Pa. PUC: Retail Suppliers Must Pay Costs of Opt-in Auction, Referral Programs

Retail suppliers will be responsible for the costs of retail opt-in auctions and customer referral programs developed under a final intermediate workplan addressing the state's retail electric market, the Pennsylvania PUC ordered. Additionally, the PUC has ordered that the utility Price to Compare shall be listed on all utility bills, even those for customers on competitive supply.

Opt-in Retail Auctions
The PUC affirmed that service under the retail opt-in auctions, which will be a one-time event, will not be prior to June 1, 2013.

The PUC adopted a product structure for the offers in the auction consisting of a fixed price for six billing cycles of service (the length of service under the auction), plus a bonus (incentive) payment to the customer.

The fixed price offer must be at least 5% off the default Price to Compare at the time of the auction.

The PUC said that it believes a bonus payment of $50.00 is a reasonable incentive and should be large enough to attract attention. Customers should have to remain with the program for three entire billing cycles as a condition of receiving the bonus, and customers should then receive the bonus shortly after qualifying for it.

Customers served through the auction will be free to leave their auction-determined supplier at any time without a cancellation fee.

At the end of the six-month term, customers will remain with their auction-determined supplier, on a month to month basis with no termination fee, absent an affirmative election of another supplier or default service.

The auction to determine the product's price will occur prior to the period in which customers will opt-in for service under the auction.

"Upon review of each of the party's comments, the Commission will retain its initial decision to hold the EGS auction before the customer enrollment. We are cognizant of the concerns raised by some EGSs about uncertainty that may be manifested from this sequence; however, we believe that the proposal to hold enrollments before the product specifications are known will create customer confusion," the PUC said.

The enrollment period during which customers can opt in to service under the auction will last no longer than one month. The PUC refrained from issuing a specific timeline on how soon the opt-in period must commence after the close of the price auction, citing EDC operational challenges.

Participation in the auction will be limited to 50% of an EDC's default customer base, i.e., non-shopping customers.

Additionally, there will be a load cap such that no more than 50% of opt-in participant accounts may be awarded to any one electric generation supplier (EGS).

Auctions will be limited to residential customers, but are open to both non-shopping and shopping customers. Participation by customers in the Customer Assistance Program (CAP) will be reviewed further.

The PUC declined to endorse a specific auction format (sealed bid versus descending clock), with particulars addressed in each utility's next default service proceeding which will include an opt-in auction.

Retail suppliers "participating" in the retail opt-in auction will pay for its costs. The PUC noted that such costs may be recovered through a POR discount rate, or other mechanism, such as an auction fee.

Customer Referral Programs
The PUC will require the electric distribution companies to institute a New/Moving Customer Referral Program no later than the fourth quarter of 2012.

Under this program, limited to those customers calling to initiate service or calling to move service within an EDC's service territory, the EDC customer service representative will provide the customer with general information about choice.

No specific supplier offer information will be communicated; however, if the customer is familiar with a supplier and wishes to speak with that supplier, the EDC customer service representative shall transfer the call to the selected supplier after the business with the EDC is concluded.

Additionally, the PUC will require the EDCs to include a Standard Offer Customer Referral Program in their next default service plans (generally for service starting June 1, 2013). The Standard Offer program should be presented to customers during calls to the EDC call centers, other than calls for emergencies, terminations and the like, the PUC said.

The Standard Offer program will be open to shopping and non-shopping customers, targeted to residential default service customers.

The Standard Offer product should be comprised of a 7% reduction from the EDC's effective Price to Compare, provided for a minimum of four months but not longer than 1 year, the PUC said. The product will be uniform across an EDC service area.

"The 7% reduction is a constant price established against the PTC [Price to Compare] effective on the date the standard offer is made," the PUC added. It is unclear whether the term "constant" indicates only that the 7% discount shall apply through the entire term (but with the specific price varying as the Price to Compare varies), or whether the price must be constant at the initial 7% discount effective upon enrollment.

There will be no early termination fee for customers leaving the Standard Offer referral program.

Under the Standard Offer program, customers may choose to be assigned to an EGS of their choice or may choose a random assignment. The process by which an EGS is assigned either randomly or by customer choice, at the customer's discretion, will be addressed in each EDC's proposal to implement the program.

Absent an affirmative election by the customer for an alternative supplier or default service, retail suppliers will continue to serve customers enrolled through the Standard Offer program upon its conclusion, on a month to month basis without a termination fee.

The PUC said that the "bulk" of the costs of the referral program should be the responsibility of the participating EGSs.

Other Issues
The PUC ordered that the Price to Compare shall be listed on all electric distribution company bills, not only on those for customers on default service. In other words, the Price to Compare will now be listed on EDC consolidated bills for competitive supply customers.

The PUC also directed a working group to study language in the existing Letter of Authorization for customers to allow suppliers to receive their utility account information. The goal of the working group will be to develop language for LOAs that will provide authorization to EGSs to obtain copies of customer-specific bills directly from the EDCs in order to troubleshoot billing issues.

The PUC's Office of Competitive Market Oversight has also appointed a consumer education subgroup -- comprised of Commission staff, industry and consumer representatives -- to develop a comprehensive statewide consumer education campaign. The campaign will be finalized in the spring of 2012, as part of the long-range work plan to improve the Commonwealth's competitive electricity market. In the interim, various education mailings the PUC previously ordered will continue.

The docket is I-2011-2237952.