Pennsylvania Standard Offer Customer Referral Programs -- Doubling Migration, or Keeping A Sinking Market Afloat?

Several of the Standard Offer Customer Referral Programs offered by Pennsylvania electric distribution companies commenced at the start of August, and while enrollments under some of the programs are solid, data suggests that the enrollments could merely be offsetting what would otherwise be a decline in electric shopping, rather than growing the market as intended.

Under the Standard Offer Customer Referral Programs, EDCs will refer certain customers calling the utility (such as those with high bill complaints) to a randomly selected retail electric supplier participating in the program. The supplier must offer the customer a standard 7% discount versus the currently effective Price to Compare, with such rate fixed for 12 months.

The Standard Offer referral programs were due to commence at Met-Ed, Penelec, Penn Power, West Penn Power, and PPL on August 1. The programs are to begin at Duquesne Light and PECO within a few days.

As of publication time, only Met-Ed, Penelec, Penn Power, West Penn Power had provided Matters with requested information on the programs.

The FirstEnergy Pennsylvania utilities said that, across Met-Ed, Penelec, Penn Power, and West Penn Power as of August 14, 4,495 customers have been enrolled through the Standard Offer referral program.

While this is a solid number, especially considering the limited universe of customers to which the program is promoted, given current migration trends at the FirstEnergy EDCs, the Standard Offer referral program could end up being the sole driver of net customer growth.

Specifically, the aggregate number of customer accounts on competitive supply at each FirstEnergy EDC was as follows on July 31 and August 14 (per PUC data):

                     Aug. 14      Jul. 31      Change
Met-Ed               186,788      185,603      1,185
Penelec              203,506      202,575        931
Penn Power            53,102      52,430         672
West Penn Power      209,620      209,252        368
Total                653,016      649,860      3,156

In other words, from July 31 to August 14, the four FirstEnergy EDCs saw a total increase in electric shopping of 3,156 accounts.

As noted above, this is less than the number of enrollments recorded through the Standard Offer program for the first two weeks of August, which was 4,495.

Now, it is not clear how many (if any) of these 4,495 Standard Offer enrollments were included in the August 14 migration stats for the FirstEnergy EDCs (based on factors such as whether pending enrollments are included, and if not, how many of the 4,500 Standard Offer enrollments were completed prior to August 14 given the "accelerated" switching timeline in place), and to be conservative, Matters will assume at this point that none of the Standard Offer enrollments were included in the August 14 migration data.

And if none of the Standard Offer enrollments were included in the August 14 migration data, then the Standard Offer program more than doubled "organic" enrollments during that timeframe (how Standard Offer enrollments compare to executed "organic" enrollments during the period they are actually completed remains to be seen). However, if the bulk of the Standard Offer enrollments were already reflected in the August 14 data, then their impact in increasing net migration is much smaller, and possibly could even be offsetting what would otherwise have been a loss of shoppers.

The FirstEnergy EDCs told Matters that there are currently three electric generation suppliers participating in the Standard Offer customer referral program in their Pennsylvania service territory. The FirstEnergy EDCs would not disclose the specific EGSs participating in the program, though it would appear that this information is de facto public information, since any customer calling the EDCs' call center seeking the program would be told at least one of the EGS participants (the one they are referred to), and this same customer could repeat this process to find out the different EGSs. Matters would also note that similar programs in New York publicize a list of participating retail suppliers in the program, as part of promoting the program on their website (see ConEd's PowerMove list of participating ESCOs).

The participation rate of three ESCOs is a bit underwhelming, though not dissimilar to referral programs in certain markets (Connecticut). We'll wait to see the participation rate for other Pennsylvania service areas before passing judgment.