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Pennsylvania ALJ Issues Recommended Decision On PECO Prepaid Pilot Proposal

Addresses Retail Market Concerns From EDC-Offered Pilot

ALJ's Conclusions Regarding Statutes, Regulations To Impact Prepaid Plans Offered By Retail Suppliers

February 13, 2018

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

A Pennsylvania ALJ has issued a recommended decision that would deny the application of PECO to implement a prepaid pilot for electricity and dual-fuel customers, as the ALJ would conclude that the plan as proposed has not been shown to be in the public interest

PECO's proposed prepaid pilot was proposed to be limited to 2,000 residential shopping and default service customers. See more on PECO's proposal as originally filed, here

"[T]he Petitioner failed to sustain its burden of proof regarding the pilot plan because overall the pilot plan failed to meet the public interest standard, and therefore this decision recommends that the pilot plan be denied," the ALJ said

Of broad note to any potential prepaid plans which may sought to be offered by retail suppliers is the ALJ's conclusion that, "A statutory right cannot be waived if its intended to benefit the public. A statutory right affecting public interest cannot be waived. Without express authority to waive a statute, the Commission is unable to do so."

"I do not believe the public interest is served by just looking at those portions of the Plan that vary from Commission regulations and whether those segments which the Petitioner has expressly requested waivers of compliance with the regulations are in the public interest. There are some portions of the Plan that through its operation vary from portions of the Commission’s statute. Review as proposed by the Petitioner would do a disservice to the public where those portions of the Plan comply with the regulations but do not comply with Commission statutes by operation or where the regulations are silent on such operation but policy declarations are expressed in Commission statutes that may be contrary to the proposed operation," the ALJ said

Of broader market applicability is the ALJ's conclusions regarding PECO's proposed electronic means of notifying prepaid customers of discontinuance of service.

"The Plan proposed notification through electronic means which the opponents find inadequate. I agree that for standard, post-pay service notices are written, posted at the service address and provided through phone contact. I agree with I&E that these means of notification are more effective than electronic means because they are more personal and actively engages the customer rather than electronic means which passively engage the customer," the ALJ said

"I am concerned that the electronic means may not be contemporaneously communicated without a significant delay. Although a text or email is sent, there is no telling when the recipient will receive it, or open it to gain knowledge of its contents. The recipient may have financial problems causing his or her electronic system to be disengaged. The recipient may have technical problems such as a hacked account or equipment attacked by a virus. The electronic address may no longer be active, be returned undeliverable or no longer be the primary address of the recipient to monitor. The electronic device may simply be off charging or just off. The individual may not be able to access his or her electronic equipment. In short, the notices can be delivered but never be seen by the recipient," the ALJ said

"Just depending on electronic means as the sole means of notification when the regulations require at least two media, telecommunications and U.S. postal service delivery, is not sufficient or reasonable. The procedures of this new method of payment should not be less than the means that are in place for consumers. Consequently, I fail to see the benefit of this operation of procedure for the Plan. I do not find that the procedure of notification through solely electronic means is in the public interest," the ALJ said

Furthermore, the ALJ concludes that statutory protections against winter service terminations for certain low-income customers cannot be waived for prepay customers. Section 1406(e)(1) of the Code states, "Unless otherwise authorized by the commission, after November 30 and before April 1, an electric distribution utility or natural gas distribution utility shall not terminate service to customers with household incomes at or below 250% of the Federal poverty level except for customer whose actions conform to subsection (c)(1). The commission shall not prohibit an electric distribution utility or natural gas distribution utility from terminating service in accordance with this section to customer with household incomes exceeding 250% of the Federal poverty level."

"I find that the protections afforded to consumers at 52 Pa.Code § 56.100 and 66 Pa.C.S. § 1406(e)(1) are not maintained by the Plan. I find that these protections cannot be waived," the ALJ said

The ALJ found that PECO's proposed pilot, due to barriers to the EGS-customer relationship and different access provided to the utility versus retail suppliers, "inhibits [the] competitive market." The Retail Energy Supply Association had stated that the barriers to a direct relationship between the EGS and its customers include the following structural impediments: (1) the EDCs require utility consolidated billing (UCB) as the only billing option available for EGSs; (2) lack of ability of the EGS to disconnect service to a non-paying customer; and (3) lack of reasonable and timely access to real-time usage data of customers.

The ALJ also said that, while some of these barriers may be created by regulation, if such regulations create barriers to customer choice, then such regulation is wrong, and should not be used to sustain PECO's proposed plan.

"It is noted that the barriers to direct relationships with EGSs as stated by RESA are not specific to PECO or its Plan, but to EDCs in general. Nevertheless, these barriers cause access and conditions that are not comparable with PECO using its own system, which is contrary to the statutory provision found in 66 Pa.C.S. § 2804(6)," the ALJ said

"PECO rebutted the assertions of RESA by stating that it is complying with the Commission’s regulation for advance payment service at 52 Pa.Code § 56.17 and that the regulation excludes EGSs. Consequently, PECO stated that the Commission chose through the regulation to differentiate between the EDC and the EGS and is the source of the barrier to entry; the barrier to entry is not PECO or its Plan," the ALJ said

"I find the rebuttal by PECO misses the mark. PECO did not deny there are differences in EDCs and EGSs through the Plan in communicating, contacting and cultivating relationships with residential customers. Consequently, PECO did not deny that the barriers to access and conditions of its system to offer service, that it has as an EDC, exist for EGSs. PECO merely stated the Company is not the author of the differential treatment," the ALJ said

"If the differential treatment exists because the Commission’s regulation authorized the difference, that does not mean the regulation is right or is promoting sound policy. The policy declarations in the Electric Competition Act, specifically Sections 2804(6) and 2811(a) do not promote differentiation but commonality. The PECO rebuttal does not promote the policy declarations of the Commission’s statute or provide a reason for why the promotion of the differentiation is in the interest of the public," the ALJ said

"It is noted that 66 Pa.C.S. § 2802(12) states, in relevant part, 'The purpose of this chapter is to modify existing legislation and regulations and to establish standards and procedures in order 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.' If the PECO system for prepay service presents an impediment for generation suppliers to have direct access to retail customers, then it cannot be found to uphold this policy statute, and therefore, the procedure cannot be sustained," the ALJ said

"I find that the regulation promotes a differentiation between EDCs and EGSs. PECO’s argument simply shows that the regulation is problematic. It does not show that the Plan should be approved," the ALJ said

"I agree with RESA that the proposed Plan is contrary to the public policy declarations of the Electric Competition Act, and therefore, should not be approved," the ALJ said

P-2016-2573023

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