Pennsylvania End-State Retail Market Tentative Order Defers Supplier Consolidated Billing, Switching Rules, Other Issues

A tentative order concerning the end-state design of the Pennsylvania retail electric market deferred consideration of numerous issues raised in the retail markets investigation, including issues surrounding supplier consolidated billing, the switching timeline, and cost recovery from retail suppliers for choice education campaigns

Regarding supplier consolidated billing, the PUC only proposes that the Office of Competitive Market Oversight shall provide a "recommendation" to the Commission as to how to proceed with making supplier consolidated billing available as a billing option for electric generation suppliers (EGSs) and third parties.

Although the Commission included forceful language in support of supplier consolidated billing, given the gap between the PUC's prior language regarding the barrier posed by the existing default service model to an effective retail market, and the ultimate proposal to retain that model (e.g. EDC-offered default supply), the language offered by the PUC in support of supplier consolidated billing (SCB) cannot be given much weight, given that the PUC has only faintly directed OCMO to come back with a recommendation.

"The Commission believes that SCB should be made available as a billing option as part of a vibrant, competitive market. We agree that SCB can help EGSs establish a more robust, familiar relationship with a customer. Removing the utility from the billing function and presenting the customer with a single bill from the supplier will help establish the supplier's identity with the customer. This will assist with removing the 'link' between utility and customer that some parties have identified as a barrier to developing a fully competitive market," the PUC said.

The tentative order also notes that the PUC recently addressed the switching timeline, in what served as yet another example of the PUC retrenching from earlier proposals. As previously reported, while the PUC has issued an order to accelerate the switching timeline from 16 day to 11 days, it ultimately decided to keep, at this time, an anti-slamming "waiting period" that necessitates the 11-day switching period, after earlier proposing to eliminate this waiting period (see earlier story.

In the tentative order, the PUC notes that in adopting the 11-day switching period, it directed Commission Staff to initiate a rulemaking to review and revise the switching regulations at 52 Pa. Code §§ 57.171 – 179. While the rulemaking will explore methods to accelerate the switching timeframes beyond simply shortening the waiting period, the rulemaking need not be initiated until 12 months after the PUC's October order on the switching period, and then obviously the rulemaking process will take an appropriate amount of time, meaning that the tentative order has endorsed waiting several years before any wholesale change in the waiting period.

The PUC also only sought comment on, and did not propose any policy regarding, other switching issues, including "seamless moves" or contract portability (allowing competitive supply customers to move without being dropped to default service), and "day one switching," which would allow a customer to take competitive supply at service initiation.

The PUC did definitively direct the EDCs to develop plans that allow their Customer Assistance Program (CAP) customers, on or before January 1, 2015, to shop in the competitive market without restriction

"At this time, our [CAP] proposal does not include a discussion of the mechanics of how CAP programs should be structured to allow their customers to shop but, instead, we propose to let each EDC develop a plan suitable for its service territory," the PUC said.

The tentative order would leave meeting statutory energy efficiency and conservation (EE&C) obligations as an EDC responsibility.

"The Commission believes that removing this obligation from the large EDCs and encouraging EGSs, instead, to provide energy efficiency services would result in a widespread loss of rebates and incentives to customers. We would like to clarify that we do not believe EGSs would be unable to offer such programs. However, because business models vary widely across the EGSs, it is possible that many EGSs would not be offering such services. This provides for a loss of EE&C programs to those customers who do not choose an EGS providing EE&C rebates and incentives," the PUC said.

However, Commissioner Pamela Witmer asked for comments from retail suppliers regarding what energy efficiency services they offer, or may offer, and how they can be coordinated with the EDCs' Act 129 EE&C obligations

The tentative order includes a proposed customer choice education campaign, estimated to cost $5 million a year for at least three years.

"We propose that the funding be collected from EGSs and EDCs following the 'Fair Share' approach offered by EGSs during the subgroup process. Under this proposal and based on current statewide numbers, competitive suppliers licensed in Pennsylvania would be responsible for 66.3 percent of the costs (calculated using the November 7, 2012, weekly switching statistics that showed 33.7 percent of customers have switched). Suppliers' contributions would decrease in subsequent years if shopping increases. Each residential and nonresidential supplier would be directed to contribute to the campaign using a mechanism yet to be determined and based on input from stakeholders," the PUC said.

EDCs would recover the balance of the cost of the campaign (for the first year, this share would be 33.7 percent) from their residential and small business consumers through an automatic adjustment clause and using their existing riders.