RESA: ALJ Recommendations in FirstEnergy Pennsylvania EDCs' Default Service Case are "Calamitous"

A Pennsylvania ALJ's recommended decision regarding the default service plan of the FirstEnergy distribution companies contains "calamitous" recommendations and would, "merely perpetuate the structural problems inherent in Pennsylvania," the Retail Energy Supply Association said in a brief on exceptions.

As was exclusively reported by Matters, the ALJ recommended that 24-month contracts be used exclusively for the full requirements portion of both residential and commercial default service.

The ALJ rejected RESA's proposed mix of 24 and 12 month contracts, stating that RESA failed to, "adequately address the need for price stability."

However, RESA said that the ALJ was impermissibly elevating price stability above the specific statutory provisions contained in Act 129, in contravention of the PUC's recent financing in Pike County's default service proceeding.

In Pike County, the PUC held that, "[t]he rules of statutory construction dictate that the findings and declarations found in the Preamble of a statute do not take precedence over the specific statutory provisions contained in the law, but the rules of statutory construction provide that the Preamble may be considered in the construction of a statute."

The goal of price stability is only contained in the preamble of Act 129, but not in the Competition Act as amended by Act 129.

"[T]he inescapable conclusion here is [the ALJ] has elevated the preamble policy standard over the statutory requirements," RESA said.

"[T]he RD recommends implementing a default service plan that will ultimately harm consumers on the sole basis of trying to achieve a policy goal -- price stability -- set forth in a legislative preamble and not in the law. The Commission has already determined that this policy objective cannot take precedence over the statutory requirements," RESA said.

"Adopting the ALJ's recommendation ... will likely retard competitive development and merely perpetuate the structural problems inherent in Pennsylvania as evidenced by the lack of significant shopping in the FirstEnergy service territories," RESA said.

RESA also called the ALJ's recommendations with respect to the opt-in auction and standard offer referral program, "calamitous."

In particular, the ALJ ruled that the opt-in auction product will not pay customers a $50 bonus for enrolling with a competitive supplier, as designed in the PUC's retail markets order.

"[I]f the ALJ's recommendations are adopted, then these programs will have no, to very little likelihood of, success because the majority of electric generation suppliers ('EGSs') are not likely to participate, making the programs costly, non-starters," RESA said.

The Office of Consumer Advocate also filed exceptions to the use of 24-month contracts, and the use of only two procurements, as OCA recommended, "a broader mix of full requirements contracts of different lengths as well as block and spot purchases."

"The OCA submits that reliance on a single type of contract, all of which start on the same day (June 1, 2013) and end on the same day (May 31, 2015) is not a 'prudent mix' of purchases as mandated by Act 129 of 2008."

The Office of Small Business advocate filed exceptions in support of its desired use of six and 12 month contracts.