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Update: Pa. PUC Says NRG Petition For Supplier Consolidated Billing, "Could Be Harmful To Pennsylvania’s Electric Consumers" (Written Order Issued)

Proposal To Allow Suppliers To Block Customer Switches May "Trap" Customers, Harm Retail Market -- "Inherently Anti-competitive", PUC Says

PUC Denies Retail Supplier's Ability To Order Disconnection Of Customers As Proposed In Petition

PUC Concerned With "Confusing", "Unwieldy", Process For Suppliers To Handle Disconnection Orders

PUC Says Disconnection Authority Tied To Obligation To Serve, Which Retail Suppliers Lack


February 1, 2018

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

Adopting a petition by NRG Energy for electricity supplier consolidated billing in Pennsylvania, "could be harmful to Pennsylvania’s electric consumers," and contains, "inherently anticompetitive," provisions, the Pennsylvania PUC said in a newly issued written order denying the petition.

As previously reported, the PUC earlier this month said in adopting a motion to deny the petition that NRG had not met its burden of proving that its SCB proposal is in the public interest, or that it complies with the Public Utility Code and Commission regulations promulgated thereunder.

The PUC previously instituted an en banc hearing process to further study SCB, as well as alternatives to SCB (see more details on the new process to study SCB here)

In its newly released written order, the PUC provides more specific reasoning for its denial of NRG's petition, including raising various concerns with SCB generally, and making determinations with regards to NRG's petition specifically and various proposals thereunder.

"In the Commission’s judgment, NRG’s proposal is not fully developed, leaves many critical issues unaddressed, and could be harmful to Pennsylvania’s electric consumers and retail electric market in general," the PUC said in its order

"Our concerns weighing against NRG’s proposals include transferring the power to order termination of a customer’s electric service to EGS firms; the block mechanism enabling EGSs to prevent supplier switching by customers on a payment plan; the ability of EGSs to properly account for VAS [value-added services] charges; the handling of customers receiving subsidies from low-income assistance programs; and the administration of POR programs," the PUC said

Among other provisions of current statute, the PUC stressed that "since electric service is essential for modern life, the General Assembly wanted to ensure that consumers received safe, affordable, and reliable electric service at levels they enjoyed prior to deregulation. 66 Pa. C.S. §§ 2802(11) & (12), 2804(1) & (14)."

"In addition, the General Assembly meant to protect low-income customers in the deregulated market, stating that the Commonwealth must continue the policies and programs—including making available and funding universal service programs—that allow low-income customers to afford electric service. 66 Pa. C.S. §§ 2802(10), 2804(9)," the PUC noted

"For all customers, the General Assembly wanted to ensure transparency so that customers would be able to see the component charges making up their overall electric bills. This would allow customers to compare prices for generation service from their EDCs to the prices for generation service from competing EGSs. As such, the Commission was directed to require the unbundling of electric utility services, tariffs, and customer bills to separate charges for generation, transmission, and distribution. 66 Pa. C.S. § 2804(3)," the PUC noted

"NRG’s proposal to implement SCB, however, is not fully developed and leaves critical questions unanswered. Without having adequately addressed those questions, the Commission finds that NRG’s Petition may lead to outcomes that run counter to the General Assembly’s intentions regarding deregulation of the electric industry. NRG’s specific proposal may be harmful to customers and may not uphold current policies and programs to ensure that low-income customers can afford service," the PUC said

The PUC's findings regarding specific proposals under NRG's petition are discussed further below:

Supplier-Initiated Disconnections

As summarized by the PUC, NRG proposes that when an electric generation supplier (EGS) offering SCB is owed money by a customer and termination of service is appropriate under Chapter 14 of the Public Utility Code and Chapter 56 of the Commission’s regulations, it will instruct the EDC to physically terminate the customer’s service.

