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Departing From ALJ's Recommendation, Pa. PUC Approves Modified PECO Prepay Pilot Program

ALJ Had Agreed Utility Prepay Program Was Anti-Competitive Due To Lack Of Billing Access For Retail Suppliers

PUC: Competition Act Does Not Bar Utility From Offering A Service If The Market Cannot

April 25, 2019

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Copyright 2010-19
Reporting by Paul Ring •

The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of

The Pennsylvania PUC this morning approved a modified prepaid pilot for electricity and dual-fuel customers at PECO

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

As exclusively first reported by, an ALJ had recommended denying PECO's application, while also making several findings regarding the interaction of prepay programs and relevant statutes, which would impact any future retail supplier prepay offerings (see story here)

In brief, the ALJ had recommended denying the prepay pilot due to various statutory requirements concerning service termination. Of broad note to any potential prepaid plans which may sought to be offered by retail suppliers was 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."

In particular, the ALJ expressed concerns with a customer's receipt of electronic notices, which the ALJ noted may not be seen or opened by customers immediately upon being sent.

Furthermore, the ALJ had 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.

"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

See a further discussion of this issue in our prior story

However, the PUC disagreed and adopted a joint motion from Chairman Gladys Brown Dutrieuille and Vice Chairman David Sweet which stated, "We disagree that the program will inhibit competition. The Competition Act1 does not bar an electric distribution company (EDC) from offering a service if the market cannot. Additionally, we reiterate that this is a pilot, which will allow the Commission to analyze the impacts of a utility-offered pre-pay program on, among other things, the competitive market. As such, RESA's [reply] Exceptions are denied."

Turning more broadly to the issue of prepay service and disconnection, the adopted Dutrieuille/Sweet motion stated, "We agree that there must be additional protections in place before PECO can implement its proposed Plan."

However, "it is clear that the placement of advanced 'smart' meters has opened a door to new possibilities that were not available under the prior metering systems. The traditional billing cycle where the meter is read monthly is no longer the only way to approach billing, as the smart meters can transmit daily usage. Customers using the prepaid program can add funds to their accounts in a manner that suits their needs, perhaps adding funds every two weeks to coincide with their paychecks, instead of making a large payment monthly. This would more accurately reflect the way that money flows into their households. It would be unfortunate to miss an opportunity to see how this type of program can be used by customers who wish to use it. We are mindful that this is a pilot program, and that participation is strictly voluntary," the adopted Dutrieuille/Sweet motion stated

"We believe that this proposed pilot program should be given an opportunity to proceed in order to gather data to aid in the determination of its viability in terms of convenience to customers, cost effectiveness, reduction in terminations, and increase in reconnections, particularly just before the winter moratorium takes effect, and other benefits," the adopted Dutrieuille/Sweet motion stated

The Dutrieuille/Sweet motion approved the PECO prepay program on the following conditions:

• Provide that a customer who has not paid during the five-day grace period is automatically removed from the program and returned to standard payment terms and conditions, including, but not limited to, the traditional termination procedures. "This removes the practice of 'voluntary discontinuances of service' and restores the full consumer protections in Chapter 14 of the Code and Chapter 56 of the Commission's regulations to the participants. It also protects the non-ratepayer occupants of a dwelling from experiencing a shut-off for which they had no warning. We note that, if a written notice the five-day grace period under the program may be the first five days in the traditional 10-day termination process," the motion stated

• Provide that a participant who informs PECO that a medical certification will be provided is automatically removed from this program and returned to standard payment terms and conditions in order to provide full consumer protections to those in need of them.

• Provide that existing deposits may be eligible for application to the program but may be returned to the customer at the customer's election.

• Provide that customers holding an active protection from abuse order are eligible for this Plan but must be informed of their other payment plan options in order to determine which may be the best choice for them.

• Ensure that there is no PECO-initiated fee for payments made on the website or customer portal.

PECO shall indicate in a compliance filing acceptance of such terms, or otherwise the program will be deemed withdrawn


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