Contagion: Pennsylvania Now Being Cited As Reason for Other States to Retain Utility-Provided Default Service!

Pennsylvania PUC Chair Robert Powelson has been quoted in the past as saying that the PUC's goal is to make Pennsylvania the most competitive electricity market in the country, but instead of serving as a "city upon a hill" for progressive retail market reforms, it's the PUC's recent retail retrenchment which is serving as its legacy that other like-minded restructured states are being urged to follow.

Specifically, the Ohio Partners for Affordable Energy and other consumer groups in Ohio have highlighted the Pennsylvania PUC's outright refusal to remove the utility from the default supplier role in opposing efforts to modify the electric default service structure in Ohio, as Ohio proceeds with a retail electric market investigation.

"After a similar investigation of the competitiveness of retail markets in Pennsylvania that was initiated in 2011, the Pennsylvania Public Utility Commission recently issued a Final Order recognizing the need for default service and continuing the provision of default service," OPAE said.

The contagion is not limited to Ohio. AARP, in comments regarding the District of Columbia's investigation of Standard Offer Service, noted that notwithstanding the PaPUC's preferred end-state market design, the Pennsylvania PUC in the most recent default service procurement plans, "approved a two-year procurement plan for [certain] electric distribution utilities that reflect laddered wholesale market contracts and a mix of contract terms from six-months to two years."

Citing Pennsylvania's retention of utility-provided default service, OPAE concluded: "Continuation of the SSO [Standard Service Offer aka default service] is critical to ensuring an effectively competitive market. It sets a benchmark in price, terms, and conditions, which provide consumers with a clear standard by which to evaluate other competitive options. A standardized SSO will drive the changes necessary to create a market that serves consumer interests by ensuring 'the availability to consumers of adequate, reliable, safe, efficient, nondiscriminatory, and reasonably priced retail electric service' consistent with the policy goals of the State of Ohio. O.R.C.§ 4928.02(A)."

Moore good news for Pennsylvania's reputation: It is now being compared to Maryland.

"[T]he regulatory actions of the latter two states [Pennsylvania and Maryland] make it clear that a standard offer is essential to ensure that the competitive market operates in a manner favorable to consumers," OPAE said.

In fact, given each states' respective policies regarding default service procurement and POR, it can be argued that Maryland has the more favorable retail market design [quarterly pricing already in place down to 25 kW, late payment revenues used as POR offset], and that Maryland is unfairly viewed as a less desirable retail market structure when its policies compare favorably to those in place in Pennsylvania.