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Pa. PUC "Looking At" Home Rule Opt-Out Aggregation Question

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October 20, 2010

The Pennsylvania PUC's law bureau is "looking at" the issue of home rule municipalities conducting opt-out municipal aggregations under their home rule charters.

Speaking before a National Energy Marketers Association roundtable in Harrisburg, PUC Chairman James Cawley said that the legal authority of home rule municipalities to conduct opt-out aggregations, essentially replacing the PUC's default service regulations, "might be unclear."

As noted by Matters, FirstEnergy Solutions has pitched opt-out aggregations to several home rule municipalities, and the City of Meadville has approved such an aggregation to be supplied by FirstEnergy Solutions (10/8/10).

The PUC's review will focus, in particular, on the nexus between the home rule opt-out aggregations, and the PUC's consumer protection rules, particularly the protection against slamming.

Asked by Matters when the PUC would bring clarity to this issue, Cawley said that the PUC would have an answer on whether the home rule opt-out aggregations can move forward "pretty quickly" and said that Pennsylvania would not become a "Wild West" in the interim.

The PUC's review of home rule opt-out aggregations comes as enabling legislation which would have permitted all municipalities to conduct opt-out aggregations recently died at the legislature for the current term.

Cawley took partial blame for the bill's failure.  He noted that, to avoid interfering with current default service plans, the amended bill would not have allowed any municipal opt-out aggregations to begin during the term of a currently in-place default service plan.  However, some of these plans extend through May 2013, but Cawley believed that, in the interim, some small scale opt-out aggregations would not have been detrimental, and would have allowed the PUC to gain experience with the programs.  However, the legislation as written would have prohibited even these experiments for several years, raising concern among the bill's sponsors that the bill would delay these programs rather than enabling them as intended.

While Cawley supports municipal opt-out aggregation, he said that the PUC does not desire a market where only two or three large suppliers compete to win the aggregation pools, and other suppliers are left out in the cold.

Cawley stressed, however, that if suppliers sufficiently differentiate themselves, competing against a municipal aggregation will be less challenging.

Commissioner Robert Powelson will be conducting a stakeholder process regarding municipal opt-out aggregation in preparation for next year's legislative session, where the bill is certain to resurface.

   
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