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Pennsylvania Intends to Require Suppliers to Send Advance Notice of Some Variable Rate Changes, Require Statement Affirming Customer May Not Save Money

March 20, 2014

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Copyright 2010-13
Reporting by Karen Abbott •

The Pennsylvania PUC intends to adopt a standard Electric Generation Supplier "Contract Summary" which all EGSs will be required to use for residential and small business customers, and the PUC also intends to require EGSs to provide certain customers with advance notice of variable rates.

Notably, the proposed EGS Contract Summary requires a "Statement Regarding Savings," in which the EGS must state in, "[p]lain language that the supply price may not always provide savings to the customer."

Click here for template of proposed PUC Contract Summary

For variable rates the EGS must answer the following in the Contract Summary:

• If variable, based on what?

• If variable, how often is the rate expected to vary?

• If variable, any applicable ranges/ceilings.

• If no ranges/ceilings, a plain language statement indicating as such.

• If variable, describe when the customer will receive notification of price changes in relation to time of month, final monthly meter read, billing cycle, or when the price takes effect.

While the Contract Summary requires the EGS to inform the customer of when the customer will receive notice of a variable rate price change, it does not appear from the material released by the PUC yesterday that the PUC is proposing a blanket mandate that EGSs must provide advance notice of variable rate changes (the Contract Summary only requires notice, not "advance" notice). Rather it appears that the PUC is only requiring advance notice of a variable rate under two circumstances.

First, the PUC proposes that the EGS must provide notice to variable rate customers, "of a rate increase of more than 50% over the prior billing cycle as soon as the EGS becomes aware that such an increase will occur."

For customers who have elected to receive electronic communications from the EGS, the notice of the rate increase will be transmitted in the manner chosen by the customer. For all other customers, notice will be provided by direct mail, the PUC proposes.

Second, the PUC proposes that customers who rollover onto a variable rate from a fixed rate, due to customer inaction in response to an "options" (renewal) letter, must be provided the variable rate for a month in advance, regardless of the size of any change versus the prior month.

Specifically, the PUC proposes that, if a fixed rate customer does not respond to the notices and is converted to a month-to-month contract, "any subsequent changes in pricing shall be provided to the customer at least 30 days prior to that new price being charged."

While the PUC does specifically propose to require that EGSs provide all small volume variable rate customers, "information regarding when the customer will be made aware of each price change," nothing we see proposes a deadline by which EGSs must provide the new rate, aside from the two specific instances described above.

Apart from the Contract Summary, the EGS terms of service for a variable rate product, if there is no limit on price variability, shall "clearly and conspicuously state that there is no limit on how much the price may change from one billing cycle to the next billing cycle."

Furthermore, the PUC proposes that for contracts with variable pricing, the EGS shall provide, "a telephone number and internet address at which a customer may obtain the previous 12 months' average monthly billed prices for that customer's rate class and EDC service territory."

The PUC did not define, "the previous 12 months' average monthly billed prices for that customer's rate class and EDC service territory," and whether the rate disclosure history is product-specific (Texas), or aggregated across multiple variable rate plans within the same EDC territory (New York), though the use of the term "average" suggests some blending is involved.

The PUC's proposed requirements would apply to disclosure statements for "residential and small business customers."

Due to current retail market conditions, the PUC intends to adopt the changes above through a "final-omitted" rulemaking, but is accepting comments on an expedited basis.

Docket L-2014-2409385

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