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Pa. PUC Adopts Price Cap For Certain Customers; Sends Issue To OCMO To Refine Mechanics

August 23, 2018

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

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The Pennsylvania PUC adopted a joint motion which requires the institution of a price cap on retail supplier offers to Pennsylvania Customer Assistance Program (PCAP, or CAP) customers at the FirstEnergy electric distribution companies, and which refers the matter to the PUC's Office of Competitive Market Oversight (OCMO) for further discussion regarding mechanics and implementation of the price cap.

The PUC ordered that retail electric suppliers at the FirstEnergy EDCs shall not charge PCAP customers a rate which exceeds the EDC price to compare

As first reported by EnergyChoiceMatters.com, an ALJ had recommended that on or before June 1, 2019, the FirstEnergy utilities shall implement the following PCAP shopping rules:

ALJ Recommendation:

a. PCAP customers are prohibited from entering into any retail electricity contract with an EGS which would charge rates exceeding the applicable price to compare (PTC) for the entire duration of the EGS contract.

b. EGSs are not permitted to enter into contracts with PCAP customers charging early termination or cancellation fees.

c. EGS enrollments submitted for any PCAP customers that do not meet these requirements will be rejected.

For the purpose of transitioning PCAP customers who are currently being served by an EGS, as of June 1, 2019, the ALJ recommended that:

a. PCAP customers who are served under a fixed duration contract with an EGS as of June 1, 2019 (a 'pre-existing fixed duration contract') may remain with their EGS until the expiration date of the fixed duration contract or the contract is terminated, whichever comes first.

b. Non-PCAP customers served under a fixed duration contract who subsequently enroll in PCAP (also considered to be served under a 'pre-existing fixed duration contract') may remain with their EGS until the expiration date of the fixed duration contract or the contract is terminated, whichever comes first.

c. Upon expiration or termination of a pre-existing fixed duration contract, the EGS must either: (a) enroll the PCAP customer under a contract compliant with the new PCAP shopping rules; or, (b) return the PCAP customer to default service. For EGSs serving PCAP customers under a month-to-month contract as of June 1, 2019, the EGS must either: (a) return the PCAP customer to default service effective June 1, 2019; or, (b) enroll the PCAP customer under a contract compliant with the provisions, above, with an effective date of June 1, 2019.

d. For EGSs serving non-PCAP customers under a month-to-month contract who subsequently enroll in PCAP, the EGS must either, within 120 days of the customer’s PCAP enrollment: (a) return the PCAP customer to default service; or, (b) enroll the PCAP customer under a contract compliant with the provisions, above.

Addressing the ALJ's recommendation at its meeting this morning, the PUC adopted a motion from Commissioner David Sweet and Vice Chairman Andrew Place which adopts a price cap for EGS offers to CAP customers, such that EGSs may not charge CAP customers a rate greater than the PTC, but which sends the issue to OCMO for further development regarding mechanics.

Specifically, the Sweet-Place motion adopted by the PUC states, "We agree with the ALJ's recommendation that FirstEnergy implement a CAP shopping program where CAP customers may only enter into a contract with an EGS for a rate that is at or below the utility's PTC and does not contain an early termination or cancellation fee."

The Sweet-Place motion adopted by the PUC states, "As noted by the ALJ, there is clear evidence demonstrating that a significant number of FirstEnergy's CAP customers paid significantly more than what they would have if they were default service customers. As outlined by the Commission's Bureau of Investigation and Enforcement (I&E), this is important since the generation rates charged to FirstEnergy's CAP customers affect the asked-to-pay amounts for those customers since their monthly maximum CAP credits are based upon their average monthly electric burden less a percentage of their income. Therefore, higher rates make it more likely that CAP customers will exceed their monthly maximum CAP credits and incur charges they may not be able to pay. If CAP customers are unable to pay their bills, this leads to increased uncollectibles, which are recovered from the rest of the utility's residential ratepayers. As such, it is necessary to impose some restrictions on FirstEnergy CAP customer shopping in order to protect both CAP customers and the non-CAP residential rate base from increased and unnecessary costs."

"Therefore, the ALJ's recommendation should be adopted in so far as EGSs may not charge CAP customers a rate greater than the PTC, nor charge early termination or cancellation fees," the adopted Sweet-Place motion provides

"However, we find that the mechanics and details of this program are not fully developed within the record of this proceeding to adequately ensure a program can be implemented in a successful fashion by June 1, 2019," the Sweet-Place motion provides

"[W]e propose referring the program to OCMO to work with stakeholders on the details of the program in order to ensure a successful implementation. We request that OCMO provide its recommendations to this Commission by the end of January 2019," the Sweet-Place motion provides

PUC Chairman Gladys Brown, in a statement, supported the price cap on EGS service to CAP customers, and stated, "I wish to note my support for a shopping program which prohibits CAP participants from enrolling with electric generation suppliers (EGSs) at a price which exceeds the current Price-to-Compare (PTC). The record here indicates that CAP enrollees net expenditures above the PTC was more than $18.3 million from June 2013 to March 2018. I contend that implementation of a CAP shopping program is appropriate to protect the Companies' customers from inflated uncollectible expenses."

Customer Referral Program

The adopted Sweet-Place motion also referred to OCMO the issue of scripts for the customer referral program, noting concerns raised by the OCA, which had expressed concerns with the scripting and training materials currently in use, arguing that they do not provide sufficient education and disclaimers. The motion also noted competitive concerns regarding the scripts raised by RESA

The PUC directed that OCMO submit recommendations on the customer referral program by the end of January 2019

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