Pennsylvania About-Face on Retail Opt-In Aggregation Could "Dampen" Retail Supplier Interest, Investment in State

The Pennsylvania PUC's proposal to indefinitely shelve the retail opt-in aggregation programs, "could dampen the desire of competitive suppliers to test the waters of Pennsylvania's retail market in the short and longer term," Interstate Gas Supply and Dominion Retail said in comments on the PUC's tentative order.

The PUC's proposal to shelve the opt-in programs, a radical departure from its established process and orders in both the retail market investigation and specific default service proceedings, had been first reported by Matters (click here). The PUC cited potential customer confusion regarding the opt-in aggregation program and the forthcoming Standard Offer customer referral program as necessitating the delay.

IGS Energy and Dominion Retail noted that the Commission had considered and explicitly rejected concerns raised about customer confusion regarding the simultaneous implementation of the programs in its final intermediate workplan retail market order issued in May 2012. The PUC affirmed this conclusion in several subsequent default service proceedings, in which it approved the opt-in aggregations, to be followed by the start of Standard Offer program. "We are not persuaded that having the two programs in effect at the same time is a concern. We also agree with FES' observation that, because the Standard Offer Program will be marketed only to default service customers and not to customers who have enrolled in the Opt-In Program, the potential for customer confusion is diminished," the PUC said in a final order issued in October 2012.

"On March 14,2013, however, upon its own motion, and without having received or cited-to new or additional evidence, the Commission reversed its course and issued an Order that tentatively concludes that the ROI [retail opt-in program] might interfere with the SOR [standard offer referral program], and as a consequence, should be suspended and possibly terminated. This action has perplexed the EGS Parties because the ROI -- which is to be a once and done affair, not a continuous 2 year plus program like the SOR -- would reach a mass market, not the narrowly targeted audience of the SOR. Properly crafted the ROI would reach a larger group of consumers and provide an opportunity unique to the SOR. It would seem logical to implement the SOR programs in a way that the referral process is commenced after the ROI is in place and customers are actually taking service through the program. At that point, those participating in the ROI, as shopping customers, will not be provided with the SOR messaging hence no confusion," IGS Energy and Dominion Retail said.

IGS Energy and Dominion Retail did not object to the Commission taking the time that is necessary to ensure that the programs are viable, "so long as there is a clear intention to see the matter through to the end in a way that is more universally acceptable."

Moreover, because of the ongoing nature of the Standard Offer referral program, "a delay in the implementation of those SOR programs to avoid overlap with the ROI may be necessary," the suppliers said.

The suppliers also suggested that to address any lingering concerns of the PUC, the opt-in program should be changed to a 12-month fixed price product, with a discount in the 5-10% range.

The suppliers also, "would not object to fixing the fee [charged to suppliers for the opt-in program] at an amount which absolutely will recover the costs of the program with the utilities then refunding any excess back to the suppliers on a pro rata basis after the full accounting for the costs of the program ... [t]hereby ensuring complete cost recovery for the utilities and ensuring that customers are not asked to bear any of the costs of the ROI program."

Additionally, given the higher costs per customer of the Standard Offer referral program, and because it is "far less likely" to transition large numbers of customers to competitive supply, the suppliers said that if a compromise per-switch-fee cannot be found, the suppliers would not oppose the Commission suspending the Standard Offer programs indefinitely, or at least until a suitable cost recovery mechanism can be derived.