Pennsylvania: This is Going to Get Worse Before It Gets Better

As Matters shockingly reported today (see related story), the Pennsylvania residential electric market has now seen its first weekly decline in aggregate shopping totals, and the real bad news is that market conditions are expected to get worse before they get better.

Consider especially new Prices to Compare for residential customers.

At PECO, the June 1 residential Price to Compare will decrease to 8.82¢/kWh from 9.61¢/kWh.

A June 1 Duquesne Light residential Price to Compare is not listed on PA Power Switch nor is an estimate provided (nor is this info on this Duquesne Light PTC page); however, the Duquesne Light residential Price to Compare is expected to significantly drop on June 1 as Duquesne Light transitions to market-sourced default supply, in place of its above-market managed fixed rate.

Although headroom will vary with market prices for retail providers' supply, all other things being equal, the new Prices to Compare will make the currently challenging environment worse. Given that PECO and Duquesne Light are seeing declines in residential shopping right now, as indicated in the most recent stats, and that the new Prices to Compare will be more competitive, and that given the closeness to June 1 (and the fact that with the summer any market price movement would likely be higher than lower), it seems clear retail suppliers will continue to struggle in these service areas.

Actual or estimated June 1 Prices to Compare are also not available for the FirstEnergy EDCs from PA Power Switch (nor on the EDCs' Price to Compare pages, Met-Ed/Penelec), while PPL is estimated to see about a 1¢ increase in the June 1 residential Price to Compare, to 8.237¢/kWh.

And there are no market changes on the horizon which will appreciably help retail suppliers combat the current climate in Pennsylvania, which appears to be a combination of the bias to default service, and default rates which do not reflect the fully unbundled cost of serving a retail customer. Notably, the Pennsylvania PUC has flatly refused to address both of these issues, stating its preference for utility-provided default service (though with quarterly supply contracts), and declining to open an investigation into full unbundling.

Now delayed to August, the Standard Offer customer referral programs are not expected to provide a material boost to shopping, given the limited universe of customers to which the programs will be marketed (customers calling the EDCs with high bill complaints or certain other issues). As previously reported, the opt-in retail aggregations programs, which would have helped address status quo bias, have been indefinitely shelved.