"The Commission finds that NRG’s proposal regarding EGSs’ power to authorize the termination of service does not adequately address the consumer protection concerns raised by the commenters, may be unnecessary for EGSs to collect on debts owed by customers, and may not comply with the Public Utility Code. As such, the Commission will deny EGSs the authority to order the termination of customers’ electric service based on the lack of sufficient detail regarding EGS termination safeguards provided in this Petition," the PUC said

"Customers are presently accustomed to directing distribution service related complaints and inquiries -- including those for billing, payment, and termination issues -- to their EDCs. Under NRG’s proposal, customers’ bills would come from their EGSs and payment arrangements would be made with their EGSs, but termination notices and actual termination would be handled by their EDCs. This division of responsibility could confuse customers," the PUC said

"In addition to potentially being confusing for customers, the process could be unwieldy. A customer making a payment or providing a medical certification to prevent a threatened termination of service would have to communicate with the EGS. The EGS would then have to take that information and provide it to the EDC. This extra step—compared to the current situation where the EDC would be in direct contact with the customer—could cause communication delays, increasing the risk that customers would be subjected to an improper termination of service or delay in reconnection," the PUC said

"The Commission agrees with the commenters who expressed concerns about increased customer confusion. The Commission finds that NRG’s proposal regarding termination of service could confuse customers and add steps for consumers attempting to have their termination of service inquiries addressed," the PUC said

"[T]he Commission agrees with FirstEnergy and the PA AFL-CIO that the legality of an EDC terminating a customer’s service when that EDC is not owed any money has not been adequately addressed by NRG. Although NRG claims in its Reply Comments that Chapter 14 does not bar termination under the circumstances, we are not convinced that this assertion settles the matter. That Chapter 14 does not appear to expressly bar the EDC from terminating service when it is not owed money is not by itself a compelling reason to allow it," the PUC said

"We also agree with PPL that NRG has not adequately explained the safeguards that EGSs would employ to ensure that an EGS-ordered termination of service is proper. Given the essential nature of electric service to Pennsylvania consumers, PPL notes that EDCs -- which have years of experience complying with termination rules and regulations -- use a checklist to help ensure that service is not terminated improperly, especially to those consumers that are stressed by serious economic and medical issues. Also, PPL 'manually checks [a] home’s circumstances before terminating service' in the winter. NRG has not outlined the specific steps EGSs would take to ensure that termination of service is proper, aside from its broad claim that EGSs would follow the requirements of Chapter 14 of the Public Utility Code and Chapter 56 of the Commission’s regulations. Accordingly, we are not convinced that sufficient safeguards would be in place to prevent improper terminations," the PUC said

"Lastly ... the Commission agrees with the OCA and PECO that NRG’s Petition does not adequately address the issue of payments for VAS. Nonpayment of VAS -- non-basic, non-utility charges -- cannot serve as the basis for termination of a customer’s electric service in accordance with 52 Pa. Code § 56.83. Although NRG claims EGSs will employ mechanisms to ensure that electric service is not terminated for failure to pay VAS charges, NRG’s Petition and Reply Comments provide no detail regarding how they would ensure that. As such, the Commission is not convinced that adequate systems are in place to ensure that nonpayment of VAS does not lead to termination of service," the PUC said

"Also, NRG’s proposal to allow EGSs to direct the termination of a customer’s electric service may be unnecessary. NRG claims that EGSs need the power to terminate so they can collect amounts owed to them and to advance Chapter 14’s goal of eliminating the opportunity of a customer who can pay his electric bill to avoid payment; however, the Commission finds that the record in this proceeding lacks sufficient information to support these claims. An EGS owed money by a customer has options other than the threat of terminating service. The EGS may turn the debt over to collections or sue the customer for payment. The viability and cost of such a collection effort is uncertain, and compensation policies for this collection effort can vary depending on any future petition or Commission Order for SCB. The Commission finds that the record in this proceeding fails to support NRG’s request for EGSs to have the power to direct an EDC to terminate a customer’s electric service," the PUC said

