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Pennsylvania Utility: 85% Of Residential Customers Placed Onto New Rate With Their SOP EGS At End Of Supplier Referral Program Paid More Than Price To Compare

Customers Not Switching EGSs At SOP Term End Paid 40% More Than Default Service

December 23, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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Duquesne Light (the Company) filed with the Pennsylvania PUC a report on its Standard Offer customer referral program (SOP), including actions taken by residential customers at the end of the initial 12-month SOP term, and rates paid by customers after the end of the term

Duquesne Light reviewed residential customers who entered into the SOP during the period January 1, 2018, through July 15, 2021, and whose initial 12-month SOP period concluded on or before June 9, 2022. The analysis examined customer actions for the four months following SOP contract expiration

Duquesne Light said that, within one month of the expiration of their SOP contract, approximately 20% of residential customers took affirmative action. For purposes of this analysis, "affirmative action" was deemed to have occurred where the customer: closed their account, switched to a new supplier, returned to default service, or started a new SOP rate contract with their current supplier.

"The Company is not privy to the contracts between customers and EGSs. However, the Company does possess the effective rates charged by EGSs to residential customers, which were used for purposes of this analysis. The Company infers that where an EGS begins to charge a non-SOP rate to a residential customer following the 12-month SOP period, this indicates the commencement of a new non-SOP contract between the customer and the EGS," Duquesne Light said

Nearly 80% of SOP customers remained with their existing electric generation supplier (EGS) at the end of the SOP term, and were enrolled into new non-SOP "contracts" (rates), Duquesne Light said. Of these customers, within four months of the expiration of their SOP contract, approximately 20% left those contracts.

In total, 60% of residential customers remained with their SOP supplier, on a non-SOP contract, following the four-month period, Duquesne Light said

Duquesne Light said that approximately 85% of the residential customers who were enrolled into a new, non-SOP contract with their supplier paid a rate greater than the Company’s then-effective price to compare (PTC) within the first month of the new contract

Of these, 75% were charged more than 10% over the then-effective PTC, Duquesne Light said

"Many were charged significantly more than the PTC: 29% were charged rates 50-100% more; and 6% were charged greater than 100% more than the then-effective PTC," Duquesne Light said

"Even after the fourth month, 25% were charged 50-100% over the then-effective PTC and another 9% were charged greater than 100%," Duquesne Light said

"By the end of month four, 18% of customers remaining with their EGS post-SOP term were being charged a rate less than or equal to the then-effective PTC. By comparison, only 15% paid a rate less than or equal to the then-effective PTC at the end of the first month. This suggests that some customers who were being charged rates higher than the PTC took affirmative action by switching suppliers, returning to default service or renewing their SOP contracts," Duquesne Light said

"The Company’s analysis shows that a large portion of residential customers take no action upon the expiration of the SOP term, and remain with their SOP EGS on a new, non-SOP rate. Nearly 85% of those customers were charged a rate greater than the then-effective PTC. As a result, customers who did not take affirmative action upon expiration of their 12-month SOP period tended to experience higher electric bills than they would have received had they switched to default service or a lower-cost EGS product," Duquesne Light said

"In total, these customers were charged approximately $623,865 by their EGS during the four months following their initial SOP period. In comparison, these customers would have been charged a total of approximately $443,421 for default service during the same time period. These customers were thus charged approximately $180,444 -- or about 40.7% -- more than the corresponding default service charges," Duquesne Light said

Docket No. P-2020-3019522


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