As noted by EnergyChoiceMatters.com today, the Pennsylvania Attorney General has alleged that five retail suppliers violated statute and Commission rules by charging rates which were not "competitive" as allegedly promised by the supplier in describing the plans to customers.

The AG based this allegation on a proxy of 23¢/kWh being a "competitive" rate for the relevant time period, representing, according to the AG, the cost to serve an average residential heating customer based on PJM spot prices

Here, specifically, is how the AG's expert arrived at the 23¢ calculation. Notably, we don't see any specific discussion regarding uplift (it is unclear what falls under "ancillaries") or higher credit/collateral costs from higher LMPs.

The AG's expert used the following categories of generation costs to arrive at 23¢:

• Energy cost (the cost of energy delivered to the relevant EDC zone) - both day-ahead and real-time prices were relied upon

• Cost of Alternative Energy Portfolio Standard compliance

• Capacity cost

• Cost of ancillary services, margin (i.e., profit) and risk.

Specific details on values for margin and risk were not included

In any case, the AG's expert said when examining four separate billing cycles (each covering a period of Jan and/or Feb 2014), "[t]he results obtained from this analysis suggest that the cost to serve residential consumers covering any of the four billing cycles examined would be not more than $0.23 per kWh in any of the six EDC zones examined, even under the assumption that all supply were procured on the PJM spot markets."

The highest cost resulting from the expert's analysis was, "approximately $228 per MWh (based on day-ahead energy prices for the PECO zone for space heating customers over the January l through February [sic] 30 billing cycle).

See the expert's affidavit (Appendix B, starting at P. 20) for further discussion, although specific calculations are not provided.