"An EGS is not required to serve any customer. NRG wants EGSs offering SCB to have the power to terminate service for a customer’s failure to pay. The EGS, by deciding to terminate service, is effectively saying that it no longer wants to serve the customer. If the EGS does not want to serve the customer—and is not required to serve the customer—the default service provider is then obligated under 66 Pa. C.S. § 2807(e) to provide that service. Accordingly, one option may be for the EGS to drop the customer to default service and pursue any and all other available means to collect amounts owed by the customer, including amounts owed for VAS. Under the circumstances—the EGS dropping a nonpaying customer—66 Pa. C.S. § 2807(e)(3.1) would obligate the EDC to provide generation service to that customer. The EDC’s obligation to serve appropriately carries with it the power to terminate service. Since the EGS does not have that obligation, we find an EGS has less justification for it to have the power to terminate service. While the Code and regulations permit the Commission to identify a supplier as the default service provider for any given service territory or for specific customer classes, NRG has not proposed to take on that role in this Petition," the PUC said

"[A]n EDC’s power to terminate service is based on its obligation as DSP [default service provider] to provide electric service to all customers in its territory. Since an EGS is not required to serve any customer, there is less justification for granting it the power to terminate service. If an EGS wants to terminate a customer’s service, it is effectively saying that it no longer wants to serve that customer. In that case, the EDC/DSP is obligated under 66 Pa. C.S. § 2807(e) to provide electric service to the customer. One option available to the EGS at that point is to drop the customer to default service and pursue any other available means to collect from the customer. While the Public Utility Code and regulations allow the Commission to designate a supplier as DSP for a given service territory or specific customer class, NRG has not proposed to take on that role in its Petition," the PUC said

"[W]e agree with the OCA that the Commission’s authority to regulate EGS behavior in terminating a customer’s electric service under Chapter 14 is questionable, if even permitted under the Public Utility Code. If an EGS does not follow the requirements of the Public Utility Code and corresponding regulations in carrying out termination, the Commission might not be able to enforce those rules, which would place consumers at great risk of harm from an improper shut off or delayed reconnection," the PUC said

Retail Supplier Switch Block Mechanism

NRG originally proposed that EGSs offering SCB have the power to block customers who have made payment arrangements from switching to another supplier or back to their EDC until they have paid their past due bills in full. NRG later withdrew this proposal, but the PUC still addressed the original proposal in its order.

"The Commission agrees with CAUSE PA and PPL that NRG’s block mechanism would harm Pennsylvania’s residential electric consumers. It would effectively trap consumers in a relationship with their current supplier. These customers -- likely low-income customers who benefit most from having the ability to switch suppliers -- would not be able take advantage of lower cost offers," the PUC said

Under the block mechanism, "it appears that an EGS would be given a great deal of latitude and discretion, potentially resulting in customers being forced into adhesion contracts they may not be able to get out of until their service is terminated. The Commission cannot put customers at such risk based on such a vague proposal," the PUC said

"Further, the Commission agrees with CAUSE PA, Calpine, Duquesne, and PECO that preventing customers from switching suppliers would frustrate the purpose of the Competition Act, to lower electricity costs by allowing customers to choose their EGS," the PUC said

"By limiting customer choice, NRG’s block mechanism would also harm the competitive retail electric market in general. Taking away a customer’s ability to switch suppliers is inherently anticompetitive and contrary to the Competition Act’s goal of lowering electricity costs by introducing competition to Pennsylvania’s retail electric market," the PUC said

"NRG’s proposed mechanism to block customers on a payment plan from switching suppliers until their bills are paid in full is anticompetitive. It would frustrate the purpose of the Competition Act by preventing customers from choosing their EGS, and harm Pennsylvania’s competitive retail electric market in general by limiting customer choice," the PUC said

"The Commission finds that the proposed block mechanism is unnecessary. As we discussed above, EGSs offering SCB have options for handling delinquent accounts, including turning them over to collections or suing delinquent customers for payment, as suppliers that offer dual billing do. There is no evident justification for allowing EGSs to prevent customers from switching suppliers considering the harm it could do to those customers and the retail electric market in general," the PUC said

Billing Of Value-Added Services (VAS)

"Regarding EGSs billing and collecting payment from customers for VAS, the Commission shares the concerns expressed by the OCA, PECO, and FirstEnergy. Commission regulations dictate that charges for VAS must appear separately on customers’ bills, are last in line of priority for payment, and cannot serve as the basis for termination of service. 52 Pa. Code §§ 56.13, 56.23, 56.24, and 56.83," the PUC said

Docket P-2016-2579249

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