energy is a non-utility generator that operates an 80-megawatt power plant in Schuylkill County. PP&L has a contract to purchase electricity from the plant. Under the terms of the contract, if the plant is a "cogenerator" as established by the contract, Schuylkill is entitled to a higher payment from PP&L for its electricity.
In general, cogeneration means producing electricity and thermal energy for commercially useful purposes.
"PP&L has found that Schuylkill is not acting as a cogeneration facility under the terms of its contract," said Bill Dussinger, PP&L's manager of electric market strategies and operations. "We have asked Schuylkill repeatedly for specific information regarding this finding and they have refused to provide such information five times. It's not in the interest of our customers to continue paying the higher rate for electricity."
PP&L's customers pay the cost of PP&L's purchases from non- utility power producers such as Schuylkill Energy through the Energy Cost Rate on electric bills. Under federal law, electric utilities are required to buy power from non-utility generators like Schuylkill Energy.
In a letter, PP&L informed Schuylkill that effective May 1 PP&L will reduce the rate Schuylkill will be paid for electricity to 5 cents-per-kilowatt-hour from 6.6 cents-per-kilowatt-hour.
"Schuylkill still can prevent the rate reduction by providing all of the information sought by PP&L — if that information demonstrates to PP&L's satisfaction that Schuylkill is entitled to the higher rate," Dussinger said.
"PP&L does not take such action lightly, but Schuylkill has left PP&L little choice, given its unreasonable, continuing refusal to provide information to PP&L," Dussinger said. "With the large amount of money at issue, we need to protect the interests of PP&L's customers."
In November 1995, PP&L filed a "writ of summons" in Lehigh County Court to begin civil lawsuit proceedings against Schuylkill to recover money PP&L paid in the past at an unjustified higher rate.