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Pennsylvania to Investigate Requiring Advance Notice of Variable Rate Changes, Rate History Disclosures

February 21, 2014

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Copyright 2010-13
Reporting by Paul Ring •

With more than 750 high bill informal complaints filed by consumers so far this year, the Pennsylvania PUC has opened an investigation into disclosures and other regulations governing variable rate electric contracts (Docket M-2014-2406134).

Noting that some customers have seen their variable electric rate triple, or increase by an even higher amount, PUC Vice Chairman John Coleman and Commissioner James Cawley said in a joint motion that, "changes may be needed to the EGS [electric generation supplier] disclosure statement requirements."

"Currently, the Commission's Office of Competitive Market Oversight (OCMO) is considering revisions to the disclosure statements to make them more user-friendly to consumers. At this point, OCMO's review should consider whether, for variable rates, disclosure statements should include some form of pricing history and whether these statements should expressly state that uncapped variable rates may be increased without limitation," Coleman and Cawley said in the motion adopted by the PUC.

Among other things, the PUC will consider whether retail suppliers should be required to provide advance notice of price changes to customers

Specifically, the PUC's variable product investigation will consider the following:

For variable-priced contracts without explicit formulaic pricing parameters:

• Should EGSs be required to provide advance notice of price changes to customers?

• Should the advance notice requirement be waived for minor contract price changes, within a certain bounds? If so, what bounds are appropriate?

• If advance notice is required, how far in advance of the meter read date should notice be provided and how can this notice be provided?

• Do variable rate contracts without explicit pricing parameters provide consumers with the information needed to make informed decisions? If not, what is the remedy?

For variable-priced contracts with explicit formulaic pricing parameters:

• Should EGSs be required to provide a historical pricing history for this formulaic rate structure?

• If so, how many months should be provided, and where should this information be provided so as to be available to all participating customers?

For Electric Generation Suppliers who offer variable priced products:

• Please provide copies of Customer Disclosure Statements for variable priced products provided through contracts in effect for service rendered for the period December 1, 2013 through February 20, 2014

For daily recorded and automatic meter reading capable electric utilities:

• Under current plans, when will mid-cycle EGS switches be implemented?

• How much can these plans be accelerated, and at what additional cost?

Coleman and Cawley noted that currently, for customers on a variable rate, "the disclosure statement must disclose conditions of variability (i.e., it must state on what basis prices will vary) and any limits on price variability. It appears that some customer contracts had no ceiling on the variable rate that could be charged by the EGS." [emphasis in original]

Under the adopted motion, the PUC will, "continue to evaluate the additional actions that should be taken to ensure that consumers are receiving adequate and accurate information to make informed decisions when purchasing electric supply."

The PUC will also, "continue its ongoing efforts to empower customers to more quickly change generation suppliers when they are charged unacceptably high rates."

"Presently, a variety of regulatory requirements, technical issues, and business practices can result in a switching process that lasts as long as forty days. Reducing the length of this process will serve to mitigate adverse financial impacts from variable rate volatility," Coleman and Cawley said.

The PUC had previously proposed a significant acceleration of the switching timeline, which would have been accomplished by eliminating the anti-slamming "waiting period," but the PUC ultimately decided to maintain a waiting period, which meant that the switching timeline was only accelerated by about 5 days.

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