PUC Proposes Structure for Transitional Electricity Market

The PUC yesterday took a big first step toward creating an electricity market where most customers are served by competitive suppliers, and not by utilities, and unanimously voted to adopt recommendations for the next round of default service plans that will be filed by Pennsylvania’s electric utilities.

As part of its ongoing Retail Markets Investigation, on March 1, 2012, the PUC issued and Order at Docket No. I-2011-2237952 that addresses how default service will be provided after June 1, 2013.  Among the most innovative provisions, the Order requires the inclusion of a number of “competitive enhancements” aimed at stimulating shopping in the short run.  Among the competitive enhancements are a standard offer referral program that will provide customers with a minimum 4 month, 7% discount offer from suppliers, and an opt-in retail auction, where suppliers will bid to provide service to customers who volunteer, at a fixed price, with a minimum $50 signing bonus to be paid if the customer stays at least 3 months.  The Order addresses many of the specifics of these programs including the timing and structure of the offers, the auction process and the security requirements for participating suppliers.

The timing of this Order is expected to complicate the plans of the First Energy Companies and PECO Energy, since both already have filed their default service plans for the upcoming period, and their filed plans, in more than a few aspects, differ from the guidelines.

The Commission’s Final Order is available here.