Pennsylvania PUC Approves Reduced Bond Level for Retail Supplier VCharge, Inc., Grants License

The Pennsylvania PUC has approved the request of VCharge, Inc. for a lower security requirement associated with its licensure as an electric generation supplier (EGS), contingent on several conditions.

As first reported by Matters, VCharge proposes to use the PPL service territory as its initial test market for a unique business model that combines meter sales with the operations of an electric generation supplier. As described by Commissioner James Cawley, "VCharge will install its patented SmartBricks system for PPL Residential Thermal Storage (RTS) heating customers. These SmartBricks charge RTS customer heaters when the hourly wholesale price of electricity is lowest. VCharge will then purchase electricity on behalf of these customers and pass on the value of the lower priced electricity purchased, offering a rebate of approximately 20% to participating RTS heating customers."

VCharge had sought to reduce the bonding requirement from $250,000 to $50,000 given the pilot nature of its market entry and small size. VCharge offered to cap customer enrollments at 250, in an effort to limit gross receipts to $500,000, as a condition of the lower bond level.

The PUC, in a 3-2 vote, adopted Commissioner James Cawley's motion to approve a bonding level of $50,000 under several conditions.

Cawley cited, "unique circumstances in this case which support granting the requested modification to the bonding amount."

"These unique circumstances include the significant rate increases experienced by PPL's RTS customers due to the removal of the historical discounts given to them for supply service, combined with VCharge's willingness to specifically serve this small customer group, which has not garnered the attention of EGSs thus far. At the same time, we also believe the scope of VCharge's license should reflect the narrow scope and limited nature of its intended business operations in Pennsylvania," Cawley said.

"This modification to our initial bonding requirement is in response to the unique needs of PPL RTS customers who have seen a disproportionate increase in utility rates as a result of the discontinuance of the historical discounts granted to RTS customers for supply service. Additionally, it simultaneously responds to the unique technology package that these RTS customers will receive to complement this innovate rate package offered by VCharge, which is uniquely designed to capture the value of PPL's Smart Meter measurement capabilities. Through approval of this Application at a reduced initial bonding level, the Commission intends to enable an innovative pilot program that can push the current bounds of this technology for the benefit of RTS customers," Cawley added.

Aside from limiting VCharge to serving 250 customers on PPL's RTS rate, the PUC ordered that should VCharge want to expand the number of customers served or otherwise change is business model, it must first file a license amendment with the Commission seeking approval of such expansion.

VCharge shall be limited to utility consolidated billing under the PPL's Purchase of Receivables (POR) program. VCharge shall also not require customer deposits for electricity supply service from any of its RTS customers.

Commissioners Pamela Witmer and Wayne Gardner dissented.

While Witmer said that she is, "supportive of Commission practices that encourage innovation among EGSs in Pennsylvania's retail competitive marketplace," and, "believe[s] that the potential of electric competition unleashes not just pricing advantages, but also a whole array of novel product offerings from EGSs, such as the one proposed by VCharge," Witmer said that VCharge's offer to limit enrollments does not equate to the "substantial evidence" required to justify a lower bond amount to an EGS taking title to the electricity, and supported Staff's recommendation to grant the license but require the standard bond amount of $250,000.