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Last Of State's Original, Once-Championed Retail Market Enhancement To Be Eliminated Under Unopposed Settlement
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A much-celebrated retail energy market enhancement would be eliminated under an unopposed settlement in Duquesne Light's default service proceeding.
Specifically, the unopposed settlement would terminate the standard offer customer referral program (SOP) at Duquesne Light, as more fully discussed below
The standard offer program gives customers an opportunity to "test drive" retail choice by allowing customers to be randomly assigned to a participating SOP retail supplier, with customers provided, by program rule, a fixed rate for 12 months that is 7% less than the applicable all-in default service rate at the time of SOP enrollment
In a statement explaining its non-opposition to the settlement in Duquesne Light's default service case, the Retail Energy Supply Association described the SOP program as, "the last Commission approved program in place to encourage customers to shop."
It is not clear if RESA's use of the term "last" is meant to that mean that SOP, generally, is the last remaining program encouraging customer shopping, or the fact that, based on filing dates, the Duquesne Light's SOP program was the last (among the major EDCs) to have not yet, until the filing of the Duquesne Light settlement, been subject to a termination, a proposed termination, or a significant revision from the original SOP design
FirstEnergy Pennsylvania Electric Company's SOP is currently available, but will automatically terminate on May 31, 2027, and any continuation must be separately ordered by the PUC. As previously reported, PPL's SOP program is slated to end under a pending-but-unopposed settlement. PECO's SOP would remain in place under a contested settlement, though the non-unanimous settlement would change PECO's SOP to drop customers to SOS at the end of the SOP term unless the customer affirmatively makes a choice to remain with the SOP supplier or chooses another supplier, rather than customers remaining with their SOP-assigned retail supplier absent an affirmative action. While PECO's SOP program would remain, this change in customer disposition does materially impact how the SOP is considered in terms of being an effective retail market enhancement.
The SOP program was once celebrated by then-Gov. Tom Corbett, R, as the program was awarded (along with PA Power Switch) the "Best Customer Service Innovation" accolade among state agencies at the 2014 Innovation Expo held the by the governor
The innovation expo, whose awards were determined by a panel of judges from the private sector, was, "intended to recognize the many positive changes that are taking place across our state agencies and how they are benefiting the people of Pennsylvania," then-Secretary of Administration Kelly Powell Logan had said in a 2014 news release
In a 2014 news release, then-PUC Chairman Robert F. Powelson had stated, "The Standard Offer Program provides a voluntary, innovative approach to introducing non-shopping customers to the competitive marketplace." Powelson in 2014 had further said, "In our view, the Standard Offer Program is a 'win-win-win' for electric consumers, competitive suppliers and the Commonwealth. This is why more than 200,000 electric customers in Pennsylvania have found the Standard Offer to be anything but standard."
Duquesne Light has reported that, of the SOP customers who remain with their SOP supplier after the end of SOP term, about 75% were charged rates 25% or more than the default service rate
Some customers who remain with the SOP supplier, after the SOP pricing ends, pay "substantially" more than the default service rate, Duquesne Light has said
A report said that 19% of post-SOP customers remaining with their SOP-assigned EGS were charged rates more than 100% higher than the SOS rate
Settlement Key Terms, Signatories, Details On End Of SOP
The standard offer customer referral program at Duquesne Light would cease, while Duquesne Light would adjust its default service product mix to reduce rate volatility for certain customers, under an unopposed settlement filed in Duquesne Light's default service proceeding at the Pennsylvania PUC
The settlement, whose signatories include the utility, Office of Consumer Advocate, and Office of Small Business Advocate, would govern Duquesne Light's offering of electricity default service to non-shopping customers for the period June 1, 2025 through May 31, 2029 (DSP X)
Most notably, the unopposed stipulation would terminate the standard offer customer referral program (SOP) effective May 31, 2025.
Service for participants in the SOP program as of May 31, 2025 will continue to be governed by the existing SOP rules, until the end of such participants' SOP term.
Under a recent 32-month period, there were about 7,400 residential customer referrals, and about 6,700 enrollments, under Duquesne Light's SOP
In not opposing the settlement, the Retail Energy Supply Association cited several ongoing concerns about the Pennsylvania retail electric market, but noted that the settlement does exclude approval of several new products that were proposed to be provisioned through the utility to non-shopping customers (such as a utility green tariff and an EV-only TOU SOS rate, noted below)
RESA said that a "broader shift" is needed to address its retail competition concerns, and that such shift extends beyond what could be accomplished in a default service proceeding
"RESA remains concerned about the lack of concern
among many stakeholders and the Commission regarding how the structure of the current
competitive retail market could be improved to better support the ability of competitive suppliers
to offer more innovative and consumer oriented products and service. Unfortunately, the
Settlement does not offer any pathway for the Commission to consider the negative impacts of
the continuing dominance of utility provided default service and the Commission approved
messaging of the default service rate as the benchmark upon which all competitive offers should
be judged while proposing to terminate the customer service standard offer program -- the last
Commission approved program in place to encourage customers to shop," RESA said, though, as noted, RESA is not opposing the settlement for the reasons stated above
Default Service Procurements
Apart from a provision regarding the wholesale supplier load cap, Duquesne Light's proposed product mix and procurement schedule for SOS would be approved under the unopposed settlement
Such approval includes Duquesne Light's previously reported proposal to modify the products used to supply medium C&I default service (customers between 25 kW and 200 kW)
Under the settlement, Duquesne Light would cease the use of non-overlapping three-month contracts, with 100% of SOS load bid every 3 months, to serve medium C&I default service
Instead, Duquesne Light is to create a portfolio under which half of medium C&I non-shopping load will be served under 1-year full requirements contracts, and half would be served under 6-month full requirements contracts.
