Full Requirements RFP – Contract

As stated in Appendix D (DS Supplier’s Obligations for AEPS Compliance) of the Default Service SMA:

“(6)      At the conclusion of each annual June to May Period (“Reporting Period”), DS Supplier shall complete its transfer of any AECs not transferred in accordance with this Appendix D and Exhibit 2, into the Company’s GATS account(s) in the amount necessary to fulfill the DS Supplier’s AEPS Obligation under this Agreement. Transfers must be made no later than 70 calendar days following the completion of a Reporting Period.”

For avoidance of doubt, damages will not apply if the DS Supplier has completed its transfer of any AECs not transferred in accordance with Appendix D and Exhibit 2, into the Company’s GATS account(s) in the amount necessary to fulfill the DS Supplier’s AEPS Obligation under the Default Service SMA. Transfers must be made no later than 70 calendar days following the completion of a Reporting Period.

DS Suppliers for the Large C&I customer group are responsible for providing AECs necessary for PPL to meet its obligations under the Alternative Energy Portfolio Standards Act, 73 P.S. §§ 1648.1 1648.8, (“AEPS Act”).

This information was omitted in the previously posted Exhibit 2. An updated Exhibit 2 to the Default Service SMA that is relevant and specific to this February 2026 solicitation has been posted to the documents page of the RFP website. (February 18, 2026)

The DS Supplier is responsible for DOE 202C charges as part of its obligations to provide Full Requirements Service under the Default Service SMA. You may refer to Appendix C – DS Supply Specifications for more information.

There are no changes to the Default Service SMA between the July 2025 and February 2026 solicitations. The Default Service SMA is dated January 8, 2025 in the filename and the footer of the document.

As outlined in Section 6.5(b) of the Default Service Supplier Master Agreement (SMA), collateral posted by a DS Supplier that exceeds the required margin—based on the current Total Exposure Amount—may be considered Surplus Margin and is eligible for return upon written request, provided it exceeds the Minimum Transfer Amount.  The Total Exposure Amount is recalculated daily and reflects only the undelivered portion of the contract. Once a delivery month has passed, the associated Mark-to-Market (MtM) Exposure Amount is no longer included in the exposure calculation (see Section 6.3 and Appendix B). As a result, collateral tied to past delivery months may be released, subject to the rounding and timing provisions in Section 6.5.

As stated in Section 5.5 of the Default Service SMA, “the amount of supply obligation assigned to the DS Supplier following the DS Supplier’s Step-Up response will be the DS Supplier’s pro-rata share of the total of such Step-Up responses from all DS Suppliers and will be from zero up to and including the maximum amount that the DS Supplier indicates.” For avoidance of doubt, PPL Electric will not allocate any supply obligation associated with the terminated transaction(s) to any DS Supplier who has rejected the Step-Up request, nor will PPL Electric allocate supply obligation associated with the terminated transaction(s) to a DS Supplier more than the maximum amount that the DS Supplier indicates.
If any shortfall still remains after the Step-Up process, PPL Electric will expeditiously seek guidance and approval from the PUC to address this shortfall in procurement of Default Service Supply. Subject to PUC approval, PPL Electric will issue a new RFP as soon as practicable, and if needed, the Company will obtain Default Supply through the spot market administered by PJM in the interim.

No, DS Supplier is not expected to provide twice the amount of AECs as compared to the original obligation as set forth in Appendix D and Exhibit 2 of the Default Service SMA. To the extent PPL Electric is able to procure additional AECs to meet the shortfall amount, the costs of procuring these AECs will be included as part of damages resulting from DS Supplier’s failure to meet the AEPS requirements. If PPL Electric does not procure sufficient AECs to fully meet the shortfall amounts, DS Supplier remains liable for those remaining shortfall amounts.

If a DS Supplier is relying on the financial standing of a Guarantor, the Maximum Credit Limit under the Default Service SMA will be based on the credit rating and Tangible Net Worth of the Guarantor only, and not the DS Supplier.
The RFP Bidder will be required to indicate the entity on whose financial standing the RFP Bidder is relying on as part of its Bidder Qualifications.

