Right Now: Pa. PUC Finds That Home Rule Municipal Aggregation May Not Proceed

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March 17, 2011  

At this morning's public meeting, the Pennsylvania PUC held that opt-out municipal aggregation by home rule municipalities may not proceed.

Based on the PUC's discussion, it was not clear if the PUC believes that enabling statewide legislation is required for home rule opt-out aggregation, or if it believes that the PUC has the authority, in implementing current statewide statute regarding enrollments, to allow home rule opt-out aggregation if the PUC so desired. Regardless, it was clear that PUC found that it retained jurisdiction over the issue, and that home rule municipalities may not engage in municipal opt-out aggregation by simply authorizing such aggregation in their home rule charters.

**Update, 12:16 p.m. -- A just issued news release suggests that the PUC beleives it has jurisdiction to permit opt-out aggregation (which would be consistent with the Pike County precedent). Quoting from the order, the news release states that the PUC held that, "absent a legislative change to the anti-slamming provision, opt-out aggregation programs must be explicitly approved by the Commission, and the Commission will approve such programs only in unique circumstances where it is clearly in the public interest to do so."

"Under the facts that exist at this time, Commission approval of an opt-out municipal aggregation program would be an improper and unnecessary abrogation of individual consumers' rights concerning electricity choice," the order states.

Although a full written order was not yet available, PUC Chairman Robert Powelson said that the order finds that FirstEnergy Solutions' belief that opt-out municipal aggregation falls outside the scope of the PUC's jurisdiction is, "clearly wrong."

The PUC was ruling on several petitions for declaratory order concerning the legality of home rule opt-out municipal aggregation, which were first reported in Matters (see 11/1).

Powelson said that he was "troubled" that FirstEnergy Solutions believes that such opt-out aggregation does not implicate Commission authority given the legislative requirement for direct oral or written confirmation from a customer for an electric distribution company to execute a switch.

FirstEnergy Solutions, "should have recognized [that] the Commission's jurisdiction could be implicated," Powelson said, chastising FirstEnergy Solutions for engaging home rule municipalities in negotiations for opt-out aggregation programs prior to seeking a Commission declaratory order on the programs.

While noting that the PUC has been generally supportive of legislation allowing opt-out municipal aggregation in the past, Powelson said that he is becoming "less than convinced" that municipal aggregation is a benefit to well-functioning retail markets. Powelson expressed concern that opt-out aggregation could hinder retail competition and a wide diversity of supplier offers, and that it could thus weaken the retail market.

Given these concerns, Powelson said that he believes any opt-out municipal aggregation legislation should be tabled until the PUC completes its statewide investigation of retail market issues which it said it would institute as part of approving the FirstEnergy-Allegheny Energy merger.

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