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Pa. PUC Issues Final Order Concerning Proposed Default Service Bypassable Adder

Written Order Also Confirms Price Cap On Retail Offers To Certain Customers

September 5, 2018

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Reporting by Paul Ring • ring@energychoicematters.com

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The Pennsylvania PUC issued a written order concerning the FirstEnergy electric distribution companies' default service plans for the period beginning June 1, 2019

The written order addresses several topics not specifically discussed at the PUC's recent meeting in which Commissioners voted on the plan. As previously reported, at such meeting, the 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 (discussed further below)

The final order adjudicates a sought bypassable default service adder that the EDCs had proposed. As previously reported, the proposed PTC Adder (retail market incentive adder) is $0.00144 per kWh for the June 1, 2019 through May 31, 2023 DSP term

The PUC denied the proposed bypassable PTC adder

"In the instant proceeding, the Companies have not shown that the PTC Adder will incent shopping and that there is even a need to incent shopping. The Companies provided no substantial data to make an informed decision on what an appropriate level of shopping is. The public testimony indicated many customers have shopped or are currently shopping, yet they have experienced significant issues. The issues were troubling enough that these customers were motivated to testify about their experiences. For example, low income PCAP customers would be subject to the charge as well as low-income customers not participating in PCAP, and this would add an additional burden on those customers who experience difficulty paying their utility bills. The PTC Adder would add costs to the PCAP expenses paid for by the non-PCAP residential customers, including the 160,000 confirmed low-income non-PCAP customers," the PUC said in its order

"We are not persuaded by RESA’s argument that the real purpose of the PTC Adder is to correct market inequalities. RESA has not proven these inequalities exist or that it’s proposed remedies would be effective. In this regard, we agree with the OCA that 'a significant number of EGSs have been able to effectively compete in the residential generation supply market and continue to participate in that market by providing a range of products that the utility is unable to provide . . . different types of 'green product,' fixed-price products of varying durations.' Furthermore, we are persuaded by OCA’s witness Alexander who demonstrated that the average monthly number of residential customers served by EGSs in the Companies’ territories increased by more than 13,000 from 2016 to 2017," the PUC said

The PUC's written order also memorializes the price cap on service to PCAP customers adopted at its public meeting

"[T]here 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 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." the PUC said in its order

"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. 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. Therefore, we shall adopt the ALJ’s recommendation in so far as EGSs may not charge CAP customers a rate greater than the PTC, nor charge early termination or cancellation fees," the PUC said in its order

"Furthermore, we believe it is prudent to refer the program to OCMO to work with stakeholders on the details of the program in order to ensure a successful implementation. Accordingly, we direct that OCMO provide its recommendations to the Commission on, or before, January 31, 2019," the PUC said in its order

In addition, consistent with the PUC's previously adopted motion, OCMO was also directed to convene and coordinate a group of interested stakeholders for the purpose of collaboratively addressing the scripting and training materials associated with FirstEnergy EDCs' Customer Referral Program to: (a) ensure that such scripting and training materials will provide sufficient consumer education/protections and disclaimers to customers that are not misleading, and (b) determine the impacts that such scripting and training materials may have on customer enrollment in the program as well as any other competitive concerns. A recommendation shall be provided to the Commission on, or before January 31, 2019.

Docket P-2017-2637855

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