The 6-month contracts would include two separate pricing periods within the individual 6-month terms (wholesale suppliers would bid two prices, one price for the first 3 months, and another price for the second 3 months)
Supplies for Medium C&I SOS, under the products described above, would be procured every 6 months, during the same procurement which is held to obtain small customer default service (while the procurements would be held at the same time, the products for various SOS customer classes would remain distinct and separate)
For the 50% of medium C&I default service supplied under the 12-month contracts, one-half of such 12-month supplies (i.e. 25% of the needed total SOS supply) would be sought under each semi-annual procurement (thus the 12-month contracts would overlap)
For the 50% of medium C&I default service supplied under the 6-month contracts, there would be no overlap, and 100% of the supply served under 6-month contracts would be procured every 6 months
Default service rates for medium C&I customers would still be established for fixed terms of 3 months (due to the distinct 3-month pricing embedded in the 6-month contracts).
Duquesne Light had proposed the change in the medium C&I SOS product mix to promote "price stability", and had said that procuring all medium C&I supplies in the same auctions as the small customer supplies should boost competition via increased participation by wholesale bidders, who may be reluctant to participate those current medium C&I SOS auctions which occur twice a year without being held in conjunction with the small customer SOS auctions, and which thus have a smaller amount of load available in the overall procurement (as medium C&I auctions are held quarterly for 3 month products, while small customer SOS auctions occur semi-annually)
Under the settlement, there is no change to the default service product mix or pricing terms for Residential & Lighting; Small C&I; and hourly customers.
As such, default service for the Residential & Lighting class, and the Small C&I (under 25 kW) class, will be served under a mix of overlapping twelve-month (50% of the portfolio) and twenty four-month (50% of the portfolio) full requirements contracts.
Default service rates for the Residential & Lighting class, and the Small C&I class, would change every six months as is, generally, the current practice, barring any interim rate adjustments allowed under the current tariff (and for which authority would continue)
The settlement would modify the load cap for wholesale suppliers, for the residential customer supply portfolio
Currently, for both the Residential & Lighting class and the Small C&I class, a bidder in a specific procurement may not be assigned more than 50% of the applicable supply tranches in such auction
Under the settlement, for residential customers, this 50% wholesale supply load cap would apply to a wholesale supplier's entire award of tranches for residential customers across the entire residential SOS portfolio, rather than applying the cap only on the awards in a specific auction
Green Tariff For Non-Shopping Customers
As first reported by EnergyChoiceMatters.com, Duquesne Light had in DSP X proposed to offer, on a pilot basis, a voluntary Green Tariff for residential customers who have not chosen a retail supplier
Under the settlement, Duquesne Light withdraws the Green Tariff proposal without prejudice
As more fully discussed in our prior story, the Green Tariff would have provided that, for subscribing customers, an additional 7% of the customer's volumes would have been matched with carbon-free electricity (CFE) sourced within Pennsylvania
Combined with the existing AEPS renewable electricity requirement, this 7% of additional CFE would have meant participating Green Tariff customers would have received a total of 25% green energy (with 18% sourced from default service suppliers under the mandatory AEPS)
Retail suppliers and third parties would have bid to provide to Duquesne Light the applicable credits to reflect the customer's additional purchase of CFE under the program
While Green Tariff customers would have remained on default service, the name of the provider of the credits to serve Green Tariff customers would have been listed on the customer's utility bill
Automatic Drop Of CAP Customers To Default Service
Under the settlement, when a customer enrolls in the customer assistance program (CAP), Duquesne Light, effective June 1, 2025, will automatically drop that customer to default service if the customer is currently taking service from a retail supplier
CAP customers are not eligible to shop for a retail supplier, but currently, if a customer obtains CAP status after the point in time at which the customer enrolled with a retail supplier, the customer themself must contact the retail supplier to end retail supplier service and return to default service. Such return to default service is a prerequisite for the customer to receive CAP benefits
The settlement also provides that retail suppliers will not be permitted to charge termination or cancellation fees to customers who transfer to default service due to being enrolled in CAP
Other issues
The stipulation provides that Duquesne Light will continue to offer bill ready billing to retail suppliers. CAUSE-PA had proposed in the proceeding the elimination bill ready billing, alleging that the utility can not determine from bill ready billing whether any amount of the retail supplier's charges are for non-basic service, for which disconnection for non-payment cannot be initiated
Under the settlement, Duquesne Light would not implement its proposed Time of Use pilot default service rate that would apply only to EV charging usage (and not whole home usage). The pilot had been proposed for 500 customers
Duquesne Light will still offer a "whole home" TOU default service rate for EV customers, with the TOU rate applicable to all usage
As is current practice, supply for the EV TOU default service customers will not be procured separately, and will be served from the general SOS supply portfolio for the applicable customer class
P-2024-3048592
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Settlement Would Approve Default Service Changes To Reduce Rate Volatility
Utility's Proposed New Green Tariff Option For Non-Shopping Customers Withdrawn
October 2, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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