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Pa. PUC Withdraws Proposal Requiring EDCs To Develop Program To Allow CAP Customers To Shop

Says Evidence Shows Both CAP & Other Customers Suffered Harm Under CAP Shopping Programs

April 20, 2023

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Copyright 2010-21
Reporting by Paul Ring •

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The Pennsylvania PUC today withdrew a proposed policy statement concerning the eligibility of Customer Assistance Program (CAP) customers to shop for a competitive electric supplier

As previously reported, the PUC had in 2019 issued a proposed CAP policy statement that would have required EDCs to develop CAP shopping programs in their next default service proceedings

While the PUC's proposed policy statement on CAP shopping programs would have imposed price limits on CAP shopping (which were already in place at several EDCs), it was also notable because it would have required the development of CAP shopping programs at several EDCs where CAP customers were prohibited from shopping at all.

See more details on the specifics of the CAP shopping proposed policy statement in our prior story here

Due to EDC-specific developments since the issuance of the proposed CAP shopping policy statement, effective June 1, 2023, no CAP customers at any of the seven large EDCs in Pennsylvania will be eligible to shop for a retail supplier. Customers who are otherwise eligible for CAP may elect to forego CAP benefits and instead shop for a retail supplier, but a customer may not receive CAP benefits if being served by a retail supplier

The PUC cited previously reported data from several recent default service plan (DSP) proceedings in withdrawing its proposed CAP shopping policy statement

The PUC said, "Evidence presented in the PPL DSP VI proceeding demonstrated that, despite its built-in protections, the CAP SOP [standard offer program] program resulted in both CAP participants and other residential customers suffering harm."

"Evidence presented by PPL demonstrated that as of January 2020, 7,975 of PPL’s CAP participants were shopping with an EGS outside of CAP SOP because they entered CAP with a pre-existing contract, and that 62% of these customers were paying rates more than the PTC," the PUC said

"Further, PPL presented evidence that CAP participants paying more than the PTC were likely to shorten the duration of their CAP credits, resulting in residential customers paying higher subsidies into PPL CAP due to rates above the PTC. Specifically, PPL presented evidence that CAP participants’ shopping resulted in additional costs to other residential customers of $4.3 million and $2.9 million in 2018 and 2019, respectively," the PUC said

"Evidence presented in the FirstEnergy DSP VI proceeding demonstrated that since June 2019, when FirstEnergy’s CAP shopping rules [which included certain price caps] were implemented, CAP shopping customers across the four FirstEnergy Companies paid $4,022,308.41 more than the applicable PTC," the PUC said

"When broken down in per customer terms, CAP shopping customers paid on average between $520.62 (Penelec) and $1,316.46 (MetEd) more than the applicable default service price from July 2019 to December 2021. These high prices increased rates of payment troubled CAP participants, involuntary terminations, and uncollectible expenses recovered from all residential ratepayers," the PUC said

"In 2021, two years after FirstEnergy implemented its CAP shopping rules, the average write-off balance for CAP shopping accounts was $1,876.11, compared to $1,038.69 for CAP default service accounts. In that same year, 9.4% of CAP shopping customers were payment troubled, while just 1.8% of CAP default service customers were payment troubled; and 29.5% of CAP shopping customers were involuntarily terminated, compared to 8.8% for CAP default service customers," the PUC said

"The data presented in the PPL DSP V and FirstEnergy DSP VI proceedings demonstrate that in those two EDC service territories, even with restrictions, CAP shopping harmed both CAP participants and other residential ratepayers due to CAP participants paying more for generation than the PTC," the PUC said

The PUC also cited what it termed low retail supplier participation in the prior CAP shopping programs.

The PUC said, "PPL presented testimony in its DSP V proceeding that EGS participation was minimal and the EGSs that did participate only did so for a short time. From June 2017 through November 2017, two EGSs participated in the CAP SOP; from December 2017 through May 2018, one EGS participated in the CAP SOP; from June 1, 2018 through February 29, 2020, no EGSs participated in the CAP SOP; and beginning March 1, 2020, one EGS began participating in the CAP SOP. PPL DSP V Order at 125-126. The results of PPL’s CAP SOP demonstrates that EGSs are reluctant to participate in CAP shopping programs that limit the rates they charge to at or below the PTC. As such, an EDC’s programming costs to administer a CAP shopping program, which are ultimately borne by other residential ratepayers, may be inefficiently spent on a program that, due to the need to protect CAP participants and ratepayers from harm, lacks design elements that would incentivize EGS participation."

The PUC also cited a lack of alternatives to the elimination of CAP shopping

The PUC said that, in PPL's DSP V proceeding, "the Commission found that no other parties presented reasonable alternatives to PPL’s proposal to eliminate the CAP SOP and return all CAP participants to default service at the PTC rate."

Despite the withdrawal of the proposed policy statement, the PUC said that, "EDCs and other parties are still free to propose CAP shopping in the EDCs’ respective DSP proceedings."

"Such proposals will be subject to review on a case-by-case basis by interested stakeholders and the Commission," the PUC said

Docket M-2018-3006578


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