Pa. PUC Issues Written Order Detailing Restriction That CAP Customer Retail Supplier Rate Must Always Be Below Utility Rate
November 2, 2018 Email This Story Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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The Pennsylvania PUC issued a written order granting reconsideration and modifying its prior order concerning the price cap imposed on Pennsylvania Customer Assistance Program (PCAP, or CAP) customer shopping at the FirstEnergy EDCs, with the PUC ordering on reconsideration that, to serve a PCAP customer, the retail supplier's rate must always be at or below the utility's Price to Compare (PTC) for the duration of the contract
In August (with a written order issued in September), the PUC had adopted a CAP "shopping program" at the FirstEnergy EDCs, under which CAP customers may only enter into a contract with an EGS (electric generation supplier) for a rate that is at or below the utility’s PTC and which does not contain an early termination or cancellation fee. As previously reported, the PUC delegated to the Office of Competitive Market Oversight (OCMO) further discussion concerning mechanics and implementation of the price cap
In delegating the issue to OCMO, the PUC originally ordered, in a footnote, that the issue of whether the EGS rate must be below the PTC at the time of contracting only, or below the current PTC and below all future PTCs during the duration of the customer's contract with the EGS, is within the scope of the referral to OCMO.
As previously reported, the Pennsylvania Office of Consumer Advocate petitioned the Pennsylvania PUC to reconsider its decision, as OCA opposed including within the scope of OCMO's review the issue of how the capped EGS price relates to future Prices to Compare. OCA argued that the EGS rate must be below the PTC at the time of contracting and below all future PTCs
The PUC granted OCA's request for reconsideration on this issue
In its written order, the PUC stated, "we shall modify the pertinent Ordering Paragraphs of our September 2018 Order to reflect that in light of our determination in this Opinion and Order that EGS rates must always be at or below the PTC, the issue of whether the CAP product should be at or below the PTC at the time of enrollment versus all time periods of the contract will not be referred to OCMO. In addition, with regard to the mechanics of FirstEnergy’s CAP shopping program, we shall direct that OCMO include in its recommendations whether the product should be rate ready or bill ready[.]"
The PUC on reconsideration specifically ordered that, "That the Office of Competitive Market Oversight is, [sic] hereby directed to convene and coordinate a group of interested stakeholders for the purpose of collaboratively addressing the mechanics and details of the new Customer Assistance Program approved by this Opinion and Order and in which CAP customers may only enter into a contract with an Electric Generation Supplier for a rate that is at or below each FirstEnergy Company’s Price to Compare for the duration of the contract and does not contain any early termination or cancellation fees, and provide a recommendation on the mechanics and details of the program to the Commission on, or before, January 31, 2019, to ensure a successful implementation of the program."
As a result, the PUC set forth a revised set of provisions applicable to the PCAP shopping program at the FirstEnergy EDCs as follows:
That on or before June 1, 2019, the First Energy Companies shall implement the following PCAP shopping rules:
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 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.
That for the purpose of transitioning PCAP customers who are currently being served by an EGS, as of June 1, 2019:
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.
