Growth in Pennsylvania Electric Shopping Continues to Be Challenged

February continues to be a challenging month for growth in residential electric shopping in Pennsylvania, as collectively the state saw its second-lowest weekly migration growth total since at least October of last year.

Link to 2/13/13 Weekly Migration Report

Matters has also developed a comparison of the migration levels from the 2/6/13 Report to the 2/13/13 Report.

Link to Matters' Comparison of Weekly Migration

While the growth from the PUC's 2/6 migration report to the 2/13 migration report did show a recovery versus the historic low growth seen in the immediately prior week, the weekly growth was still well off the pace of the recent robust activity that the state's retail market has enjoyed.

Specifically, from about February 7 to about February 13 (reporting date varies slightly by utility), the aggregate growth in the number of residential customers on competitive supply at the state's seven major EDCs, plus UGI, was only 4,050 accounts. While this is up from the anemic aggregate growth of only 3,000 accounts seen in the immediately prior week, it's well off the aggregate growth of 6,000 customers per week seen in much of January, and the aggregate growth levels of 7,000-10,000 customers per week seen in November and October of last year.

Also notable is that the recovery in the aggregate growth was attributed to growth at two utilities (PECO and Duquesne Light), rather than robust growth across the state.

Specifically, the weekly net growth in residential shoppers at each utility from about February 7 to about February 13 was as follows:

Duquesne Light       1,151
Met-Ed                 372
PECO                 1,219
Penelec                546
Penn Power             215
PPL                    160
West Penn Power        387

For comparison, although weekly growth can vary week-to-week, most of the major EDCs, aside from Penn Power, had recently been seeing residential shopping growth at or near 1,000 accounts per week; now most territories are struggling to reach growth of 500 accounts.

As noted previously, this is the second consecutive week of a precipitous slowdown in the growth rate of Pennsylvania electric shopping (see last week's story for details on the prior-week slowdown, which saw even lower growth)

The slowdown comes as the PUC, with much fanfare, marked the 2 millionth customer on competitive supply, and is scheduled to consider today a final order on an "end-state" retail market design.

A quick scan of offers on PA Power Switch indicates that customers in each of the seven major service areas can readily find offers at least 10% or so below the Price to Compare (or significantly more savings in some areas), indicating the slowdown in migration is not the result of above-market offers from suppliers.

Rather, should the slowdown in migration continue, as residential shopping has now reached ~30-44% of accounts in each service area, it's further evidence that structural barriers to retail choice remain. Moreover, as indicated by the current savings offered to customers, the migration slowdown suggests that merely changing the utility-provided default service procurements to quarterly supply auctions will be inadequate to remedy these barriers. Quarterly auctions merely assure that the default price will reasonably reflect current market rates, preventing non-market reflective default service. However, as seen by the current migration slowdown despite supplier offers 10% or more below the PTC, merely providing market-based default service will not change the current bias among the majority of residential customers towards default service, as customers are currently eschewing economic incentives to switch due to this status quo bias; quarterly auctions won't address this problem.