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Pennsylvania End-State Retail Market Contemplates Quarterly Auctions, Pricing for Residential Customers

By: Energy Choice Matters |

A “discussion document” outlining the retail electric market end state proposal in Pennsylvania contemplates that all non-hourly default service customers, including residential customers, would receive a 90-day full requirements load following default service price resulting from quarterly auctions.

As was first reported by Matters yesterday, the proposed end-state market design would maintain the electric distribution company in the default supplier role. While the discussion document notes that the PUC could approve an alternative default service provider consistent with existing Section 2807(e)(3.1) and regulations, it offers no endorsement or any other analysis of what would be required to grant a petition for an alternative default service provider.

The discussion document, which outlines default service for the period starting June 1, 2015, contemplates that hourly default service pricing would be extended down to 100 kW, except that, in cases where metering does not currently support hourly pricing for such customers, default service would instead be based on quarterly auction.

The discussion document is silent regarding whether the PUC believes the contemplated quarterly auctions for mass market default service customers can be implemented without statutory changes, and whether it is consistent with the “prudent mix” standard required of the default service portfolio.

The entirety of the end-state discussion design is excerpted below. The Office of Competitive Market Oversight will host a stakeholder conference call on October 17 concerning the document, which will facilitate the drafting of a tentative order proposing to adopt an end-state design, to be filed November 8.

Other notable aspects of the plan include an annual licensing fee on retail suppliers to cover PUC costs associated with the review of reports filed by EGSs, regulatory compliance issues, and bonding requirements.

Retail suppliers are also to pay a “fair share” of consumer education costs relating to choice.

The proposal also contemplates the introduction of supplier-consolidated billing, and portability of low-income customer assistance in order to facilitate shopping by such customers.

Pennsylvania PUC Retail Market End-State Proposal
1. Default Service Provider. Electric distribution company (EDC) remains in default service role unless PUC approves an alternative Default Service Provider consistent with Section 2807(e)(3.1) and regulations.

2. Default Service Product.

a. Default Service product acquired by EDCs for medium and large commercial and industrial customers (such as above 100 kW of demand) will reflect hourly Locational Marginal Pricing (LMP) prices where metering capabilities or load profiling permit such pricing.

b. Default Service product acquired by EDCs for medium and large commercial and industrial customers will reflect 90-day full requirements load following price resulting from quarterly auctions where metering capabilities or load profiling do not support hourly pricing.

c. Default Service product acquired by EDCs for residential and small commercial and industrial customers (such as below 100 kW of demand) will reflect 90-day full requirements load following price resulting from quarterly auction.

3. Timing of Transition. Transition is planned to occur on June 1, 2015, following the expiration of the Default Service Plans that are currently pending review/approval by the Commission.

4. Consumer Protections. All consumer protections will be maintained.

5. Low Income Customers. The Office of Competitive Market Oversight (OCMO) will develop a plan, to go into effect no later than January 1, 2015, which will allow customers on customer assistance programs (i.e. via portable benefits) to purchase supply from an electric generation supplier (EGS).

6. Consolidated Billing. By July 1, 2013, OCMO will provide the Commission with a recommendation to move forward with a plan that permits the implementation of consolidated billing, which allows EGSs and third parties to offer consolidated billing for supply and distribution services.

7. Accelerated Switching. By October 1, 2013, OCMO will provide the Commission with a recommendation to move forward with a plan that permits customers to switch to EGSs between meter reads.

8. Metering Services. EDC will continue to provide metering services and perform PJM settlement functions, regardless of who supplies electricity to the customer.

9. Energy and Efficiency Conservation Plans. EDCs will continue to fulfill statutory obligations to reduce consumption and demand, as per Act 129.

10. Long-Term Contracts.

a. Alternative Energy Portfolio Standards (AEPS) Contracts. EDCs will be permitted to allocate AEPS credits to EGSs and establish AEPS riders (non-bypassable surcharges) to recover costs associated with long-term AEPS contracts.

b. Other Long-Term Contracts. Other long-term contracts entered into by EDCs, including default service and PURPA contracts, which extend beyond June 1, 2015, will be held harmless through a means determined on a case-by-case basis.

11. Consumer Education.

a. A statewide campaign will be launched to increase shopping awareness, drive consumers to PAPowerSwitch.com and apprise customers of changes arising from the Retail Markets Investigation.

b. EGSs will pay fair share of the consumer education costs relating to choice.

12. Regulatory Costs/Assessments.

a. EGSs will pay an annual licensing fee to cover PUC costs associated with the review of reports filed by EGSs, regulatory compliance issues and bonding requirements.

b. EDCs will recover electric industry assessments from consumers through an automatic adjustment clause.