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RESA: Pa. PUC Order Restricting CAP Shopping Amounts to "Governmental Slamming"

RESA Says PUC Lacks Authority To Mandate Transfer of Customers From EGS To Default Service

June 23, 2017

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

The Retail Energy Supply Association filed a brief with the Commonwealth Court of Pennsylvania in support of its appeal of the Pennsylvania PUC's decision which ordered that, effective June 1, Customer Assistance Program (CAP) customers at PPL may only shop through a CAP-specific Standard Offer Program (CAP-SOP), under which the EGS must serve the customer at a 7% discount off the Price To Compare at the time of enrollment, with such EGS price fixed for 12 months

Under the PUC's order, 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.

The PUC's order did include language stating that:

• 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.

• Once the existing CAP customer shopping contract expires or is terminated, the CAP customer will have the option to enroll in the CAP-SOP or return to default service, but in any event will only be permitted to shop through the CAP-SOP.

As previously reported, there has been confusion concerning the treatment of month-to-month customers and any requirement to "drop" these customers to default service.

See more details on the CAP-SOP program here

"The plain and unambiguous language of the Choice Act mandates that [the] PUC permit all retail customers to choose an EGS," RESA said in its brief

"Section 2806(a) of the Choice Act unequivocally guarantees that as of January 1, 2001 'all customers of electric distribution companies in this Commonwealth shall have the opportunity to purchase electricity from their choice of electric generation suppliers. The ultimate choice of the electric generation supplier is to rest with the consumer," RESA said in its brief

Furthermore, RESA in its brief said that Pennsylvania's Choice Act established a framework, "to create direct access by retail customers to the competitive market for the generation of electricity while maintaining the safety and reliability of the electric system for all parties." 66 Pa.C.S. §2802(12).

"Despite this unambiguous statutory language, the Commission is forcing customers on PPL's CAP who have selected EGSs to return to PPL for default generation service," RESA said in its brief

While under CAP-SOP, CAP customers could still be served on competitive supply under a regulated program, with customers assigned to one of any participating suppliers, RESA said in its brief that, "enrollment in the CAP-SOP does not equate to direct access to the competitive market or give these consumers the opportunity to purchase electricity from their choice of EGSs, as guaranteed by Section 2806(a)." [emphasis by RESA]

RESA also said in its brief that the PUC does not have statutory authority to force customers who have selected an EGS to return to the EDC for default service.

RESA in its brief noted that, as a result of the PUC's orders, nearly 21,000 CAP shoppers at PPL, "are being forced to return to default service on some unclear transition timeframe."

"[T]his is occurring without the consent of the customers," RESA said in its brief

"Nothing in the Code authorizes the Commission to force customers who have affirmatively exercised their right to select an EGS to return to the EDC for default service. In particular, nothing in the statute empowers the Commission to mandate the transfer of CAP customers from their selected EGSs to the EDC without their consent. At no point has the Legislature ever even hinted at giving the Commission authority to reverse the decision that a customer, low-income or otherwise, has made to participate in the competitive retail market," RESA said in its brief

"Despite PUC's long-standing zero tolerance policy for slamming, its own actions amount to 'governmental slamming,'" RESA said in its brief

"[D]espite the Commission's zero tolerance policy and its harsh warnings of firm retaliatory measures, the Commission's orders under review result in a change in the customer's EGS without consent. From the customer's perspective, it amounts to governmental slamming -- where a shopping customer is being forced by the Commission to return to PPL for default generation service without any regard for the customer's prior choices or current desires," RESA said in its brief

"Notably, the Commission has previously recognized that an unauthorized switch constitutes slamming even when it occurs through a government-sponsored program," RESA said in its brief, citing a 2012 PUC order on PECO's EGS-administered Time of Use pilot

PECO had originally proposed that customers, who were placed with an EGS for TOU service, would return to the EDC at the conclusion of the pilot. "Rejecting the proposal for customers to be returned to default service following the completion of the pilot, the Commission concluded that such a transfer without consent 'would result in these customers being slammed in violation of the [Code] and the Commission's Regulations," RESA said in its brief

RESA also noted in its brief that the PUC had further found in the PECO TOU case that, "aside from any slamming concerns or arguments, it is not in the public interest to automatically transfer customers that have made an affirmative choice to move away from PECO's basic default service rate back to that rate without them affirmatively choosing to do so."

RESA said in its brief that nothing in the Choice Act confers jurisdiction, either explicitly or implicitly, on the Commission to regulate EGS prices or to dictate the prices that are charged, and therefore the PUC erred in adopting a price cap (7% discount to the Price to Compare at enrollment) as part of the CAP-SOP program. RESA noted that the Commonwealth Court had previously rejected an EGS rate ceiling as part of a CAP program sought at another utility

RESA further said in its brief that the data cited by the PUC did not support its actions.

The PUC cited data showing about half of CAP shoppers were billed at a rate above the PTC, and found that this would lead to quicker exhaustion of CAP funds and would lead to customers being removed from the CAP program (under its design).

However, RESA noted in its brief that, as a result, the other half of shopping CAP customers, who are saving versus the PTC, will be returned to default service,"without regard for the fact that they would then be receiving higher bills as a result of the PUC's action."

"Decreasing the bills of some CAP participants at the expense of increasing bills for other CAP participants does not seem like a fair way to address concerns related to CAP participants," RESA said in its brief

RESA also said in its brief that the data does not show that increased shopping among CAP customers has led to an increase in customers being de-enrolled from the program due to the customer hitting their CAP limit

"[T}he data showed that from January 2, 2012 through October 30, 2015, an average of 2% of CAP participants (both shoppers and non-shoppers) were removed from the CAP program for exceeding their allowable credits. R.126a. This average CAP removal rate due to exceeding maximum credits is consistent with the 1.8% rate for the period of time prior to January 2012 (between January 2009 and December 2011) which includes the one year period prior to CAP participants being able to shop. R.145a. Thus, the data presented in this proceeding did not establish a nexus between CAP shopping and a quicker erosion of CAP credits notwithstanding the opposite view taken by the PUC," RESA said in its brief

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