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Pennsylvania PUC: "Competition Act Does Not Bar An EDC From Offering A Service If The Market Cannot"

Written Order Issued Approving PECO Prepaid Pilot

June 19, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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The Pennsylvania PUC has issued a written order approving a modified prepaid program at PECO, with the order holding that, "[t]he Competition Act does not bar an EDC from offering a service if the market cannot."

As previously reported by, the PUC in April previously adopted a joint motion from Chairman Gladys Brown Dutrieuille and Vice Chairman David Sweet to approve, subject to various modifications, PECO's prepaid program. Such motion dismissed the concerns raised by the Retail Energy Supply Association, which had argued that the offering of a prepaid pilot by the utility would inhibit competition. However, absent a written order, it was thus far unclear how the PUC would address specific findings of the ALJ which had, in an initial decision, reached a conclusion that the pilot would inhibit competition and would be inconsistent with the statutes concerning retail competition

As proposed, PECO's prepaid pilot is 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, in an initial decision, 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 had 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.

The ALJ had said, "If the differential treatment exists because the Commission’s regulation authorized the difference, that does not mean the regulation is right or is promoting sound policy. The policy declarations in the Electric Competition Act, specifically Sections 2804(6) and 2811(a) do not promote differentiation but commonality."

The ALJ had cited Section 2804(6) of the Code (66 Pa C.S. § 2804(6).), which states, "[A] public utility that owns or operates jurisdictional transmission and distribution facilities shall provide transmission and distribution service to all retail electric customers in their service territory and to…electric generation suppliers, . . . on rates, terms of access and conditions that are comparable to the utility’s own use of its system."

The ALJ had said, "It is noted that 66 Pa.C.S. § 2802(12) states, in relevant part, 'The purpose of this chapter is to modify existing legislation and regulations and to establish standards and procedures in order to create direct access by retail customers to the competitive market for the generation of electricity while maintaining the safety and reliability of the electric system for all parties.' If the PECO system for prepay service presents an impediment for generation suppliers to have direct access to retail customers, then it cannot be found to uphold this policy statute, and therefore, the procedure cannot be sustained."

However, the PUC, in its written order, disagreed with the ALJ's conclusion, stating, "At the outset, based upon our review of the record and the Parties’ positions, we disagree with the ALJ’s finding and RESA’s contention that the pilot program will inhibit competition in the electricity and/or natural gas retail markets."

"The Competition Act does not bar an EDC from offering a service if the market cannot," the PUC said in its written order

Other than stating its conclusion and generally granting the exceptions of PECO on this issue (PECO's exception being that the pilot did not violate the Competition Act), the PUC in its written order did not further discuss the issues raised in the case and discussed by the ALJ concerning different access provided to the utility versus retail suppliers, or equal access and use of utility systems, which could have had broader implications had the PUC chosen to opine on whether such different access is consistent or inconsistent with the Competition Act.

Notably, the written order uses the term "cannot", implying retail suppliers are incapable of offering a service, rather than "will not" or "do not", which would imply that suppliers are capable of offering the service but have elected not to do so (and, then, arguably, there is a market failure).

As noted above, retail suppliers in the case have argued that their inability to offer prepaid service is the result of various regulations concerning billing and termination (lack of equal access), rather than an unwillingness to offer prepaid service.

The PUC continued in its written order: "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."

"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 PUC said

As previously reported, the PUC did condition approval on modifications to the prepay proposal. The written order codifies these conditions as follows, with PECO required to:

• 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 notice1 is issued, the five-day grace period under the program may be the first five days in the traditional 10-day termination process.

• 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 pilot program 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.

"We remind PECO that this program is not to be used as a substitute for the company-issued payment arrangements that it offers to payment troubled customers now. PECO is expected to continue to negotiate payment arrangements with payment-troubled customers in good faith. We assure all stakeholders that this approval is not intended to circumvent or reduce the consumer protections to which customers are now entitled. If at any time during the pilot, those protections are imperiled, PECO must suspend the program and may do so with a letter to the Commission at this docket," the PUC said

The PUC directed PECO to submit a compliance filing reflecting the modification. If the modifications are not acceptable to PECO, then PECO will simply not file its compliance filing, and the program will not be developed, the PUC said.


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