Office of Consumer Advocate Seeks to Reduce Number of Customers in Opt-In Auctions

Allowing 50% of default service customers to participate in a retail opt-in auction, "may create unintended issues and challenges for the EDCs [electric distribution companies] and default service," the Pennsylvania Office of Consumer Advocate said in comments on a tentative PUC order concerning a retail market workplan (see 12/15).

The PUC has tentatively proposed limiting participation in retail opt-in auctions to 50% of the customers on default service for that respective customer class.

"Such a number of customers switching at one time may have a significant impact on default service operations, causing problems from purchasing to reconciliation," OCA said.

OCA recommended limiting retail opt-in auction participation to 20% of the default service customer base.

Several retail suppliers oppose a customer participation limit on auction participation.

Several retail suppliers also endorsed the proposed 50% tranche cap for winning suppliers in the auction, with some suppliers seeking a lower cap.

The Retail Energy Supply Association called the 50% tranche cap a "reasonable" mechanism to promote participation by a variety of suppliers, but also suggested that the Commission should require a minimum number of winning bidders, and recommended four.

The Pennsylvania Energy Marketers Coalition (PEMC) supports a tranche cap, but said that 33% would be a superior level to encourage robust participation. Dominion Retail and Washington Gas Energy Services, in separate comments, both supported a tranche cap in the range of 25% to 33%.

FirstEnergy Solutions opposed any tranche cap, stating that any cap would result in higher prices. Exelon also opposed a 50% tranche cap as too low.

Retail suppliers opposed the PUC's tentative proposal to allow all customers, even those on competitive supply, to opt-in to the retail auction (although marketing of the auction would be limited to default service customers).

The National Energy Marketers Association said that including shopping customers in the auctions would "undermine" consumer shopping activities that have taken place to date, would create uncertainty for competitive suppliers currently serving consumers in Pennsylvania, and could potentially interfere with existing customer contracts.

PEMC said that including shopping customers in the auctions, "may unfairly discriminate against smaller suppliers or suppliers which choose not to participate in the auction process."

RESA noted that, "EGSs who have already invested in acquiring customers on an individual basis could face a negative return on their investment if their existing customers choose to participate in the opt-in auction."

"Such a result unfairly chooses 'winners and losers' in a competitive market and erases any incentive on the part of individual EGSs to further invest in the Pennsylvania market," RESA said.