FirstEnergy Utilities Intend to Propose Opt-In Retail Auction in Next Default Service Plan

Met-Ed, Penelec, Penn Power, and West Penn Power, "anticipate proposing an opt-in offering for non-shopping residential customers," in their upcoming default service plan petition, which will likely cover the period June 1, 2013 through May 31, 2015 (I-2011-2237952).

Commenting on a PUC tentative order which would require EDCs to incorporate such opt-in retail auctions into the default service plans (see 10/17), the FirstEnergy utilities said that, "this proposal will likely be comprised of a declining clock auction held to supply a specified product without any market enhancements."

Once the auction clears, the companies would provide customers the ability to opt into the offering through a mailer during a specified period of time, which would enable customers to select this option to begin receiving service effective with their June 2013 meter read.

The FirstEnergy companies do not believe that it would be appropriate for the PUC to order EDCs to support, through the auctions, short-term "teaser rates" or "marketing gimmicks" in the form of cash incentives, etc., to those customers who opt in.

"Because these measures can be followed by volatile or higher rates once the initial rate expires, it is the view of the Companies that such offerings could damage the trust the Companies have earned from their customers and result in increased customer complaints and call volume directed to call centers which are tasked with fielding customer contacts associated with the core business functions of the EDC. The requirement to provide such 'incentives' also could result in increased customer prices and higher costs to the EDC in managing customer unrest," the FirstEnergy utilities said.

"The Companies experience thus far has indicated increased call volume and customer concerns regarding short-term variable rates that have been offered by EGSs which have quickly turned into prices that exceed the utilities' default service rates," the FirstEnergy EDCs added.

The FirstEnergy utilities also said that the administration of an opt-in auction, "would certainly prove costly," and intend to propose a nonbypassable automatic adjustment rider to recover such costs.