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RESA/NRG Seek Order From Pennsylvania PUC That Certain PPL Electric Communications To Shopping Customers Are Anti-Competitive, Violate Statute

PPL EDC Communication States, "We Want To Make Sure That Your Bills Are As Low As Possible"; Urges Comparisons With Other Options, Including Default Service

December 1, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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The Retail Energy Supply Association and NRG Energy, Inc. filed a petition at the Pennsylvania PUC for a declaratory order finding that certain communications sent by PPL Electric Utilities (PPL or PPL Electric) to supply customers of electric generation suppliers (EGSs) about their electric supply prices and contracts with EGSs are unlawful and directing PPL Electric to immediately cease sending these communications.

In addition to concerns relating to communication related to the Standard Offer program (SOP), RESA/NRG also alleged, "PPL has ... communicat[ed] with presumably all shopping EGS customers (outside of SOP enrollments) about their contracts with EGSs and the supply prices they are paying under those contracts."

RESA/NRG alleged that PPL has sent at least two types of electronic communications to supply customers of EGSs in recent weeks, as follows:

(a) "One type of communication is aimed at SOP customers regarding their options following expiration of their contracts and is labeled as an 'Important Notice.' It advises SOP customers to check their energy supply contract and provides the electric supply rate on the last bill. The communication goes onto say that PPL cares about helping the customer manage costs, which is why it is reminding the customer to check the EGS supply contract to see when it expires and what rate the EGS will charge after expiration. PPL further advises the customer that once the annual SOP contract expires, the EGS can change the rate. Finally, the communication informs SOP customers of their options when the 12-month SOP term ends, including calling the current EGS to discuss next steps, checking out PPL’s 'smart shopping tips,' and cancelling their contracts with the EGSs, thereby automatically returning to default service through PPL," RESA/NRG alleged

(b) "A second type of communication, also labeled as an 'Important Notice,' was sent to shopping customers receiving supply from EGSs in the competitive market outside the parameters of the SOP. This email lists the shopping customer’s electric supply rate on the last bill and further advises the shopping customer of the identity of its selected EGS and provides a telephone number for contacting them. In the notice, PPL also informs the shopping customer that it is trying to make sure that the bills are as low as possible and reminds the shopping customer to compare the current supply rate with other options that are available. Among the options identified by PPL are to contact the current EGS, check out PPL’s 'smart shopping tips' and cancel with the EGS so as to automatically return to default service," RESA/NRG alleged

"Of note, the example in Appendix B [of the petition] illustrates a situation in which the customer’s current supply price was slightly above the PPL PTC for default service on November 1, 2022, but also demonstrates that the price will be below the PPL PTC once it changes on December 1, 2022. This nuance is not covered by the PPL communications, which seek to discourage customers from participating in the retail electric market," RESA/NRG alleged

One of the communications from PPL Electric to a shopping customer states, "We want to make sure that your bills are as low as possible. That’s why we’re reminding you to take a few minutes to compare your current supply rate (noted above) with other options that are available."

Another communication states, "When you shop, beware of variable rates, which start small and then increase depending on the price of power. (Visit our Shop Smart site below for more tips.)"

RESA & NRG issued a joint statement concerning the matter:

"The Pennsylvania Public Utility Commission’s December 2020 Order explicitly prohibits PPL Electric Utilities from interfering in the contractual relationship between suppliers and their customers," said representatives from RESA and NRG. "We look forward to the Commission reviewing the matter and helping us to resolve this issue swiftly and in a way that reinforces its clear guidance. The Order clearly states that PPL Electric Utilities must refrain from any communication related to ESG’s electricity supply contracts. We expect PPL Electric Utilities to comply with the Order and to discontinue any interference with any supplier’s relationships with its customers."

--- Joint statement from RESA & NRG:

In the petition, RESA/NRG alleged, "The PPL communications: (i) drive customers to EGSs’ call centers; (ii) portray the EDC as the expert on 'smart shopping tips,' without any reference to the Commission’s shopping website,; and (iii) promote default service by encouraging customers to cancel service with the EGSs, thereby automatically returning to default service through PPL. Further, the PPL communications focus on EGS customers obtaining the lowest prices, which overlooks other benefits of shopping beyond price or that the EGS customer may have expressly chosen a higher price than PPL’s current PTC due to a variety of factors, including the long-term nature of the plan, a renewable product or other value-added services. Finally, the PPL communications advise supply customers of EGSs regarding the terms of their electric supply contracts, including prices, and offer advice as to actions customers should take concerning the supply contracts."

"RESA and NRG urge the Commission to resolve this controversy by directing PPL to immediately cease and desist from sending communications to EGSs’ supply customers regarding their contractual terms, including prices for electric supply," RESA/NRG said

"[B]y informing customers of the option to cancel their contracts and be automatically returned to default service, PPL is promoting its own default service, which is contrary to prior Commission directives," RESA/NRG alleged

RESA/NRG said, "To be clear, these EGS customers have actively shopped for an EGS and entered into a contract with the EGS that must include specific information as mandated by the Commission’s regulations. Specific regulatory requirements established by the Commission govern how and when EGSs are to communicate with their customers about contract changes and expiration. EDCs do not have any similar contracting or notice requirements regarding default service nor do the Commission regulations require or authorize the EDCs to communicate with EGS customers about the competitive supply contracts."

