Pennsylvania PUC to Order Utilities to Consider Longer-Term Fixed Price October 17,
2011 Email This Story Copyright 2010-11 Energy Choice Matters
The Pennsylvania PUC has tentatively ordered the electric distribution companies
(EDCs) to consider semi-annual electric default service rate adjustments for mass
market customers rather than the current quarterly adjustments (I-2011-2237952).
The direction, part of a tentative order on intermediate recommendations regarding
the PUC's investigation of the retail market, is tentative and subject to comment
before being adopted in a final order.
Nevertheless, at this point the PUC is, "interested in weighing the benefits of semi-annual
(i.e. six month) energy rate adjustments and/or six month reconciliation adjustments,"
for residential and small commercial customers.
Accordingly, in the tentative order, the Commission recommended, "that EDCs contemplate
the incorporation of semi-annual default service rate adjustments within their next
default service plans."
As first reported by Matters Friday (10/14), the PUC has tentatively issued a series
of recommendations to be incorporated into the EDCs' next default service plans (for
delivery beginning June 1, 2013), such that any ultimate changes in retail market
design adopted by the PUC after the completion of its retail market investigation
may be harmonized with the default service plans which, due to timing, must be designed
before the PUC completes its retail investigation.
Chiefly, the PUC tentatively recommends that EDCs, for the next default service period,
file default service plans that run for two years, with the period aligning with
the PJM Planning Year. "The Commission believes that two year plans will provide
a reasonable time period to allow for implementation of any long term changes proposed
in the Investigation," the tentative order says.
The Commission does not want to hinder the ability of EDCs and other interested parties
to formulate a portfolio of energy contracts that satisfy statutory requirements
for default service. Accordingly, the tentative order would avoid mandating a prescriptive
portfolio of contract lengths.
However, the tentative order would recommend that EDCs file plans, "that limit or
eliminate the existence of short term energy contracts extending past the end date
of the default service plan time period."
The tentative order contends that adherence to such a policy can be achieved while
still obtaining compliance with statutory requirements. "The Commission also believes
that the approval of various EDCs' presently effective default service plans does
not define these portfolios as the only possible prudent mix of contracts," the tentative
Further, at a minimum, the tentative order recommends that EDCs limit the proportion
of long term contracts that make up their default service plan energy portfolio.
In addition, the tentative order recommends that EDCs consider using already existing
long term contracts from previous or presently effective default service plans to
satisfy compliance with the long term contract mandate of 66 Pa. C.S. § 2807(e)(3.2)(iii).
The tentative order would also recommend that EDCs incorporate an opt-in retail auction
program within their default service plans, which would allow customers to affirmatively
indicate their willingness to be served by a retail supplier through an auction process.
"The Commission will not propose a specific format for opt-in auctions in this Tentative
Order. Rather, the Commission recommends that EDCs use, as a starting point for
prospective opt-in auctions, the format being discussed by a stakeholder sub-group
in this Investigation when it is finalized."
Additionally, the tentative order would recommend that EDCs incorporate a customer
referral program within their default service plans. Again, the Commission would
not propose a specific format for referral programs within its order, again directing
that the proposal being discussed by stakeholders should serve as a "starting point."
The PUC noted that referral programs can range from programs which simply inform
and direct customers to PA Power Switch, to programs where EDC call center representatives
assist customers with enrolling onto a standard "referral program" competitive supply
To address the statutory requirement that EDCs offer a Time of Use generation option,
the tentative order would recommend that EDCs "contemplate" contracting with a retail
supplier to offer a default service TOU option.
Finally, the tentative order would recommend that EDCs "contemplate" expanding hourly-priced
default service to the medium-sized commercial and industrial class, which the order
notes are generally those customers with demand greater than 100 kW.