No, there is no process to consider an alternate form of Guaranty except as provided below.
Pursuant to Section 4.9.1 of the RFP Rules, an acceptable Unconditional Guaranty form is provided as Exhibit 5 in the Default Service SMA. As part of its Bidder Qualifications, an applicant may propose modifications to the Unconditional Guaranty form that are non-substantive or clarifying in nature. The applicant proposing modifications to the Unconditional Guaranty form must provide an electronic copy in MS Word with all proposed modifications clearly marked and submit such document as directed in Section 6.1.2. The acceptability of such proposed modifications to the Unconditional Guaranty form will be determined at PPL Electric’s sole discretion, and such acceptability will be communicated to the applicant no later than forty-eight hours before the Cure Deficiency Deadline. A list of all acceptable modifications to the Unconditional Guaranty form will be posted to PPL Electric’s RFP Website or the Proposal Submission Website.

PPL Electric completes load submissions to PJM which includes distribution and transmission losses (including PJM assigned 500kV losses and unaccounted for energy). PJM applies a deration factor to the load submissions for settlement purposes. (See PJM Marginal Loss Implementation Details.) Suppliers will be paid based on the loss derated load.  Hence suppliers will be paid for loads at the retail meter adjusted upward to include the distribution and transmission loss factors, recognizing that these factors vary from time to time and are reconciled, and derated by PJM for marginal losses (that removes transmission loss associated with the PJM state estimator model).

For this July 2025 Default Service RFP, if the results for the 2026/2027 PJM BRA are announced on July 22nd, which is 5 business days before the Bid Date, then the Capacity Proxy Price for the 2027/2028 delivery year will be set equal to the average of the Third Incremental Auction results for the 2025/2026 delivery year and the BRA results for the 2026/2027 delivery year.
If the results for the 2026/2027 PJM BRA are not announced on July 22nd, then the Capacity Proxy Price for both the 2026/2027 delivery year and the 2027/2028 delivery year will be set equal to the average of the Third Incremental Auction results for the 2024/2025 delivery year and the Third Incremental Auction results for the 2025/2026 delivery year.
Final CPP numbers will be posted and announced to all Bidders prior to the Bid Date.

Yes, PPL Electric Utilities Corporation is an adherent to the ISDA U.S. Stay Protocol. Please see adherence letter here: https://www.isda.org/protocol-adherence/1143413/

Yes, estimated contract quantities are outlined in the Delivery Schedule included within the Transaction Confirmation. These quantities serve as the basis for the Mark-to-Market (MtM) credit exposure calculations.

As stated in the Default Service SMA –
Default Service Load (“DS Load”) shall mean the net total default service customer sales at the retail meter, plus any transmission and distribution losses and Unaccounted for Energy, adjusted for PJM’s derating in conjunction with marginal loss implementation as appropriate, expressed in MWh or MW, as appropriate, for a particular class(es) of retail customers being served by Buyer pursuant to the PaPUC Orders, as such sales vary from hour to hour, in Buyer’s Pennsylvania franchise service territory, as such territory exists on the Effective Date or may increase or decrease due to de minimis geographic border changes to the service territory that exists on the Effective Date, less excess generation purchased from net metering (customer generation) and less supply the Company is obligated to purchase pursuant to the Public Utility Regulatory Policies Act (“PURPA”). Additionally, with respect to the Residential Customer Group, less a fractional percentage of committed energy and capacity obtained under long-term contract with Allegheny Electric Cooperative, Inc. for supply from the New York Power Authority (“NYPA”) and less Block Supply. For the purposes of this Agreement, Time-of-Use load will be included in the calculation of DS Load.

The AEPS Act requires that the AEC compliance requirements be based on electric energy sold to retail electric customers, not the total generation used by an EDC or EGS to meet customer demand. (see AEPS Act at 73 P.S. § 1648.3(b)). As stated in the AEPS Act, “For each reporting period, EDCs and EGSs shall acquire alternative energy credits in quantities equal to a percentage of their total retail sales of electricity to all retail electric customers for that reporting period, as measured in MWh.” (See PUC Final Rulemaking Order in Docket No. L-00060180 dated September 29, 2008, Annex A, Title 52, Subpart C, Chapter 75, Subchapter D at § 75.61(b)). PPL Electric will issue quarterly AEPS Reports to winning suppliers, detailing the derated and retail MWhs, by month, by contract. In this report, suppliers are able to transparently see load values, Alternative Energy Credit (AEC) obligations, and a history of transfers to date.