"By paving its own path and unilaterally inserting itself into the middle of the EGS-customer relationship, PPL is essentially signaling that the EDC knows better than the Commission as to the customer notice requirements that should be followed," RESA/NRG alleged

"[B]y sending non Commission authorized communications to EGS customers when EGSs were required to advise customers as part of the initial contract about the timing and notices the EGSs would send their customers about the customers’ options upon expiration, PPL is confusing customers and unnecessarily driving them to EGS call centers. Through these actions, PPL is interfering with the functioning of the competitive market and is engaged in anticompetitive conduct," RESA/NRG alleged

RESA/NRG alleged, "The Commission has previously cautioned against any efforts by the EDCs to promote default service. In Interim Guidelines Addressing Electric Distribution Companies’ Activities Relating to Their Provider of Last Resort Functions, Docket No. M-00960890F0017, 1998 WL 975764 (Pa. P.U.C.) (Order entered November 19, 1998) ('PLR Marketing Order'), the Commission observed that a description of default service as a competitive option would be misleading to consumers. Further, the Commission found that it 'has a substantial government interest in creating and promoting the formation of a vibrant and effective competitive market for electric generation,' which necessitates constraints on the marketing of default service. Id. The Commission recognized that as an incumbent provider, 'the EDC possesses an inherent advantage which could be used to undermine competition if unregulated marketing' of the default service role is permitted."

RESA/NRG alleged, "Under Section 2806 of the Competition Act, the General Assembly made clear that all customers of EDCs shall have the opportunity to purchase electricity from their choice of EGSs, declaring that '[t]he ultimate choice of the electric generation supplier is to rest with the consumer.' Interference by PPL in the consumer’s exercise of this choice is unwarranted ... Notwithstanding the continuing obligations of EDCs, the Competition Act makes clear that the generation of electricity will no longer be regulated as a public utility function. Indeed, the General Assembly, the Commission and the Commonwealth Court have emphasized that the PUC does not regulate the prices charged by EGSs. As the Commission does not regulate EGS prices, it is well beyond the scope of PPL’s domain to offer any views on those prices or to suggest that consumers should choose the lowest prices."

"RESA and NRG view the PPL communications as being directly contrary to the clear direction given by the Commission in the PPL DSP 5 Order," RESA/NRG alleged

RESA/NRG alleged that, "In its default service plan filed in 2020 [DSP 5], PPL included a proposal to implement a communication process informing EGS customers about their options after their standard offer program ('SOP') contracts expire. The communications were proposed to occur 90 days prior to the end of the SOP contract and involve calls, letters, emails and/or text messages. After EGSs raised objections to the proposed communications, on several grounds including the fact that EGSs did not have all of this contact information for their supply customers enrolled via SOP, the Commission expressly rejected PPL’s proposal. The Commission emphasized that it is the EGS, not PPL as the electric distribution company ('EDC'), that has a relationship with the customer regarding their electric supply and that these notices should be sent by the EGS in accordance with the Commission’s regulations. Despite the Commission’s explicit rejection just two years ago of PPL’s proposal to communicate with EGS customers regarding expiration of the SOP contracts, PPL has ignored the PPL DSP 5 Order and unlawfully taken measures into its own hands to inform EGSs’ SOP supply customers of their options following expiration of the contracts."

"Further, PPL has sent these communications to electronic mail addresses to which it has access as the EDC and which are not shared with EGSs participating in the SOP," RESA/NRG alleged

"Also in the PLR Marketing Order, the Commission indicated that EDCs should not be permitted to use their customer mailing lists, to which EGSs have limited or no access, to advertise the default service option, because this ensures that EDCs, as incumbent providers, retain an unfair advantage over EGSs. While the issue today does not involve mailing addresses, but rather email addresses and texts, the sentiment is the same – when PPL uses information that is only available to the EDC to communicate with EGS customers about their supply prices and contracts, this practice gives PPL an unfair advantage over EGSs," RESA/NRG alleged

"[T]he PPL communications are anticompetitive in that they are interfering with the EGS-customer relationships and are focusing solely on one term of service – being the price – to the exclusion of other factors that may have motivated the customer to select the particular EGS product, such as the length of the contract term, renewable products, and other conditions of service, including the lack of a cancellation fee," RESA/NRG alleged

"[B]ased upon the foregoing, RESA and NRG respectfully request the issuance of a Declaratory Order declaring that the communications PPL has sent to supply customers of EGSs about the terms of service and prices in their supply contracts violate the PPL DSP 5 Order and the provisions in the Competition Act prohibiting anti-competitive conduct and run afoul of prior guidance issued by the Commission relating to the promotion of default service. On this basis, the Commission should direct that PPL cease and desist from sending any communications to supply customers of EGSs about the terms of service and prices in their supply contracts," RESA/NRG said

Examples of the cited communications may be found in the RESA/NRG petition here (starting on page 22)


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