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Pa. PUC Approves Placing New Shadow Billing Chart On First Page Of Shopping Customer Bills At PECO
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In PECO's electricity default service proceeding, the Pennsylvania PUC has denied most of the proposed changes sought by retail suppliers, with the PUC approving an on-bill chart comparing electricity default service and shopping costs, though the PUC did reject the term of a non-unanimous settlement that would have required that customers under PECO's standard offer customer referral program (SOP) shall be dropped to default service at the end of the SOP term, rather than remaining with their referral SOP supplier (as is current practice)
The PUC, in an order on PECO's default service plan for the period June 1, 2025, through May 31, 2029, (DSP VI) approved, for residential shopping customers, the implementation of a monthly bill chart, to appear on the first page of utility consolidated bills, which compares the costs for shopping customers under their retail supplier versus the amount that the customer would have paid under PECO's price to compare.
This residential shadow-billed cost comparison chart will only list the total amount due under EGS service, in one column, and the amount that would have been due under default service, in a second column. The approved chart omits an earlier proposed column that would have presented, in dollar form, the additional costs, or savings, under retail supplier service versus default service.
The column for the shadow-billed default service amount includes in its label the phrase "to Compare" [sic].
See an example of the approved shadow billing comparison chart below (click image for larger example, or click here)
The PUC, in adopting the cost comparison chart for residential UCB customers, said that the information presented by the chart is "factual" and provides additional education and transparency
The shadow-billed comparison chart is not anti-competitive, the PUC said, because, among other reasons, the shadow-billed comparison chart, "provides no inherent judgments or conclusions regarding EGS [retail supplier] prices versus the PTC [price to compare]".
Retail suppliers' arguments that the comparison chart would promote default service as being superior to shopping are speculative, the PUC found
In addressing supplier objections to the shadow-billed comparison chart, the PUC said that PECO will "continue" (i.e., no change to current requirements) to provide, as described by the PUC, "adequate" space on the UCB bill for retail suppliers to provide additional information to customers describing retail suppliers' products and pricing.
Turning to the standard offer customer referral program (SOP), the PUC ordered that the current program should continue without modification
In particular, the PUC denied a proposal from a non-unanimous settlement to change the treatment of SOP customers who do not make an affirmative choice at the end of their SOP term.
Currently, such customers remain with their retail supplier as assigned under the SOP program, on a rate determined by the supplier, with no early termination fee.
Parties to the non-unanimous settlement, which included PECO, the Office of Consumer Advocate (OCA), the Office of Small Business Advocate (OSBA) and other consumer advocates, proposed changing the SOP such that customers who do not make an affirmative selection at the end of their SOP term must be dropped to default service
The PUC found that parties in favor of this change did not adequately support with specific SOP-related evidence any harm from the current practice that would justify changing the prior design of the SOP adopted by the PUC in its retail market investigation and earlier default service plans
Parties favoring the SOP change cited, in general, higher costs under retail supplier service than default service for residential customers (with residential shoppers paying $800 million more than the price to compare over six years, see details here)
However, the PUC said that such data applies to the entire residential shopping market, and does not demonstrate any specific harm which may result to SOP customers who remain with their SOP supplier due to inaction
The PUC said that proponents of the SOP change did not, for example, demonstrate higher complaints from SOP customers, or increases in arrearages or disconnections for SOP customers (though terminations for shopping customers, generally, was cited by some parties, the PUC noted that this data was not specific to SOP participants)
The PUC cited evidence demonstrating that 80% of respondents in an SOP customer satisfaction survey reported a positive experience with PECO's SOP
Moreover, the PUC generally cast doubt on the use of higher costs under retail supplier service versus default service as being dispositively indicative of customer harm, "because customers could be making shopping decisions based on factors other than price, such as the specific product offered or the length of the contract."
The PUC said that, in the future, to the extent parties offer new evidence alleging harm to customers specifically from the SOP program design, the PUC would review such evidence on a "de novo" basis (in other words, the PUC would not grant deference to its finding related to the SOP from the case decided today)
Because the PUC rejected the contested settlement's change to the SOP program, settling parties may withdraw from the settlement. The PUC gave parties five business days to indicate any withdrawal
The PUC said that any withdrawal by a party would result in the PUC's instant order adopting, with modification, the non-unanimous settlement being disapproved, and the entire default service plan would automatically be sent back to an ALJ for further proceedings
Additionally, because the PUC rejected the change to the SOP program design, the PUC did not address, as moot, arguments from retail suppliers that moving non-acting customers from their SOP suppliers to default service would constitute slamming
However, PUC Vice Chair Kimberly Barrow said that dropping non-acting SOP customers to default service would not violate 52 Pa. Code § 54.10, which generally sets forth automatic renewal provisions for retail supply service for customers not making an affirmative choice at the end of a contract term (applicable to any contract, not specific to SOP). In addition to slamming arguments, retail suppliers said that automatic drops of SOP customers to default service would run afoul of retail supplier obligations under 52 Pa. Code § 54.10
Barrow said that, under the proposed change in the SOP program, customers would affirmatively consent at the initiation of SOP service for the customer to be returned to default service at the end of the SOP term, absent customer action to the contrary. Such a return to default service as a result of affirmative customer consent at the time of SOP enrollment is not contrary to the auto-renewals provisions of § 54.10, Barrow said
In favoring changes to the SOP, Barrow said that, "shopping is not new," and that suppliers do not need the, "leg up".
