FirstEnergy Pennsylvania Utilities Propose Design for Retail Opt-in Aggregation Program; EGS-Offered TOU product

Met-Ed, Penelec, Penn Power, and West Penn Power have filed with the Pennsylvania PUC a proposed design for a retail opt-in aggregation program, meant to jump-start the retail market in place of an earlier proposed retail opt-in auction which the PUC ordered be modified into a new program.

Under the proposed opt-in aggregation program which is limited to a number of customers equal to 50% of each utilities' residential and small commercial default service customer base, the EDCs will mail to all default service customers an offer from a participating retail supplier, with a tear-off that can be returned to the EDC for enrollment.

Specifically, under the proposal, retail suppliers participating in the opt-in aggregation shall offer customers, for a period of four months, a fixed price equal to a 5% discount off the Price to Compare effective March 1, 2013 to May 31, 2013, followed by a fixed price for eight months. Customers will receive a $50 bonus from the retail supplier for participating as well, payable after four months of service.

The terms and conditions, including price, of the eight-month fixed price term of the program would be subject to PUC review.

Customer solicitation would occur April 11, 2013 through May 1, 2013, with service under the program starting on or about June 2013.

Notably, retail suppliers would have to provide to the EDCs marketing materials for the mailing, including the eight-month fixed price, by late March.

Participating customers would be permitted to leave the opt-in aggregation program at any time without restriction or penalty from the participating retail suppliers.

A total of eight Aggregation Groups would be created: one group for each eligible customer grouping (residential, small commercial) at each EDC. Small commercial customers eligible for the program are Rate GS-Small at Met-Ed/Penelec; Rate GS at Penn Power, and Rate 20 at West Penn Power.

The EDC will stop processing tear-off enrollment cards for a particular Aggregation Group when 50% of eligible customers in that Aggregation Group have requested enrollment in the opt-in aggregation program.

For each Aggregation Group, participating retail suppliers can set a fixed limit on the number of eligible customers that will be mailed their specific marketing offer. Eligible customers in each aggregation group will be divided equally on a randomized basis between participating retail suppliers until any participating retail supplier's desired limit is reached, with the remaining eligible customers split equally among the remaining retail suppliers whose limits (if any) have not been reached.

If all participating retail suppliers for a particular Aggregation Group set a customer limit such that: (1) less than 100% of the eligible customers would be assigned to participating retail suppliers; or (2) one participating retail supplier would be assigned more than 50% of the eligible customers, there will be no opt-in aggregation program for that specific Aggregation Group.

The mailing would only be sent to default service customers at the time of the mailing, but as such customers could be switched to competitive supply in the interim prior to receiving the mailing, such shopping customers receiving an opt-in aggregation offer would be allowed to participate. Such participation would count towards the above-noted 50% limit on participation.

The EDCs propose to recover the costs of the opt-in aggregation program by billing each participating retail supplier an amount equal to the product of: (1) the number of eligible customers in a particular Aggregation Group that received that supplier's offer; and (2) the average cost per eligible customer for that Aggregation Group.

After retail suppliers indicate their interest in participating in the program, individual estimates of opt-in aggregation program costs would be provided to each eligible retail supplier.

Retail suppliers would be permitted to withdraw during a five-day period following provision of the cost estimates.

If any supplier withdraws, the EDCs would advise the remaining suppliers of the new cost of the opt-in aggregation program and mailing to confirm their continued interest in participation.

Other Retail Programs
The FirstEnergy EDCs' latest filing also addresses cost recovery of the modified Standard Offer customer referral program previously approved by the PUC.

The EDCs propose that each supplier in the referral program would be assessed a referral program charge (reflecting various program costs) for every customer enrollment completed through the referral program. The referral program charge would be calculated by dividing program costs by a projected number of customer enrollments in the program during the applicable year. The referral program charge would be calculated on an annual basis, with a new charge becoming effective June 1 of each year.

Additionally, the EDCs proposed a new Time of Use program to be offered by retail suppliers to default service customers at Penn Power and West Penn Power with smart meters.

Multiple retail suppliers would be permitted to serve TOU load, with customers assigned on a rotating basis.

Customers would be billed through utility consolidated billing, but the retail supplier serving the customer would be identified on the customer's bill

While retail suppliers would serve the load of TOU customers, the pricing would be uniform regardless of retail supplier, and set by tariff at a specific premium or discount to the Price to Compare, applicable only during the months of June, July, and August.

The specific TOU factors applied to the Price to Compare would be:

Penn Power
Summer On-Peak      1.41 x PTC
Summer Off-Peak     0.78 x PTC

West Penn
Summer On-Peak      1.35 x PTC 
Summer Off-Peak     0.82 x PTC

On-peak hours would be 12:00 pm to 9:00 pm, Monday through Friday, excluding PJM-observed holidays. All other hours would be off-peak.

Pricing in the non-summer months would be the otherwise applicable Price to Compare.

Customers would be permitted to switch from a TOU offering at any time without penalty. TOU suppliers would be prohibited from discontinuing service to individual participating customers, unless such customer selects another competitive retail offer from the TOU supplier, switches to another EGS, or affirmatively elects to return to standard default service.

TOU suppliers would be free to market other products to customers served under the TOU program.

Link to FirstEnergy EDCs' Proposed Opt-in Aggregation program, other retail enhancements

Docket: P-2011-2273650 et. al.