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Retail Suppler Proposes Eligibility Criteria For Customer Assignment Program

Proposes Pricing Restrictions For Small Suppliers

Proposes Time Limit On Service To Assigned Customers

October 14, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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Retail supplier Dominion Energy Solutions, Inc. has offered recommended changes to the Monthly Variable Rate (MVR) customer assignment program at Ohio utility Dominion Energy Ohio, including restrictions on eligibility for MVR suppliers

Dominion Energy Solutions's recommendations were made in a Public Utilities Commission of Ohio proceeding addressing motions from consumer advocates to end the MVR program and re-establish the Standard Choice Offer as the default service for all customers. Consumer advocates allege that the MVR program allows suppliers to charge MVR customers, who are randomly assigned to suppliers, rates well above competitive rates and the SCO

For residential customers, the SCO, under which a retail auction is conducted to set an SCO adder to NYMEX prices, with winning suppliers awarded the right to serve specific SCO customers at the NYMEX price plus the adder, is the default service provided to customers who have never shopped (or who elect the SCO service).

For residential customers who have shopped (including via municipal aggregation) and whose service with a supplier is then terminated, the customer is placed on SCO for two months. If the customer does not take affirmative action after two months, the customer is assigned to a retail supplier, based on a rotating list, with the customer charged that supplier's Monthly Variable Rate (MVR program). The MVR rate can not exceed any of the supplier's rates listed on the PUCO's Apples to Apples chart; however, some suppliers list on Apples to Apples a single rate that is nearly four times the SCO rate.

For non-residential customers, there is no SCO. Any non-residential customer without a supplier selected by the customer or through opt-out aggregation are assigned to a supplier under the MVR program.

As noted in our related story today, PUCO Staff supports re-establishing the SCO as the default service for all customer classes, and transferring MVR customers to the SCO. See our related story today for full details on Staff's recommendations

Dominion Energy Solutions (DES) said that consumer advocates' concerns can be addressed through changes to the MVR program, rather than its elimination

"DES recognizes that, as OCC points out in its motion, there are instances in which some unscrupulous suppliers have gamed the system by posting an exorbitant price, relying on the possibility that some customers assigned to them under the MVR program will not engage and will pay these prices notwithstanding that they are well above market. However, the fix for this problem is not to eliminate the longstanding MVR program, but to modify the requirements for supplier participation to weed out these bad actors. To this end, DES would offer the following proposal," Dominion Energy Solutions said

Dominion Energy Solutions proposed an eligibility criteria for MVR suppliers, with pricing restrictions for those not meeting the criteria

"DES proposes that, to participate in the MVR program, a supplier should be required to meet one of two eligibility criteria. First, certified CRNGS providers that serve at least 1,000 non-MVR customers on DEO, either under individual contracts or as the supplier to governmental aggregations, should automatically be permitted to participate in the MVR program. That these suppliers have been able to attract a significant number of customers shows that they are actively competing for customers in the DEO market and are offering competitively-priced products that customers find attractive and that meet those customers’ needs," Dominion Energy Solutions said

"[P]roviders that do not meet this requirement would still qualify to participate as an MVR supplier so long as their lowest posted monthly variable price is equal to or less than the median price for monthly variable rate products on the apples-to-apples chart," Dominion Energy Solutions said

"It must be remembered that the MVR program was never intended to assure that MVR customers would receive the lowest possible price. Rather ... the intent was to promote customer engagement. However, the use of the median posted price as a cap as an alternative criterion would provide a safety net for those customers who, despite past educational efforts, still do not understand customer choice, and would also prevent bad-actor suppliers from gaming the system," Dominion Energy Solutions said

Dominion Energy Solutions also recommended that consideration be given to adopting a time limit for a supplier's service to a specific MVR customer

"DES recommends that consideration be given to modifying the MVR program by providing that, after one year with an MVR provider, the customer would be reassigned to the next-up MVR supplier. Such a measure would provide an additional opportunity for notifying the customer of the available options (i.e., enrolling with another CRNGS provider, becoming a member of an opt-out governmental aggregation if available, or, in the case of a residential customer, affirmatively electing SCO service), thereby encouraging customer engagement. This approach could also lead the customer’s current MVR supplier to offer a contract with favorable pricing in an attempt to retain a customer with whom it already has a relationship," Dominion Energy Solutions said

"DES also recommends that the notice sent to customers that are about to be assigned to an MVR supplier be reevaluated to assure that the notice fully explains the customer’s options. The notice should include prominently displayed language that alerts the customer that there may be options available that will result in a more favorable pricing than the customer will receive from the MVR supplier to which the customer will be assigned after two months on SCO service and advise the customer as to how to explore these options. Again, the goal is, and should remain, customer engagement, and an effective customer notice will encourage customers to engage," Dominion Energy Solutions said

Case No. 18-1419-GA-EXM

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