Full Requirements Suppliers are not responsible for any capacity, ancillary service, or AEPS compliance costs associated with long-term block energy supply. These costs are fully borne by PPL Electric once energy is delivered by the Long-Term Block Supplier to the delivery point.
For the responsibility of Long-Term Block Suppliers, please refer to Long-Term Block-Contract-FAQ-1.

Appendix E (Adherence to the U.S Resolution Stay Protocol) to the Default Service SMA is applicable to an RFP Bidder that is a Regulated Entity under the ISDA U.S. Stay Protocol (such as Global Systemically Important Banks, or GSIBs). A Bidder that is not a Regulated Entity under the ISDA U.S. Stay Protocol is not required to submit an Appendix E to the Default Service SMA.

Yes, default service suppliers are responsible for the AEPS Quarterly Adjustments. The quantity outlined in Exhibit 2 of the Default Service SMA is inclusive of the prospective AEPS Quarterly Adjustments.

It is stated in Section 16.15 (Federal Acquisition Regulation) of the Default Service SMA that: “If any of the following clauses prescribed by the Federal Acquisition Regulation (“FAR”), 48 Code of Federal Regulations Chapter 1, should be deemed to apply to this Agreement, the DS Supplier shall comply with the requirements of such clause(s), and shall include the terms or substance of such clause(s) in its subcontracts, as and to the extent required by the FAR … In case of a conflict between the provisions of the FAR and the balance of this Agreement, the requirements of the FAR shall prevail.”

Hence, in the case that any of the clauses prescribed by the Federal Acquisition Regulation (“FAR”), 48 Code of Federal Regulations Chapter 1, which are listed in Section 16.15 shall apply, the DS Supplier shall comply with the requirements of such clause(s). In the case of a conflict between the provisions of the FAR and the Default Service SMA, the requirements of the FAR shall prevail.

First, AECs transferred from the DS Supplier into the Buyer’s account(s) for the purpose of fulfilling the DS Supplier’s AEPS obligations must be compliant with the Pennsylvania Alternative Energy Portfolio Standards Act (the “AEPS Act”). To meet its AEPS obligations for a particular quarter, a DS Supplier must transfer AECs generated during the reporting year (from June to May) that includes such quarter, or AECs from the prior two reporting years. For example, if a supplier provides Default Service Supply for the quarter of September 1, 2025 – November 30, 2025, the AECs transferred from the DS Supplier shall be generated from June 1, 2023 through May 31, 2026.

Second, please refer to Appendix D (DS Supplier’s Obligations for AEPS Compliance) of the Default Service SMA for the DS Supplier’s AEPS Obligations, which includes the following: “
(5) Within 40 calendar days following the conclusion of each quarter throughout the PJM planning year (August 31, November 30, February 28/29, and May 31) during the Delivery Period of a given Transaction, the DS Supplier shall transfer AECs into the Company’s GATS account(s) in an amount commensurate with the AECs applicable to the Full Requirements Service provided by the DS Supplier during the applicable quarter.
(6) At the conclusion of each annual June to May Period (“Reporting Period”), DS Supplier shall complete its transfer of any AECs not transferred in accordance with this Appendix D and Exhibit 2, into the Company’s GATS account(s) in the amount necessary to fulfill the DS Supplier’s AEPS Obligation under this Agreement. Transfers must be made no later than 70 calendar days following the completion of a Reporting Period.”

Exhibit 2 to the Default Service SMA that is relevant and specific to this solicitation has been posted to the documents page of the Default Service (Full Requirements) section of the RFP website as a standalone pdf document. This document contains the final AEPS obligations of the supplier associated with tranches awarded under this solicitation and is not subject to change during the term of the awarded transaction. Exhibit 2 is adjusted and updated by PPL Electric at the beginning of a solicitation to reflect the specific AEPS obligations associated with the tranches to be awarded in such solicitation. As such, an RFP Bidder is to refer to Exhibit 2 posted during the solicitation as the binding obligation of the RFP Bidder and not refer elsewhere for information related to its AEPS obligation.

