Exelon Energy, FirstEnergy Solutions Seek to Excise from Proposed Rule Prohibition on Retail Supplier Use of Name "Substantially Similar" to Utility or Utility Parent

Exelon Energy and FirstEnergy Solutions, in separately filed comments, have protested the Pennsylvania PUC's proposed rule [§ 54.122(3)(v)] that an electric generation supplier, "may not have the same or substantially similar name or fictitious name as the electric distribution company or its corporate parent."

The proposed prohibition was first reported by Matters

"The unreasonable prohibition on the use of names that suppliers have used for years, and are permitted to use in other jurisdictions in which they do business, could result in suppliers leaving Pennsylvania altogether rather than go to the enormous expense of complying with this rule for only one state. For affected suppliers that do change their names in order to continue participating in the Pennsylvania market, the extra costs involved in maintaining this separate corporate identity (along with the additional costs of separate staffing and facilities addressed elsewhere in these comments) will unnecessarily result in higher retail pricing for customers," FirstEnergy Solutions said.

FirstEnergy Solutions further said that the "concealment" of an EGS's affiliation with the EDC or its parent, which FirstEnergy Solutions said would occur under the rule, "is misleading."

FirstEnergy Solutions said that the PUC has not met the constitutional test (as set forth in Central Hudson) that, among other things, requires regulation of speech to directly advance enumerated governmental interests (in this case prevention of cross subsidization and prohibition of unfair or deceptive practices by suppliers)

"FES is not aware of any credible complaints that the use of its name has adversely impacted the competitive retail electricity market or another market participant by giving FES an unfair competitive advantage, or caused customer confusion," FirstEnergy Solutions said.

FirstEnergy Solutions also called the proposed restriction on EGS names an invalid Ultra Vires action which exceeds the PUC's statutory authority.

Exelon Energy said, "This proposal has significant impacts on an EGS's existing and/or potential branding strategy and could undo the benefits gained from years of targeted marketing practices. For instance, no evidence has been provided to explain, and indeed Exelon fails to see, the competitive advantage gained by an EGS using the name or a name similar to that of a corporate parent, particularly when that name is not shared by or similar to an EDC's name."

Direct Energy supports the language as proposed by the PUC in §54.122(3)(v). "[P]reventing use of the same or substantially similar EDC name or fictitious name would level the playing field and prevent exploitation of the name recognition and brand loyalty associated with an EDC's name by any entity," Direct Energy said.

"Switching statistics in Pennsylvania and Ohio prove the advantage that such a name confers and the EDCs have acknowledged this advantage," Direct Energy said.

"Such a rule would also help curb customer confusion whereby customers often times wrongly believe that an affiliated EGS provides a greater service quality level than if they enroll with an unaffiliated EGS," Direct Energy said.

The Office of Consumer Advocate agreed with the proposed name prohibition, stressing that the language should be clear that the prohibition against an EGS having a name similar to that of an EDC to applies to both affiliated and non-affiliated EGSs.

Additionally, FirstEnergy Solutions and Exelon Energy opposed various proposed rules prohibiting the sharing of services and employees among distribution companies and affiliated suppliers. While "corporate services" could still be shared, the rule would define corporate services as excluding, among other things, information systems, electronic data interchange, strategic management and planning, account management, regulatory services, legal services, lobbying, marketing, and sales.

FirstEnergy Solutions claimed that this prohibition on shared services among EDCs and EGSs, "will also confer a competitive benefit on certain EGSs."

"EGSs with no affiliated Pennsylvania EDCs, including those who are subsidiaries of far larger parent companies than that of FES, will be able to take unfettered advantage of their parents' resources," FirstEnergy Solutions said, electing to cite Direct Energy Services, LLC and its parent Centrica PLC as an example, "while EGSs with Pennsylvania EDC affiliates would be required to operate as essentially independent businesses with completely separate staffing and facilities even if they are already in full compliance with other federal and state jurisdictional rules,"

The docket is L-2010-2160942.