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Retrenchment: Pennsylvania Shelves Retail Opt-in Aggregations, Injects Regulatory Uncertainty into Market The Pennsylvania PUC yesterday adopted as final without modification its tentative order to indefinitely suspend implementation of the retail opt-in aggregations at the seven major electric distribution companies.
The PUC's reconsideration came on its own motion, and only two months after adopting the most recent opt-in aggregations in the PPL and Duquesne Light default service plans approved in January.
Although the PUC said the suspension in the opt-in aggregations was to limit customer confusion with the Standard Offer customer referral programs, its final order was devoid of any novel reason for the suspension of the opt-in aggregations; as the potential for customer confusion was already fully considered by the PUC in the default service proceedings, as well as the intermediate retail market workplan proceeding.
Moreover, the PUC did not explain, or even address, that if confusion required one of the two programs to be suspended, why the PUC chose to suspend the opt-in aggregation, which by its design would have touched more customers at a lower cost than the Standard Offer programs.
"From the onset of the Retail Market Investigation, this Commission has been focused not only on improving market conditions to attract additional service providers and enhanced products for consumers, but primarily on improving the market experience for Pennsylvania electric consumers. While we are very sensitive to the comments and suggestions offered by Direct, RESA, Dominion Retail and PEMC, our overriding concern remains that the residential and small business customers be provided with a simple and convenient shopping experience. We find that the simultaneous implementation of both the ROI and Standard Offer Customer Referral Programs presents concerns about customer confusion as well as EDC implementation. The suggestions for program modification are intriguing, but they do not resolve these concerns," the PUC said.
"Based on the foregoing discussion, we will direct the affected EDCs to postpone implementation of the ROI Programs as set forth in their default service plans. By this Order, we modify all schedules and directions relating to the ROI Programs so that any previously directed actions are stopped," the PUC said.
The PUC's token justification for its order, adopting a line of reasoning explicitly rejected just two months ago in the default service plans, injects a new dose of regulatory uncertainty into the market. All of the PUC's "reforms" to the retail market are now in doubt (of which the opt-in aggregation was the last major piece, with all remaining change being quite incremental), subject to reconsideration on the PUC's own motion.
The opt-in aggregation programs -- themselves a retrenchment from the PUC's earlier adoption of an opt-in retail auction for a capped amount of customers -- were essentially glorified customer referral programs. Under the opt-in programs, which were still capped at 50% of default service customers, all mass market default service customers were to be mailed a letter from the EDC containing an offer from a pre-assigned retail supplier, offering the customers a 5% discount to the Price to Compare for an initial four months, with an EGS-determined fixed price (to be set in the future) for the following eight months.
The opt-in programs were to begin customer solicitation this spring, with service starting on or about June 1, 2013.
The Standard Offer customer referral programs differ from the retail opt-in programs in several material respects. Most notably, the Standard Offer customer referral programs will reach a vastly smaller universe of customers. As noted above, the retail opt-in program was to include a letter, mailed by the EDC with its logo, containing a retail supply offer to all non-shopping customers in the eligible customer classes. In contrast, the Standard Offer customer referral programs will only be marketed to customers affirmatively contacting the EDCs regarding certain discrete issues (mostly new service and high bills inquiries), rather than all default service customers.
Furthermore, although final costs have not been determined, in several service areas the cost of the Standard Offer program is expected to be significantly higher than the retail opt-in program. For example, the EGS's share of retail opt-in costs was capped at $1/assigned customer, while the EGS's share of the Standard Offer program was capped at $30/customer.
Docket P-2012-2283641 et. al.
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April 5, 2013
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Reporting by Paul Ring • ring@energychoicematters.com
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