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Walking Back Earlier Proposal, Pa. PUC Won't Require Advance Notice for Variable Rate Changes, Except for Rollover Contracts

April 4, 2014

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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Departing from an earlier proposal, the Pennsylvania PUC will not require electric generation suppliers to notify 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."

Indeed, under the PUC's final customer disclosure regulations, advance notice of a variable rate change will only be required for contracts automatically rolling onto a variable rate at the end of a term, as explained further below.

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The PUC will require the new Electric Generation Supplier Contract Summary, for which there is a PUC-prescribed template, to describe, for a variable product, "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."

However, advance or "separate" notice of the price change is not required; the notice may simply be the customer's receipt of their bill with the new rate.

"The Commission declines to include requirements in its regulations regarding the provision of notices surrounding variable pricing changes," the PUC said.

"While we agree with those parties that stated that EGSs should provide some indication of when customers will realize a price change, we disagree with the inclusion of such a requirement in our regulations at this time. Specifically, we believe this information is best included in the EGS Contract Summary provided to customers. EGSs should include, in the EGS Contract Summary, information regarding not only when a customer may realize a price change, but also when they can expect notification of a price change. For example, an EGS could state that a customer's variable rate may change monthly and the customer will receive notification of the price change during a certain time of the month, once the final monthly meter read is performed, or when the price takes effect (i.e. when the customer receives the bill with that price)," the PUC said.

Specifically, the PUC has dropped an earlier proposal requiring advance notice for certain variable rate changes. While the PUC's initial proposal did not require advance notice of all variable rate changes, the PUC had initially proposed that EGSs 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."

This requirement has been deleted in the final rule.

"The Commission also declines to include in its regulations a requirement that EGSs notify customers of certain minimum percentage price increases. While we clearly understand customer confusion and potential frustration with increasing prices, as evident during the winter of 2014, we do not believe it appropriate to set a minimum percentage that would represent a 'significant' increase. As accurately stated by WGES, this Commission should not be perceived as condoning certain levels of rate increases – especially those at 50% over the previous bill as reasonable. Instead, this Commission believes that EGSs should be in contact with its customers regularly regarding rates being charged. It is in an EGS's best interest to contact customers regarding potential rate increases in order to retain that person as a customer. We realize this expectation may not have been met during the events earlier this year; however, as recognized by the majority of parties, those events were unforeseeable. We are confident that all parties involved, including the EGSs, have learned from these events and we expect that they will act in good faith and in the best interest of customers going forward," the PUC said.

There is one group of customers, however, which will receive advance notice of variable rate price changes -- residential and small commercial customers who were on a fixed rate, and who do not affirmatively respond to an "options" (renewal) notice, and who are transitioned to a variable rate.

For these customers, "notice of a subsequent change in pricing shall be provided to the customer at least 30 days prior to the new price being charged."

While email communication of these price changes will be acceptable for those customers agreeing to such communication, "[w]e would like to make it clear that the Commission does not believe that simply posting messaging on a website, such as the EGS's own website, would constitute compliance with this requirement," the PUC said

The final rules remain subject to approval from the Independent Regulatory Review Commission

What Type of Variable Rate History Will Pa. Electric Suppliers Be Required to Disclose Under New PUC Order?

Here's What The Final Pennsylvania Supplier Contract Summary Looks Like

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