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Pennsylvania To Require 30-Day Advance Notice of Variable Rate Changes Under Certain Circumstances (Included Among Adopted Final Disclosure Rules)

April 22, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Pennsylvania PUC issued a final rulemaking order concerning natural gas marketing disclosure rules which, among other things, require a natural gas supplier (NGS) to provide the customer with notice of a change in a variable rate 30 days in advance in situations where the customer has rolled over to a monthly variable product from a fixed rate product without affirmative action by the customer.

The PUC's order largely adopts disclosure rules applicable to residential and small business customers in the natural gas market that are similar to recently adopted rules for the electric market

Among other things, the PUC adopted a natural gas contract summary form which must be used by suppliers.

See the contract summary form on page 53 of the PUC's order (Attachment A)

Such contract summary must list whether the rate is fixed, variable or other. For variable rates, suppliers must include: "If variable, based on what? If variable, how often is the price expected to vary? If variable, give any applicable ranges/ceilings. If no ranges/ceilings, a plain language statement indicating this fact. 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."

Additionally, for variable rates, the contract summary must list the first billing cycle’s rate, with full disclosure of any introductory rate.

The disclosure statement for a variable product must further provide that if the price is introductory, the variable pricing statement shall include a statement that the price is an introductory price, the duration of the introductory period and the price for the first billing cycle after the introductory period.

While suppliers must disclose when and how prices will vary, the disclosure statement need not contain a specific formula

The contract summary must state in plain language that the supply price may not always provide savings to the customer.

Suppliers will be required to provide 24 months of historic pricing to customers.

Specifically, the disclosure statement shall list a telephone number and internet address at which a customer may obtain the previous 24 months’ average monthly billed prices for that customer’s rate class and NGDC service territory.

The PUC's order also addresses notices to be received by fixed rate customers as their term nears completion, or any customer whose contract terms change. Due to the lack of accelerated switching in the natural gas market, the PUC did not adopt the same timelines as used in the electric market for such notices.

An initial notice of fixed contract expiration shall be sent 60 to 75 days prior to the expiration date of the fixed duration contract or the effective date of the proposed change in terms. This notice is not required to include pricing information, but shall inform customers how to avoid imposition of an early cancellation fee if they elect to switch service at the end of their term, including notice of the date when the customer can choose a different product from the customer’s existing NGS, choose an alternative NGS or return to the supplier of last resort.

A second "options" notice shall be provided at least 45 days prior to the expiration date of the fixed duration contract or the effective date of the proposed change in terms.

The options notice shall include information regarding the new billed price or renewal billed price, including the price to be charged for the first billing cycle of commodity service. If a customer fails to respond to the options notice and is converted to a month-to-month contract, the NGS shall provide notice of a subsequent change in billed price at least 30 days prior to the new price being charged.

The initial, options, and pricing notices may be sent electronically if the customer has previously consented to such service.

Suppliers may roll customers not responding to an options notice onto a fixed or variable rate, but may not impose an early termination fee on such a customer if they later leave such rollover service.

The PUC declined to require advance notice of price changes outside of the limited circumstances applicable to fixed-to-variable rollovers described above, stating that requiring advance notice of all price changes, "may be overly burdensome to suppliers and may significantly restrict their product offerings."

The regulations must be reviewed by the Independent Regulatory Review Commission, Attorney General’s Office, Senate Consumer Protection and Professional Licensure Committee and House Consumer Affairs Committee before going into effect.

Docket L-2015-2465942

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