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Pennsylvania PUC Denies Rehearing Of Order Imposing Price Cap on Retail Supplier Service To CAP Customers At PPL

Rate Cap, "Will Likely Force All CAP Customers To Return To Default Service," PUC Vice Chair Had Previously Said

PUC Commissioner: Shopping Restrictions On CAP Customers Is Like Telling Certain Customers They Can't Buy An iPhone

Commissioner Asks "Where Will It End?" In Regards To Shopping Restrictions

January 27, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Pennsylvania PUC denied reconsideration of its decision adopting restrictions on the ability of Customer Assistance Program customers at PPL Electric to shop for a competitive supplier.

As first reported by EnergyChoiceMatters.com, the PUC in an October decision had ordered that, effective June 1, 2017, a newly created Standard Offer Program specifically for CAP customers (CAP-SOP), "is the only vehicle that a CAP customer may use to shop and receive supply from an EGS [electric generation supplier]," at PPL.

PPL has about 41,000 CAP customers. Currently, there are about 20,000 CAP customers who shop

The PUC had adopted the CAP shopping restrictions in October on a 3-2 vote, with Vice Chairman Andrew Place and Commissioner Robert Powelson dissenting from the majority's decision to adopt the CAP shopping restrictions.

The PUC in October had adopted the CAP-SOP program as follows:

• Effective June 1, 2017, the CAP-SOP is the only vehicle that a CAP customer may use to shop and receive supply from an EGS.

• Any CAP customer shopping request that does not get processed through the CAP-SOP will be denied.

• EGSs participating in the CAP-SOP must agree to serve customers at a 7% discount off the PTC at the time of enrollment. This price shall remain fixed for the 12-month CAP-SOP contract unless terminated earlier by the customer.

• CAP customers may terminate the CAP-SOP contract at any time and without any termination or cancellation fees or other penalties.

• At the end of 12 months, CAP customers will be re-assigned to an EGS via a customer pool if they wish to continue CAP-SOP service (an EGS cannot retain CAP-SOP customers)

• EGSs shall pay an enrollment fee to acquire customers under the CAP-SOP. The fee is to mirror the standard SOP enrollment fee, which is currently $28

• All CAP customer shopping fixed-term contracts in effect as of the effective date of the CAP-SOP will remain in place until the contract term, "expires and/or is terminated."

See more details regarding the CAP-SOP program here

In his October dissent, Place had said that the CAP shopping restrictions adopted by the PUC, "will likely force all CAP customers to return to default service over time."

Place noted that EGSs are unlikely to participate in the program and noted that CAP customers, "seeking offers from EGSs below the current default service price, even products that offer prices for multiple years, will not be able to lock in and hedge low market priced fixed rate products."

In addressing a petition for reconsideration filed by the Retail Energy Supply Association, the PUC, in an order approved on a 3-2 vote (Place and Powelson again dissenting), said that, "Based on our review of RESA’s Petition and the Answers thereto, and in light of the record as described in the proceeding, we find that RESA has failed to allege any 'new or novel arguments' that would persuade us to modify or amend our October 2016 Order."

"We emphasize that the overwhelming substantial evidence presented in this proceeding demonstrated that there has been significant harm to both CAP shopping customers and non-CAP residential customers who pay the costs of the program," the PUC said

In its petition for reconsideration, RESA has called the PUC's shopping restrictions "unprecedented" and said that they "cannot survive" a legal test previously used by the Commonwealth Court in addressing shopping eligibility.

Powelson said in a statement that, although he does not believe RESA met the legal standard for reconsideration, he continues, "to advocate for the exhaustion of all reasonable alternatives, including educating customers on the value of 'shopping smart,' before placing limitations on customer shopping."

"I have consistently disagreed with those who assert that being low-income equates to being unable to make reasoned, rational choices when purchasing electricity, and continue to do so here. The arguments used to support limitations on CAP shopping are rooted in a mindset that does not accurately reflect the current retail landscape. Imagine a retail customer walking into a shopping mall to purchase an iPhone and being told that they are not eligible to purchase that particular product because 'they may not understand the pricing mechanism behind it.' That is basically what we are saying here today by limiting shopping for certain utility customers," Powelson said

"It is also important to remember that 45% of PPL's CAP customers who are shopping are doing it well. PPL's CAP-SOP program proposal will take that option away, despite that many of these customers have done nothing but use the system wisely. If we start placing limitations on the ability of certain customers to shop out of a fear that they will not do it well, where will that end? The competitive electricity market brings real value to customers in the form of lower prices, innovation, and a broader array of product offerings. All Pennsylvanians should have access to these benefits," Powelson said

"In order to protect the integrity of electric competition for all customers in the Commonwealth, the Commission should not permit utilities to unnecessarily limit shopping for certain categories of customers," Powelson said

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