Pennsylvania to Retail Suppliers: You'll Get Nothing and Like It

The Pennsylvania PUC's final order on an end state retail electric market design contains no substantive changes, and virtually no changes at all, sought by retail suppliers to reduce current barriers to competition which have caused migration to competitive supply to slow to a trickle.

Here's a run down of the final order by issue:

Default Provider: No change to status quo; PUC retains utility-provided default service

Default Supply Contract Length: No change authorized in PUC order. As more fully reported in our late-breaking story Friday (click here), while the PUC in concept has endorsed hourly pricing for medium and large C&I customers and quarterly full requirements contracts for small customers, the PUC's order defers the appropriate default supply contract length to the legislature, and won't make these preferred changes on its own authority. All the final order does, to the extent legislative changes to the current default service statute fail, is promise that small customer default service will be, "more reflective of market conditions than the currently-offered default service products," but with no definition of what this would constitute.

Costs of Default Service: PUC rejects further unbundling of distribution rates to move additional costs of default supply into the bypassable default service rate, and declines to open a generic investigation on this issue

Supplier Consolidated Billing: PUC once again rejects implementation of supplier consolidated billing, and revokes its earlier direction that the Office of Competitive Markets Oversight was to submit a recommendation to the Commission in July 2013 as to how to proceed with Supplier Consolidated Billing. "[W]e are not prepared to move to an SCB environment at this time," the PUC says.

Unbundling of EDC Billing Function/Use of Third-Party "BillCo": Rejected by PUC

Accelerated Switching: PUC maintains earlier deferral of this issue to a rulemaking that won't be started until late 2013; does not address rules in end-state order

Despite the lack of any substantive change to the current market structure, the PUC, "hopes to create a structure where the market drives prices charged by EGSs, where EGSs expand their investment in Pennsylvania due to certainty and a more level playing field, and where consumers enjoy competitive prices and a wide variety of innovative product offerings."

Matters fails to see any policy in the final order which will engender greater retail supplier investment in Pennsylvania or which substantively levels the playing field. Pennsylvania may continue to attract retail supplier investment, because its existing market is superior to alternative markets for investment, but Matters does not see the PUC's end-state market design leading to incremental investment versus what would have been expected under the current market design -- the same problems plaguing the current market will continue.

The PUC's order does call for further study of some issues, despite the more than two-year process of the retail market investigation.

Notably, the PUC did direct the Office of Competitive Markets Oversight to convene a working group to identify issues related to the implementation of a model under which an entity or entities other than the utility provide default service. OCMO shall provide recommended solutions to the Commission no later than November 15, 2013.

"At a minimum, we envision that this working group will provide recommendations regarding the potential for cost recovery; the timeline in which an alternative entity would begin providing default service; whether or not multiple entities could provide default service within a single EDC's service territory; and the potential provision of net metering benefits," the PUC said.

Additionally, as the PUC rejected supplier consolidated billing and a third-party BillCo for the market, the PUC did at least direct OCMO, by the end of 2013, to submit a recommendation regarding the possibilities for making the utility consolidated bill more supplier-oriented. "The current utility consolidated bill looks like the utility's bill – with supplier information often relegated to a few lines, with the supplier's name, phone number, rate and charges. This is an especially incongruent result for many customers whose supplier generation charges actually exceed the utility's distribution charges. We are interested in pursuing options to make the supplier's charges and information more prominent. This could include making the supplier information more visible, incorporating the supplier's logo, providing more space for suppliers to provide bill messages and even the opportunity to include EGS bill inserts. The expected end-result would look more like a joint EDC-EGS bill," the PUC said.

Among the few actual new policies adopted by the end-state retail market order, the PUC directed EDCs to propose plans to implement seamless moves and instant switch at connect functionally by June 1, 2015, although final approval of any such functionality will be addressed in response to such implementation plans.

Additionally, the PUC ordered that EDCs shall publish a final Price to Compare no less than 45 days prior to the effective date of the PTC, and ordered any new procurement schedules to reflect this direction.

The PUC also said that it will establish a $2 million consumer education plan.
"[T]he Commission strongly encourages, and fully expects, those EGSs who are active in Pennsylvania to make significant contributions of funding and other resources to this campaign, which will be a part of the maximum $2 million total for the campaign and will help to offset the costs to the EDCs and their customers. The allocation of the $2 million total aggregate funding for EDCs will not be determined or instituted until after there is a clear understanding of the level and type of participation volunteered by EGSs," the PUC said.