FirstEnergy EDCs Seek to "Adjust" Retail Supplier Credit Requirements due to Accelerated Switching Process

The Pennsylvania PUC should provide electric distribution companies with the ability to "adjust" the credit requirements for electric generation suppliers due to the proposed acceleration of the switching timeline, the FirstEnergy electric distribution companies (EDCs) said in comments to the PUC (M-2011-2270442).

The FirstEnergy EDCs noted that with the previously reported (11/14) proposal to accelerate the switching process by ending the current "confirmation letter" sent by EDCs to customers enrolling with an electric generation supplier (EGS), unauthorized switches may increase, with EDCs forced to rely on manual processes to return the customer to their prior commodity supplier. While the PUC's proposed guidelines contemplate that suppliers would be required to compensate the EDC for the costs of any actions taken to return the customer to their original supplier, the FirstEnergy EDCs sought stronger language compelling such compensation.

Furthermore, the FirstEnergy EDCs noted that, "because there is increased exposure to the EDC as a result of correcting a customer's account due to such a switch, the EDC should be given the opportunity to adjust, as necessary, the credit requirements in its supplier tariff to account for the additional risk."

Otherwise, stakeholder comments did not cover much new ground.

The Office of Consumer Advocate opposed eliminating the EDC confirmation letter, stating that it would, "provide[] limited benefit in the way of reducing the time it takes to switch a customer, but could greatly harm the credibility of the process."

Rather than eliminating the confirmation letter, the OCA said that the switching timeline could be accelerated while retaining the letter by shortening the confirmation period from the current 10 days to 5 days; allowing customers to receive the confirmation letter by electronic mail if the customer has agreed to the service of utility notices in this manner; and clarifying the language of the letter to ensure that the customer understands that the letter is only intended to confirm the consumer's prior decision.

Additionally, OCA said that the customer should be permitted to contact the EDC to cancel a switch, rather than being required to call the supplier, since, in the case of an unauthorized switch, "the customer has no relationship with the EGS."

PECO also supported maintaining the EDC confirmation letter, but suggested shortening the confirmation period to four days. PECO said that from August 2011 through November 2011, it has received rescission requests for approximately 4% of the enrollments that relate to the transfer of a customer's account, with about one-third of those rescissions relating to switches between EGSs. "Given this volume of rescissions, the Company is concerned that eliminating the confirmation period altogether could lead to increased customer frustration with shopping, customer complaints, billing issues, and additional unnecessary costs," PECO said.

PECO also reported that implementing the proposed accelerated switching timeline would cost about $700,000.

OCA, and AARP more strongly in separate comments, noted that the PUC proposes to retain the rebuttable presumption that a customer will have received a disclosure statement, starting the clock on the rescission period, three days after it is deposited in the mail, when correctly addressed and with sufficient postage attached. "The OCA would caution that given the proposed changes in Postal Mail delivery times ... the presumption that the customer will have received the letter within three days may need to be examined again in the future."

Retail suppliers predictably raised logistical concerns with the proposed requirement that suppliers disclose an estimate of the customer's switch date in the disclosure statement. Suppliers noted both the difficultly in obtaining the customer's meter read date, and the burden associated with developing customer-specific marketing materials to include the switch date.

The Retail Energy Supply Association said that, "EGSs only acquire a customer's specific start date after they send the 814 EDI transaction to the EDC asking that the customer's enrollment status be changed."

"An EGS cannot send an 814 EDI transaction request to the EDC until after it has customer authorization to take the steps necessary to effectuate a switch of the customer's account. Under present procedures, there is simply no way for the EGS to know a specific customer's switch date prior to marketing to that customers or prior to sending the 814 EDI transaction request to the EDC," RESA said.

RESA suggested that the EDC develop an EDI information field as part of the enrollment response transaction to communicate to EGSs the customer-specific meter read date when the customer's EGS selection will become effective. Upon receiving the customer-specific meter read date from the EDC, the EGS shall make this information available to the customer, RESA recommended.

RESA also asked that suppliers not be mandated to submit a switch before the expiration of the rescission period, as proposed by the PUC, because due to various logistics, "it threatens to complicate the process by placing the EDC in the position of rescinding an EGS contract and requires the implementation of new EDI processes."

Retail suppliers also sought clarification, due to language suggesting that a supplier must maintain written proof of customer authorization for enrollment, that the supplier may, consistent with other codes and statute, use other approved means for authorization, including direct oral confirmation.

In order to streamline the switching process, the Pennsylvania Energy Marketers Coalition, "recommends that the EDC notify the incumbent EGS (if the customer is already enrolled with a supplier) as soon as possible that a customer has enrolled with a new EGS. This notification would preferably occur within 24 hours of the EDC receiving an enrollment request from a new EGS."