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Off The Table: Pennsylvania Retail Gas Market Investigation Won't Address Default Supplier Role, Rate Unbundling, Other Issues Under Tentative Order
The Pennsylvania PUC yesterday issued a tentative order proposing to open the next phase of its investigation into whether the retail natural gas market is workably competitive, proposing to direct the Office of Competitive Market Oversight (OCMO) to study specific issues, and the tentative order is notable for what would not be considered in the retail market investigation.
Most notably, the PUC would decline to consider the default supplier function, and the entity which serves as the default supplier, in the investigation.
Noting that the PUC previously concluded that utilities should remain default suppliers for electricity, the tentative order states that, "We maintain the same opinion with regard to retail natural gas supplier of last resort service."
"While we understand that there may be changes required to SOLR service in order to develop a more robust and competitive retail natural gas marketplace, we do not believe it is appropriate, at this time, to remove NGDCs from the SOLR role. Instead, as was determined on the electric side, we propose that this Investigation focus on initiatives that can be implemented within the current SOLR structure to allow for a more competitive and beneficial retail natural gas marketplace for Pennsylvania ratepayers. However, we would like to make it clear that we may, at any point in time, revisit this decision," the tentative order states
While this may not be all that surprising, we do wish to emphasize that several questions in the PUC's September 2013 order launching the natural gas market investigation squarely asked whether utility-offered default service remained appropriate, and whether such service presented barriers to competition.
The tentative order would also declare that utility rate unbundling issues will be outside the scope of the retail market investigation.
"We have stated above that the role of the NGDC as the SOLR is an issue which would be better examined at a later time, after recommendations which arise from this Investigation are implemented and have an opportunity to impact the market. We believe that similar considerations affect our consideration of further rate unbundling."
Also off the table, at least initially, is the creation of a Standard Offer customer referral program, recently heralded by the PUC for its success in the electric market, for the natural gas market.
"While we are pleased with the electric SOPs and believe that they have provided real benefits to consumers and the retail electric market in general, we have concerns regarding whether these programs can be similarly successful in the natural gas market. For the programs to be successful, both suppliers and consumers have to be willing to participate. Consumers want the security of a safe, fixed rate that offers potential savings, while suppliers want to be able to serve customers profitably and with minimal acquisition costs. We are concerned that the current retail natural gas market may not provide the environment needed to attract suppliers and/or consumers to an SOP," the tentative order said.
"The same problems that afflict the retail gas market in general and that have precipitated this Investigation are often the same problems that could hobble an SOP. On this basis, we have concerns that an exploration of SOPs in the early phases of this Investigation may be premature. However, as the Investigation progresses and market reforms are implemented, the environment may become more conducive to the development of SOPs. Therefore, we direct OCMO to move consideration of SOPs for the natural gas industry to the later phases of this Investigation," the tentative order said.
The tentative order would also only direct the investigation of Purchase of Receivables "best practices," but would not examine the statewide adoption of POR (ostensibly due to statutory prohibitions on the PUC mandating POR, thought a "carrot" approach could be used)
The tentative order would direct OCMO to investigate the following issues and to propose recommendations:
• The reconciliation process for default service
• Migration riders
• Capacity assignment and storage assets
• Utility allocation of system access points, and allegations that utilities are providing discriminatory access to locally produced gas for default service, but not providing similar access to such gas to retail suppliers
• System balancing issues, including scheduling, nominations, tolerances, penalties and cash-outs, including potential best practices and/or standardization
• Retail supplier creditworthiness requirements
• Seamless moves and instant connects (day-one switching)
• Acceleration of the switching timeframe
• Eligibility of Customer Assistance Program (CAP) customers for choice
• Enhanced customer education, including improvements to PA Gas Switch, with a recommendation for a, "comprehensive statewide consumer education plan to include pre- and post-benchmarking surveys; radio, television, print and online ads and media buys; social media; educational videos; and consumer events."
• Purchase of Receivables best practices
• Customer disclosure requirements, including use of a supplier contract summary page and supply contract expiration notices
• Joint utility-retail supplier bill
• Creation of a secure portal to provide authorized suppliers with customer account numbers to facilitate customer shopping at public venues
• Electronic data transaction protocols
I-2013-2381742
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August 22, 2014
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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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