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Delaware Staff: State Should Run Opt-in Electric Affinity Program, Select Supplier; POR Should Be Implemented

November 16, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

The joint staffs of the Delaware PSC and Delaware Public Advocate recommended in a Staff report that the state's Electricity Affordability Committee should move forward with an opt-in affinity electricity savings program, and that purchase of receivables should also be implemented

As first reported by EnergyChoiceMatters.com, statute authorized the Secretary of State, as Chair of the Electricity Affordability Committee, to evaluate, and potentially select a supplier for, an opt-in electricity affordability program for residential and small business customers. "The committee shall evaluate this program based on the potential benefits derived from a combination of a multi-year fixed price per kWh offer, value added products and services to help customers better manage their overall energy bills, and other potential consumer benefits," statute provides. The Secretary under statute may also direct the Public Service Commission to coordinate the implementation of the program including appropriate customer awareness and marketing activities

After receiving a formal proposal from Direct Energy for such a program (click here for story), the Electricity Affordability Committee deferred action and directed the PSC and OPA to report on barriers to choice

In a Staff report on a workshop process, the Joint Staff recommends that the Electricity Affordability Committee proceed to select a PSC certified supplier that offers the best benefits to Delmarva customers and that the Secretary contract with a supplier for a fixed cost and fixed period of time

"It was made quite clear in the second workshop that Section 68 of the Bond Bill [establishing the Electricity Affordability Committee] was the 'Law of the Land' and needs to be implemented. It was noted that this Section was explicit with respect to the intent of the Delaware General Assembly," the Joint Staff said.

"Based on the need to comply with this Section, it is expressly recommended that the Committee select a supplier program and that the Secretary enter into a contract with the supplier," the Joint Staff said in their report.

"Such a state sanctioned program may be considered a pilot for a defined time period in order to evaluate what effect, if any, the heightened State of Delaware certification status has on enrollment results. Also, such a program may provide the impetus needed to spur customer engagement and participation in the choice market. Finally, such a program may help the PSC and DPA Staff further research and develop the issue of customer awareness by working closely with one specific supplier for a defined period of time," the Joint Staff said.

The Joint Staff further recommended that, "a purchase of receivables (POR) program should be implemented."

"The Delaware Public Service Commission should implement a POR program, either by implementing it as part of the Regulation 49 docket process or by opening a new docket to address this issue specifically," the Joint Staff said.

While Joint Staff recommended these choice improvements, as well as others noted below, Joint Staff stressed that the "misconception" that Delaware customers are missing out on material savings due to the lack of choice, "cannot be substantiated by the facts."

Joint Staff blamed regulated charges, whether bypassable (FERC transmission) or nonbypassable (distribution/public policy) as responsible for Delaware's high electric rates, and noted that, "supply costs provided by suppliers are very comparable," to current SOS rates. "The relatively small difference in actual supply costs between utility offered rates and third party supplier rates currently offered may well be a disincentive for customers to shop," the Joint Staff said.

Nevertheless, the Joint Staff said that, "All Delaware consumers should have the same rights regarding electric choice." However, only Delaware customers may currently shop, and the PSC lacks jurisdiction over municipals and cooperatives.

The Joint Staff said options to address the lack of choice outside of Delmarva include, "having municipal governments (either individually or collectively through the Delaware Municipal Electric Corporation) vote to allow customer choice, or mandating it via a law passed by the Delaware General Assembly."

"While both options may be politically difficult to accomplish, new legislation from the General Assembly may be the best option to address this issue from a consistency and clarity perspective," the Joint Staff said.

The Joint Staff also raised concerns regarding cost recovery for any choice improvements, but did not recommend a specific recovery mechanism

"Before moving forward with the recommendations contained in this report, the Joint Staff believes it is critical for the total costs and impact on Delmarva’s customers to be identified," the Joint Staff said

Joint Staff provided "rough cost estimates" for several choice improvements as follows:

Statutory Opt-in Pilot Implementation    $30,000
Customer Awareness & Education Website  $850,000
Purchase of Receivables Implementation  $300,000
Bill Enhancements for Suppliers         $750,000
Elimination of Switching Issues         $400,000
Quarterly Supplier Workshops             $10,000
TOTAL                                 $2,340,000

"As currently provided by Delaware Code, the recommended enhancements to improve customer choice in Delaware for Delmarva’s 300,000 plus customers would result in a one-time cost of about $8.00 per residential and small commercial customer ... Depending on the approach to cost recovery, this could be amortized over five years for about $0.85 per month on the residential customer bill," the Joint Staff said

Switching issues, which include the timeline as well as the burden associated with use of the twelve digit Delmarva account number or twenty two digit Delmarva service number for enrollment, "should be resolved in the short term by PSC and DPA Staff," the Joint Staff said

The Joint Staff recommended more study on suppliers' access and messaging on bills, stating, "The balance that must be struck is between allowing suppliers greater space on utility bills and maintaining a reasonable size for the bills, both from an expense standpoint and customer understanding standpoint." This billing issue, "appears to be less important compared to other barriers brought up during the workshops and should not receive the same priority as customer awareness, POR, or switching issues," the Joint Staff said

The Joint Staff recommended increasing awareness of customer choice, but said further study was needed regarding a PA Power Switch-style website due to limited resources. The Joint Staff recommended that the Delaware Public Service Commission and Division of the Public Advocate should increase the educational materials available on their respective websites immediately in an attempt to increase customer awareness and engagement in the choice process. This can be accomplished by creating documents such as Frequently Asked Questions (FAQs), a Hints and Tips guide, or partnering with a third party, such as ACCES [the American Coalition of Competitive Energy Suppliers], to provide similar material.

The Joint Staff did not recommend any changes in SOS given that the structure of SOS is currently under consideration in PSC Docket 14-0283.

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