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Pennsylvania PUC Issues Proposed Policy Statement To Impose, Statewide, Price Cap For CAP Customers Served By Retail Suppliers, With Such Cap Applicable For Entire Term Of Contract

February 28, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Pennsylvania PUC today issued a proposed policy statement to implement, on a statewide basis, a price cap on retail supplier service to Customer Assistance Program (CAP) customers

The PUC has implemented such price caps, under CAP shopping programs, at PPL and the FirstEnergy EDCs (as the PUC finalized certain terms governing the program at the FirstEnergy EDCs in an order issued today, see our related story here for details)

As exclusively first reported by EnergyChoiceMatters.com, the proposed policy statement was sought by Commissioner David Sweet who brought the matter before the PUC in December

Specifically, under the proposal as further detailed below, retail suppliers at all EDCs would only be permitted to serve CAP customers at a rate that does not exceed the utility's Price to Compare (PTC), for the duration of service.

As previously reported, similar CAP shopping programs have been adopted at PPL and the FirstEnergy EDCs; however, the pricing under the CAP plans differs at the utilities. At the FirstEnergy EDCs, the CAP shopping rate may not exceed the PTC at any time. At PPL, the CAP shopping rate must be 7% below the PTC at the time of contracting, with such supplier rate fixed for 12 months (with no requirement to always beat the PTC)

The PUC cited rates paid by shopping CAP customers that are higher than the default service rate. At PPL, the net financial impact of CAP customer shopping was approximately $2.7 million in costs above the default service rate over 12-months.

"Similarly, in the FirstEnergy Companies’ most recent default service proceeding, evidence showed that over a 58-month period ranging from June 2013 through March 2018, nearly 65 percent of FirstEnergy’s CAP participants who were shopping with EGSs paid rates higher than FirstEnergy’s applicable PTCs, resulting in a net impact of $18.3 million in increased costs associated with CAP," the PUC said

In proposing to adopt the price cap, the PUC said, "CAP participants paying more than the PTC may exhaust their available CAP benefits earlier than if they were on default service. Non-CAP participants subsidize the EDC’s uncollectibles resulting from CAP participants’ inability to pay their bills, resulting in higher distribution rates."

The proposed policy statement provides that, in designing CAP shopping programs, EDCs should include the following provisions:

1. A requirement that the CAP shopping product has a rate that is always at or below the EDCs’ PTC(s) over the duration of the contract between the EGS and the CAP participant.

2. A provision that the contract between the EGS and the CAP participant contains no early termination or cancellation fees.

3. A provision that, at the end of the contract, the CAP participant may re-enroll with the EGS at a product that meets the same requirements as outlined in numbers 1 and 2 above, switch to another EGS offering a product that meets those requirements or be returned to default service.

The proposal states that the mechanics of CAP shopping programs should be addressed by EDCs in their next default service plan proceedings following adoption of the proposed policy statement, so as not to impact current, Commission-approved programs, and to allow for due process for all parties.

The PUC noted that a customer who is otherwise eligible for CAP would still be permitted to shop outside of the CAP shopping program, but if such customer shopped outside of the CAP shopping program, such customer would lose their CAP status

"If any party believes that it can show through a default service plan proceeding that there is a reasonable alternative to the Commission’s proposed CAP shopping guidelines that will not result in harm to either CAP participants or non-CAP participants, they are encouraged to propose such a model," the PUC said

Commissioner Andrew G. Place issued a statement on December 20, 2018, seeking additional comments as to whether EGS fixed price offers to CAP customers should alternatively be required to be at or below the PTC at the time of the offer, and whether such fixed price contracts should have a maximum fixed price term limit. In addition, Commissioner Place requested additional information to help guide the decision making, including information that will help identify the underlying causes of higher historical EGS prices for CAP participants and whether initial fixed price contracts at or below the PTC at the time the offer was agreed to were the cause of the CAP participant price premiums, or whether, for example, such premiums resulted from the repricing terms of the EGS contract with CAP participants

Docket M-2018-3006578

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