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PUC's I&E Bureau Opposes PECO Proposed Prepaid Pilot

I&E Bureau Says Proposed Prepaid Program Inconsistent With Statutory Customer Protections (Could Set Precedent For Competitive Programs)

October 18, 2017

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

The Bureau of Investigation and Enforcement of the Pennsylvania PUC has urged, in a brief, the PUC to reject PECO's proposed prepaid electricity (and dual fuel) program, with I&E stating that the proposed pilot is inconsistent with certain statutory customer protections

See background on the prepay pilot, and proposed interaction with EGS customers, here

I&E said that, "First, PECO's Advance Payments Program is too insufficiently developed to warrant approval at this time. During the litigation of this protracted proceeding, the terms of PECO's Advance Payments Program have continually evolved and now differ from what PECO originally proposed in its Petition. The result of this continued evolution is a lack of clarity regarding many facets of the Advance Payments Program, including the process for handling undeliverable notifications to participants, programming costs, the number of participants, restoration of service to certain customers during the winter months, and the goals of the program. Taking into account these inconsistencies, the terms of the Advance Payments Program are now undefined and it is unclear exactly what PECO is asking the Commission to approve. On this basis alone, I&E submits that PECO's Petition should be denied."

I&E continued by stating, "The inconsistencies of PECO's Advance Payments Program are amplified by the fact that PECO has failed to provide any disclosures or educational materials that customers would receive before volunteering to participate in the Advance Payments Program. The lack of these materials is fatal because of the unprecedented condition that participants must submit to in order to participate in the Advance Payments Program. Specifically, in order to participate, customers must agree that if their account balance drops to zero, and they completely use the five day emergency backup credit, PECO may disconnect their service. Yet, despite this condition, which deprives customers of the litany of termination protections that exist under the Chapter 14 of the Code, PECO has failed to produce any consumer educational materials or disclosures that will be provided to participants as part of the record of this proceeding. I&E submits that PECO's Petition must be denied because, absent the parties' and the Commission's ability to review these materials to ensure that they will adequately inform participants, the public interest cannot be protected."

Notably, I&E stated that, "the voluntary disconnection condition of the Advance Payments Program results in the program jeopardizing participants continued access to electric and/or gas service."

"Participants' access to utility service is jeopardized because under the Advance Payments Program, they will be required to waive key consumer and termination protections that exist under Chapter 14 of the Code," I&E stated

I&E characterized PECO's proposal as an attempt to "circumvent" Chapter 14 and called the program, "contrary to the legislative policy that underscores the important protections contained in that chapter."

"Additionally, the conditions of the Advance Payments Program are contrary to the legislature's determination that utility service is 'essential to the health and well-being of residents, to public safety and to orderly economic development' and that all customers should be able to obtain service on reasonable terms and conditions. I&E submits that participants access to utility service should not be jeopardized by the voluntary disconnection condition of the Advance Payments Program, and especially not when the evidence in this proceeding reveals that the majority of benefits that participants may receive through the programming is already available to them as PECO customers," I&E said

"PECO's Advance Payments Program does not comport with the Electricity Generation Customer Choice and Competition Act ('Choice Act')," I&E said. "Aside from opening the retail electric market to competition, the Choice Act also addressed the importance of access to electric service and the need for customer protection in the competitive market. Specifically, the Choice Act concluded that electric service is 'essential to the health and well-being of residents, to public safety and to orderly economic development' and that all customers should be able to obtain service on reasonable terms and conditions," I&E said

"I&E avers that PECO's Advance Payments Program operates in a manner that deprives participants of the ability to receive service on reasonable terms and conditions," I&E said

"Specifically, as OCA witness Howat aptly explained, as soon as participants are enrolled in PECO's pilot program, 'they will in fact have reduced options for avoiding loss of service while being denied access to the basic consumer protections.' As Mr. Howat correctly identified, these lost protections include, but are not limited to, provisions of Chapter 14 of the Code. The Chapter 14 termination process provides more safeguards for customers to avoid service termination because it more actively engages the customer and targets the service residence. As explained below, the Chapter 14 termination process makes notification more personal and more effective than the passive notification process that PECO proposes under its Advance Payment Program," I&E said

Among other things, the Chapter 14 protections not only include written notice, but require attempted telephone contact on two separate days, and, under certain conditions, posted written notice at the service location

Such protections make, "notification more personal and more effective than the passive notification process primarily via text message or email that PECO proposes under its Advance Payment Program," I&E said

Although the case is limited to reviewing PECO's specific proposal, and I&E Staff said that the case is not the appropriate forum to discuss whether prepayment programs are best handled in the competitive market, conclusions made in this case regarding whether terminations under a prepayment program are consistent with statutory protections could be applied to future programs regardless of whether the service provider is a utility or EGS.

I&E said that, if the PUC approved PECO's program, it should impose several conditions on such approval

Most notably, I&E would condition any approval on striking the requirement that participants must agree to voluntary disconnection of their service as a condition of participation in the prepay program.

Instead of disconnecting service, if a participant in the Advance Payments Plan fails to replenish their account balance within the five-day grace period, I&E proposed that PECO would automatically switch that participant back to, "the standard service," which based on context we take to mean standard billing service (post-pay)

I&E said that the Commission should also make it explicitly clear that PECO is not granted pre-approval to recover programming costs, "as these costs remain undetermined and cannot yet be determined to be reasonable or prudent."

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