Pa. PUC Finds Monthly Variable Products from Suppliers Are Exempt from Budget Billing
Requirement
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February 17, 2011
Pennsylvania electric generation suppliers, "are exempt from the budget billing obligation
when offering dynamically-priced [including monthly variable] products to residential
customers," the Pennsylvania PUC said in a Secretarial letter yesterday (M-2009-2082042).
"In the context of this Secretarial Letter, dynamically-priced products represent
those offerings that fluctuate in price, at a maximum by month, based on wholesale
electric market trends and/or offer differing rates and rebates based on peak/off-peak
usage periods. Examples of some dynamically-priced product offerings include monthly,
daily, time-of-use, real-time, critical-peak, and peak-time rebate pricing," the
Secretarial Letter holds.
The budget billing obligation in Chapter 56 of the Commission's regulations requires
that, "a gas, electric and steam heating utility shall provide its residential ratepayers
with an optional billing procedure which averages estimated utility service costs
over a 10-month, 11-month or 12-month period to eliminate, to the extent possible,
seasonal fluctuations in utility bills." Section 2809(e) of the Public Utility Code
obligates the Commission to impose requirements on electric suppliers that are necessary
to ensure that these Chapter 56 standards and billing practices for residential service
are maintained.
"This provision also authorizes the Commission to forbear from applying any requirements
of the Public Utility Code that are unnecessary due to competition among electric
generation suppliers," the Secretarial Letter notes.
"In our view, exempting EGSs that are offering dynamically-priced supply products
from the budget billing obligation in no way jeopardizes the consumer protections
afforded by Chapter 56 and would be beneficial to the development of the retail electric
market," the Secretarial Letter states.
"Particularly to the extent that dynamically-priced supply products fluctuate based
on price signals from the wholesale market and/or incentivize end-users to adjust
electric usage patterns, it would seem counterproductive to insist that residential
customers be afforded a budget billing option when selecting these products. Indeed,
dynamically-priced supply products are more consistent with the overall conservation
goals of Act 129 of 2008, and budget billing can interfere with the consumers' ability
to readily obtain the information needed to adjust their consumption and demand in
response to price signals," the Secretarial Letter adds.
"Nonetheless, we reiterate the Commission's long-standing requirement that budget
billing be made available for residential consumers who purchase conventionally-priced
service (Budget Billing Obligations of Electric Generation Suppliers, M-00960890F0011,
Order entered June 18, 1998)," the letter adds.
"Residential customers who wish to avail themselves of a budget billing option would
either choose a different EGS, a fixed priced product of the same EGS, if offered,
or remain with the default service provider. If residential customers prefer the
certainty of a budget billing option and are reluctant to accept dynamically-priced
supply products without that feature, EGSs in the market offering such products would
have to make a business decision of whether to respond to the desires of those consumers,"
the Secretarial Letter concludes.
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