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Pennsylvania Municipalities Claim Authority To Implement Opt-out Municipal Aggregations
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Several Pennsylvania boroughs have claimed to the Pennsylvania PUC that they have the authority to adopt opt-out municipal electricity aggregations, and have sought a PUC declaratory order to that effect
Specifically, the Boroughs of Carlisle, Hatboro, Lansdowne, Media, Narberth,
State College, and Swarthmore asked the PUC to hold that the opt-out nature of the aggregation
will not constitute "slamming" and will not violate Public Utility Code Section 2807(d)(1).
The Boroughs said that their contemplated opt-out programs would include residential customers and small businesses
The
Boroughs said that they represent fewer than 50,000 households across three electric utilities
The Boroughs claimed that they have "explicit power" to implement opt-out municipal aggregations under the state's Borough
Code
The Boroughs further claimed, "Pennsylvania courts have
held that both the Boroughs and the Commission bear responsibility under the ERA [Environmental Rights Amendment] to exercise
their authority under their respective legal mandates to ensure that Pennsylvania’s citizens have a
right to enjoy clean air, clean water, and preservation of environmental values," as the Boroughs alleged that their opt-out aggregations are needed to support greater amounts of renewable energy
The Boroughs asked that the PUC find that Boroughs "adopting" a municipal aggregation, as well as the Boroughs' "CCA Administrator", do not need to be licensed as an electric generation supplier (EGS). The term EGS in Pennsylvania includes brokers, marketers, and aggregators, in addition to load-serving retail suppliers
The Boroughs claimed that a CCA Administrator does not "act as a
broker or marketer in any traditional sense," while stating that the CCA Administrator, "provides advice to the Boroughs in connection with
their right of approval over EGS power purchases."
"The Boroughs request clarification under Public
Utility Code Section 2809(a) that an administrator hired by a Borough to advise it and act as its
agent in connection with its CCA Program, will not be deemed to be acting as a broker or a
marketer and is not required to be licensed as an EGS," the Boroughs said
As to the Boroughs themselves, the Boroughs said that the EGS definition in statute excludes municipal corporations which do not provide service outside of their municipal limits. The Boroughs further said that the term "corporation" under the EGS definition excludes municipal corporations
The Boroughs said that they have the
power to make aggregated electric supply arrangements on behalf of their citizens under Borough
Code Sections 24A02(a) and 24A03 and that Public Utility Code Section 2809(a) does not
require a Borough adopting the CCA Program to be licensed as an EGS.
"The Public Utility Code embodies the principle that
municipalities such as the Boroughs are public bodies that serve as effective protectors of customer
interests unless they provide services outside their municipal limits," the Boroughs said
"Moreover, the Boroughs have
a constitutional duty under the Pennsylvania Environmental Rights Amendment ('ERA') to act
to reduce climate risk on behalf of their residents and the citizens of the Commonwealth that is
mirrored by a duty of the Commission to support such action," the Boroughs said, citing several state supreme court decisions alleged to support the Boroughs' authority to take climate action, such as their renewables-focused
opt-out aggregations
The Boroughs alleged, "Energy generation suppliers ('EGSs') often offer customers unfavorable contract
terms, and customers have little or no ability to negotiate those terms. The Boroughs aim to
increase retail supply competition by aggregating enough load to achieve bargaining power. The
boroughs expect to be able to negotiate favorable contract terms on behalf of their residents, and
CCAs throughout the nation have reduced and, in many locales, eliminated unscrupulous EGS
practices through effective competition. Consumer education and deeply motivating community
interest and engagement are also a key part of the Boroughs’ approach."
The Boroughs said that the CCA
for PA Committee, described by Boroughs as a group of professionals who assist municipalities
interested in adopting CCA, have helped the Boroughs explore municipal aggregation
Each Borough has executed a non-binding Memorandum of Understanding with
Joule
Community Power in the expectation that Joule may serve as each's CCA Administrator
The Boroughs cited the PUC's approval of an opt-out retail aggregation plan at Pike County Light & Power in 2006, in which the PUC said that the opt-out program, "under this Commission’s oversight and according to the terms and conditions of
the Request For Proposals attached hereto, does not constitute slamming or violate the
prohibitions of the statute." [emphasis added]
The Boroughs claimed that this finding, for a process in which the PUC ran the opt-out program in terms of design and selecting an EGS, shows that the slamming prohibition in the Public
Utility Code
does not apply when an opt-out program is operated in a manner designed to prevent
anti-competitive abuse by an EGS and under the supervision of an, "independent entity charged with
the public interest."
The Boroughs alleged that circumstances have changed since the PUC subsequently denied an opt-out aggregation at the City of Meadville in 2011. In the Meadville decision, the PUC did not address a municipality's authority to implement opt-out aggregation, but said that unique or exigent circumstances had not been proven to justify Meadville's proposed opt-out program, as the PUC cited, among other things, multiple competitive retail supplier offers available in the market
The Boroughs alleged, "Retail competition has proven not to be the benefit for residential and small
business customers that was hoped at its inception and has not produced competitive prices for
renewable energy."
The Boroughs alleged that under the opt-out program they are, "seeking to carry out their Constitutional mandate under the ERA by providing their residents with
low, stable prices for renewable energy coupled with effective protection from unscrupulous
commercial behavior."
"The Boroughs respectfully request Commission review of the Borough Program
in the light of the Commission’s Constitutional obligation to preserve the Boroughs’ ability to
carry out their Constitutional duties," the Boroughs said
The Boroughs said that the Borough Code provides that, "A borough may, either singly or jointly, manufacture or
purchase electricity for the use of its inhabitants ..."
"The purchase of power
for use of a Borough’s inhabitants necessarily requires access to a means of distributing power, but
this language in Borough Code does not require that a borough establish a municipal utility or own
the means of distribution ... In other words, a contract for an EDC to provide transmission,
distribution, billing, and related services at its regular rates (essentially what it does for any EGS)
would not be subject to Commission approval. This is not a direction that the Boroughs have
pursued, but it demonstrates that there is no need to narrowly construe the powers granted in the
Borough Code," the Borough said
Docket P-2024-3049623
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Seek PUC Order That Their Opt-out Programs Do Not Constitute Slamming
Boroughs Allege CCAs In Other States Have Eliminated "Unscrupulous EGS Practices"
June 20, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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