The PUC's written order set forth the following reasoning for granting reconsideration
"The referral language contained in Footnote No. 19 on page 58 of the September 2018 Order is arguably inconsistent with our intent by suggesting that OCMO consider a product that would allow a PCAP customer to pay more than the PTC. We note that the ALJ’s finding was that over time the CAP and non-CAP customers were harmed by paying more than the PTC. R.D. at 66," the PUC said
"[W]itnesses for I&E, the OCA and CAUSE-PA each concluded that the record is clear that CAP customer shopping should involve only prices below the PTC for the duration of each EGS contract," the PUC said
"The ALJ clearly agreed and stated her finding in Ordering Paragraph 5.a. of the Recommended Decision when she stated 'PCAP customers are prohibited from entering into any retail electricity contract with an EGS which would charge rates exceeding the applicable price to compare for the entire duration of the EGS contract.' We are also persuaded by the testimony of I&E, the OCA and CAUSE-PA in this regard," the PUC said
"We further agree with CAUSE-PA, that the issue raised in Footnote No. 19 was not contained in ALJ Long’s Recommended Decision and was not raised by any party in the proceeding. Thus, it appears to contradict the finding of harm to CAP customers when CAP customers pay prices higher than the PTC," the PUC said
"Moreover, we agree with the OCA and CAUSE-PA that the Commission appears to have overlooked record evidence in this proceeding supporting a CAP shopping product that must be at or below the PTC(s) at all time periods of the contract. Thus, we agree that referring this issue to OCMO is inconsistent with our finding that there is clear evidence demonstrating harm to both FirstEnergy’s CAP and non-CAP, residential customers when CAP customers pay above the PTC. Specifically, we agree with the OCA and CAUSE-PA that the record evidence demonstrates that 'over a prolonged period of time' a majority of FirstEnergy’s CAP customers paid above the PTC, causing the proven harm. Therefore, the issue of whether the CAP product should be at or above the PTC at the time of enrollment versus all time periods of the contract should not be referred to OCMO. Instead, the record has shown, and multiple parties have proven, that the product should be one that is at or below the PTC(s) at all time periods of the contract between the EGS and the customer. An EGS serving a FirstEnergy CAP customer may provide a rate that is at or below the PTC(s) at all time periods of the contract and that contract may not contain any early termination or cancellation fees," the PUC said
"In response to the OCA and CAUSE-PA Petitions, we shall therefore clarify that the OCMO working group process will not be asked to address the issue of whether the EGS rate must be below the PTC at the time of contracting, or below that and all future PTCs. Furthermore, we shall decline to direct OCMO to accelerate the stakeholder process by one month. However, we encourage OCMO and the interested stakeholders to advance the stakeholder process diligently regarding the CAP shopping program and provide recommendations on the mechanics and details of the CAP shopping program to the Commission as quickly as possible. We note that the FirstEnergy stakeholder process that took place after DSP IV was not able to develop the scope of CAP shopping for FirstEnergy PCAP shopping customers. FirstEnergy St. 1 at 3. Now that the record has illuminated the extent of the harm that has been done to CAP and non-CAP customers in the amount of $18.3 million, we encourage the stakeholders to find resolution of these issues and reach consensus if possible. CAUSE-PA M.B. at 28 (citing Joint Stipulation #3, ¶ 3). In the interest of facilitating the OCMO stakeholder process, we are clarifying the framework upon which the OCMO stakeholder process will build. We note that transitional rules were proposed by CAUSE-PA and approved in the Recommended Decision. R.D. at 70 (citing CAUSE-PA M.B. at 42-43). In this Opinion and Order, we clarify that the transitional rules as presented in Ordering Paragraph Nos. 5 and 6 of the Recommended Decision are adopted and will go into effect for the June 1, 2019 deadline," the PUC said
As previously reported, the FirstEnergy EDCs had sought to mandate that the only PCAP shopping product be a percent-off-PTC, rate ready product. The PUC denied this request
"Regarding FirstEnergy’s petition, we do not believe the record in this proceeding supports a requirement that the CAP shopping product be a set, rate ready product that reflects a specific percentage off the PTC. The record here has shown that any products above the PTC have proven harmful to customers. However, an EGS may offer a rate at the PTC so long as it remains at the PTC throughout the contract duration. Similarly, another EGS may offer a discount off the PTC so long as that rate does not go above the PTC throughout the contract duration. We refer to OCMO for inclusion in its recommendations regarding the mechanics of FirstEnergy’s CAP shopping program the issue of whether the product should be rate ready or bill ready," the PUC said
"In conclusion, OCMO is to proceed with convening a collaborative of all interested stakeholders to discuss and provide information on the matters that were specified in our September 2018 Order, with the exception of the requirement that the EGS’s price be at or below the PTC for the duration of the contract. OCMO is to provide for the Commission’s consideration its recommendations on the matters discussed by January 31, 2019," the PUC said