Barrow expressed concern that SOP customers may not be familiar with their pricing at the end of the SOP term, in comparison to customers who actively choose a supplier who may be more aware of shopping and the end-of-contract process.
Commissioner Kathryn Zerfuss agreed with Barrow's comments
While the SOP program at PECO will continue under its current design, PECO is the only EDC at which the SOP has not either been subject to termination (at the FirstEnergy EDCs effective in 2027 and now at PPL effective in 2025 in an order issued today, see our related story posted today) or has a proposed termination pending in an uncontested settlement (Duquesne Light) [see ECM's prior story here for discussion of SOP programs ending]
Aside from the rejection of the non-unanimous settlement's SOP changes, the PUC denied all of the other objections from retail suppliers to the default service plan
Among other things, the PUC adopted the use of six-month fixed Prices to Compare for non-hourly (residential and small C&I) customers, departing from the current PECO practice of quarterly PTC changes for mass market customers
The PUC noted that 99% of PECO's residential default service portfolio will be served under full requirements contracts which, while overlapping, have end dates that align with the end dates of six-month fixed PTC periods. The PUC thus said that a six-month PTC is reasonable given that there will be no interim change in 99% of the default service portfolio during the 6-month PTC term (1% of residential supply will be spot pricing, offset by a long-term solar PPA)
The PUC noted that six-month fixed PTCs are common at other EDCs in Pennsylvania for small customers
The PUC also rejected as unsupported by evidence retail suppliers' request that the PUC open a statewide proceeding on the price to compare and messaging related to the PTC. The PUC further found that initiation of such a broad investigation of the PTC would be inappropriate through a narrow default service proceeding specific to one utility
The PUC also adopted the use of a capacity proxy price in default service auctions to the extent the PJM capacity price is not known.
The PUC dismissed concerns from retail suppliers that a CPP is anti-competitive and harms the retail market
The PUC cited the different business models and obligations between retail suppliers and default service suppliers, with the PUC stating that retail suppliers, "can offer products with any term length."
"EGSs [retail suppliers] have the flexibility to manage risk regarding unknown PJM capacity prices in the products they offer in the competitive market, including products to address issues arising from delays in PJM capacity auctions," the PUC said
The PUC said that the use of a CPP in default service procurements will, "create certainty and improve price stability[.]"
The PUC denied a proposal from certain retail suppliers to address the long-term procurement of solar AECs by PECO in a competitively neutral manner. Under the approved default service plan, PECO will procure, under 10-year solar PPAs, energy, capacity, and solar AECs for residential default service
To the extent the PUC adopted the use of a long-term contract for solar AECs, RESA suggested that solar AECs procured under the long-term PPAs should be used to offset AEC obligations related to all distribution customers (including customers of retail suppliers), with nonbypassable cost recovery (similar to prior treatment at some EDCs and similar to treatment of certain non-market PJM charges, for example)
The PUC found RESA's AEC proposals unsupported, and approved the continue use of PECO's procured solar AECs to offset default service wholesale suppliers' obligations. Retail suppliers have opportunities in the market to hedge or procure their own AECs, the PUC said
The PUC adopted the non-unanimous settlement's provision under which PECO will conduct an evaluation of its current default service Time of Use offering for residential customers. While RESA noted that default service providers must offer a TOU generation rate under statute, RESA said that it is inappropriate for EDCs to expend ratepayer funds to research and refine TOU generation supply products which are better left to the retail market
The PUC said that, "We find that an assessment and analysis of enrollment rates, customer characteristics and preferences, and seasonal variation is a sensible approach to considering potential adjustments to the TOU rate offering."
The PUC also rejected retail suppliers' proposed direction that PECO shall work collaboratively with retail suppliers during the implementation of any new CIS. The PUC said that the concerns raised by retail suppliers have been resolved with respect to a recent CIS upgrade, and that imposing future requirements at this time would be inappropriate based on "speculation" of future problems.
Aside from rejecting a proposed change in the SOP as described above, the PUC adopted PECO's default service plan as set forth in the non-unanimous settlement without any other modification
Full details of the default service plan are described in our prior story here (there is no change to the plan as described in our prior story except for the SOP change)
In brief, key elements of the default service plan include
• Retail suppliers may not charge an early termination fee to a customer leaving EGS service to enroll in PECO's Customer Assistance Program (CAP). CAP customers may not be served by a retail supplier
• PECO will not automatically drop customers enrolling in CAP to default service, but will propose such a change in its next DSP
• To supply residential non-shopping customers, PECO will continue to procure a mix of one-year (approximately 38%) and two-year (approximately 61%) fixed-price full requirements (FPFR) contracts, with six months spacing between the start of the contract delivery periods, with 1% filled from spot purchases offset by the new long-term solar procurement noted above
• Small commercial default service (100 kW and under) will continue to be supplied by equal shares of one-year and two-year FPFR products, procured approximately two months prior to delivery
Docket Number P-2024-3046008
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PUC Rejects Dropping Customer Referral Program Customers To Default Service At End Of Referral Term
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PUC Sets PECO Default Service Plan
November 7, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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