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Pennsylvania Utility, Major Parties Enter Settlement Which Would Exclude From POR Program Any Plan With Rate In Excess Of Default Service
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FirstEnergy Pennsylvania Electric Company ('FE PA', 'FirstEnergy Pennsylvania", or the 'Company'); the Pennsylvania
Office of Consumer Advocate ('OCA'); the Pennsylvania Office of Small Business Advocate
('OSBA'); the Coalition for Affordable Utility Services and Energy Efficiency in
Pennsylvania ('CAUSE-PA'); Walmart, Inc. ('Walmart'); and Duquesne Light Company
('DLC') have entered into a non-unanimous settlement that would adopt major reforms to the retail electric market at FirstEnergy Pennsylvania, including excluding from the purchase of receivables program any product whose rate exceeds the price to compare
The Retail Energy Supply Association and various other retail supplier parties oppose the settlement
The settlement would establish FE PA's default service plan for the period June 1, 2027 through May
31, 2031 (DSP VII)
Regarding POR, the settlement would provide, for all contracts entered into after June 1,
2027, that POR would be limited to products whose rate is at or below the price to compare at the time of enrollment
The settlement's language does not explicitly limit this POR eligibility limit to residential products
Note that, unlike POR limits proposed in other states at various points, the settlement would provide that a product with a rate above the PTC would be entirely excluded from POR, in contrast to conditionally allowing such product in POR but limiting the purchased receivables to an amount up to the PTC
To implement this POR limit, suppliers using POR would be required to use rate ready billing
Under the settlement, FE PA's existing POR clawback mechanism would be phased out over the first year
of the DSP VII term
In another reform, the settlement would require that, for new residential contracts entered into after June 1, 2027, the retail supplier must drop such customer to default service at the end of the fixed rate term, unless the customer makes an, "affirmative choice
to remain with the EGS [retail supplier] in response to the notices required by the Commission’s regulations
at 52 Pa. Code § 54.10."
For all residential variable-priced, month-to-month plans, retail suppliers would be required to obtain affirmative consent from the customer on a quarterly basis in order to continue service to such customer. Retail suppliers would be required to provide an attestation of receipt of such affirmative customer consent
Default Service
The default service plan would continue the current customer classification breaks, but would change how no-load customer-generators are classified into a default service grouping, similar to action at other PA utilities, as discussed below
For residential and commercial customers, FE PA would rely exclusively on fixed price "full requirements" contracts for default service, except that wholesale suppliers would not be responsible for NITS or PJM charges associated with United States
Department of Energy (DOE) emergency orders pursuant to Section 202(c) of the
Federal Power Act.
NITS and DOE charges would remain part of the bypassable price to compare, but FE PA would assume responsibility for such charges for default service customers only. This treatment, while in use at other PA EDCs, contrasts with the treatment of other non-market based PJM charges at FE PA, where FE PA assumes the cost for all delivery customers, with nonbypassable recovery (and with the cost not in the PTC)
For residential default service, 10% of the portfolio would be served under a 5-year full requirements contract. 45% of residential SOS would be served under laddered 12-month contracts, and 45% of residential SOS would be served under laddered 24-month contracts
Residential (and commercial) PTCs would change every 6 months
However, for residential default service, FE PA would amortize the cumulative
reconciliation balance for the residential PTC Rider identified at the conclusion of each 12-
month reconciliation period over the subsequent 12-month period through the E-Factor (reconciliation)
mechanism)
Commercial service would continue to use a 6-month reconciliation for default service
For commercial SOS, 60% of the portfolio will be 12-month contracts, and 40% will be 24-month contracts
Each of the residential and commercial full requirements products will be
procured through semi-annual auctions in February and September of each year, with the
exception that, for the first auction year of the DSP term, FE PA will hold auctions in January
2027, April 2027, and October 2027
To classify a customer into a default service group, FE PA will classify default service
customers with a peak demand of 100 kW or above, or alternatively a maximum registered peak load ('MRPL') of 100 kW or above, as industrial customers, subject to hourly priced default service
However, customer-generators online prior to June 1, 2027 will be exempt from the
MRPL rule until June 1, 2029
FE PA's existing customer referral program (CRP) is scheduled to end on May 31, 2027, and settling parties agree that FE PA will not implement a successor CRP
for DSP VII
In a statement in support of the settlement, FE PA cited testimony which FE PA said showed that, from 2022 to 2025, on average, 40% of the Company’s total residential generation
uncollectible expense was attributable to purchased EGS [retail supplier] accounts receivable, even though
only 18% of residential customers were shopping over that same period
In a statement in support of the settlement, OCA cited testimony which OCA said showed that, in 2025, 84 EGSs served FirstEnergy PA’s residential customers, with 68 of
those suppliers serving customers at a rate above the Company’s applicable
PTC.
Per OCA, this resulted in FirstEnergy PA’s residential customers paying nearly $85
million more in generation charges to those 68 EGSs that charged an average
price in 2025 that was 27% higher than the PTC.
Conversely, OCA said that 16 EGSs served
FirstEnergy PA’s residential customers at a rate that was on average 6% lower
than the applicable PTC, which resulted in those customers saving a little
more than $3 million.
OCA said that, in total, FirstEnergy PA’s residential shopping customers
paid approximately $82 million more in net generation charges in 2025 than
they would have paid if they were paying for the same amount of generation
at the Company’s default service rates
CAUSE-PA said that, on average, low-income shopping customers paid $500 more than the average residential shopping customer at Met-Ed, $320 more at Penelec, $150 more at Penn Power, and $380 more at West Penn Power, from 2022-25
P-2026-3060298
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Settlement Would Mandate That Shopping Customers Return To Default Service At End Of Fixed Price Term, Unless Customer Chooses To Continue With Retail Supplier
Quarterly Affirmative Consent Required For Variable Rate Plans
July 7, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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