As set forth in Section 1.1.5 of the Default Service RFP Process and Rules, Default Service Suppliers are responsible for providing Alternative Energy Credits (“AECs”) necessary for PPL Electric to meet its obligations under the Alternative Energy Portfolio Standards Act, 73 P.S. §§ 1648.1 1648.8, (“AEPS Act”) as set forth in Appendix D and Exhibit 2 of the Default Service SMA, during the Delivery Period of a Transaction Confirmation. PPL Electric will obtain a limited amount of AECs from separate AEC procurement(s) approved by the Commission. PPL Electric, at its option, will reduce the amount of AECs that Default Service Suppliers must provide by a pro rata share of the separately acquired AECs. Prior to each solicitation, PPL Electric will inform RFP Bidders of the amounts of AECs allocated for this purpose for each tranche of each product for which Default Supply is procured in that solicitation.

Pennsylvania Gross Receipts Tax (GRT) and State Tax Adjustment Surcharge (STAS) are charged by PPL Electric to its default service customers. All default service related GRT and STAS are the responsibility of PPL Electric and not wholesale suppliers participating in the PPL Electric Default Service energy auctions.

The Billing line items that are the PPL Electric’s responsibility under the Default Service SMA for Full Requirements are as follows:

Once selected as a winning supplier and Transaction Confirmations have been fully executed, PPL Electric will enter the winning supplier contract into the PJM inSchedule application and will update the above Billing Line Items (BLIs) to be PPL Electric’s responsibility into the PJM BLI application for your review and approval. Please note, the list of BLI’s provided may be updated if PJM adds or alters BLI’s. For example, this occurred with the BLI TECA #1115 (Transmission Enhancement Cost Adjustment), which was not an originally accounted for BLI, but was added as it relates to BLI #1108 and #2108 Transmission Enhancement. If any such changes occur, PPL Electric will communicate the updated BLI’s to winning suppliers.

As set forth in Section 1.1.5 of the Default Service RFP Rules,  Default Service Suppliers will be responsible for supplying the Full Requirements Service including, without limitation, energy, capacity, transmission (excluding Non-market-based Transmission Services below), AECs, ancillary services, transmission and distribution losses, congestion management costs, and such other services or products that are required to supply Default Service to PPL Electric.

As defined in the Default Service SMA, “Non-market-based Transmission Services” mean Network Integration Transmission Services (“NITS”), Transmission Enhancement Costs, Expansion Cost Recovery Costs, Non-Firm Point-to-Point Transmission Service Credits, Regional Transmission Expansion Plan (“RTEP”), and Generation Deactivation Charges.  These terms are ascribed in the PJM Agreements.

With respect to the Default Service RFP, the RFP Manager has posted redlines comparing the Default Service Supplier Master Agreement used under DSP V to the Default Service Supplier Master Agreement used under DSP VI. This redline document can be found on the Documents page under Default Service (Full Requirements) RFP on PPL Electric’s RFP website.

No, the Default Service SMA is a standard document that must be executed in its current form and without modifications by each RFP Bidder as a condition of its participation in the RFP.

The standby irrevocable letter of credit must be issued by a bank or other financial institution with a minimum “A-” senior unsecured long-term debt rating (not supported by third-party credit enhancements, or, if unavailable, corporate issuer rating discounted one notch) from S&P and “A3” from Moody’s.

As set forth in Section 6.1.5 of the RFP Rules, the RFP Bidder must sign the SMA and submit the SMA by noon EPT on the second business day prior to the Bid Proposal Due Date. If the RFP Bidder is awarded any tranches in any solicitation in the RFP, the signed SMA that was initially submitted will be executed by PPL Electric and provided to the RFP Bidder together with the partially executed Transaction Confirmation forms via email. If the RFP Bidder was not awarded tranches in the solicitation for which a SMA was provided, PPL Electric will retain the SMA for any future solicitation in which the RFP Bidder may again submit a Bid Proposal, in which case it is the responsibility of the RFP Bidder to submit any updated pages of the SMA no later than two (2) business days prior to the Bid Proposal Due Date of the solicitation in which the RFP Bidder is participating.