Electricity - HMS Legal

Electricity Default Service Plans – The Next Generation

Todd Stewart on February 24, 2012

Two electric distribution companies, First Energy and PECO Energy Company, have filed their default service plans for service that will begin in 2013 – before the PUC has issued final guidance on what those plans should include.

In an apparent effort to be the first ones through the gate, both companies have filed their plans, and are litigating those plans, before the Commission has issued final guidance as to what it expects to be contained in those plans. The Commission Order addressing the specifics of the next generation default service plans is expected to be issued in the first week of March.

The Commission issued a Tentative Order at Docket No. I-2011-2237952, proposing requirements for default service plans for the June 1, 2013 through May 31, 2015 time period. Shortly thereafter, the First Energy Companies submitted a Joint Petition seeking approval of their own view of what default service should look like in the future. The First Energy plan, which does not exactly track the Commission Order, does include competitive enhancements such as a retail opt-in auction and customer referral program. Perhaps the most novel proposal is First Energy’s market adjustment charge which would be a half cent adder to the price to compare that will compensate the companies for the risk of providing default service. The First Energy matter is being litigated before a Commission ALJ and should be resolved in the fall of 2012.

Following close behind the First Energy Companies, PECO filed its default service plan for the June 2013 through May 2015 in early January. It too has proposed retail opt-in auctions and customer referral programs. A prehearing conference in that case will be held in early March.

As the litigation of these two cases proceeds, the parties will have to wait and see what the Commission’s expected Final Order in the Retail Markets Investigation process yields with regard to guidance on the default service plans for that same time period. Based upon ALJ Elizabeth Barnes’ recent ruling in the First Energy case, we may see testimony adjustments in those ongoing cases as a result.

The Commission has been investigating ways to improve the competitiveness of the retail electricity market in Pennsylvania for nearly a year and the Final Order on the next default service plans, which is expected to be issued shortly, will likely not be the final word.

Stay Tuned….

PUC Announces Agenda for November 10th Retail Electricity Markets Investigation Hearing

William Lehman on November 7, 2011

The Pennsylvania Public Utility Commission (PUC) recently announced the Agenda for their November 10, 2011, en banc hearing, which is part of the PUC’s ongoing investigation into Pennsylvania’s competitive retail electricity markets.

Following a presentation of consumer survey results, the en banc hearing will be divided into five panels addressing issues such as consumer survey results; a statewide consumer-education campaign; accelerated switching timeframes; customer referral programs; retail opt-in auction; and default service plans beyond June 2013. The panels include a mix of consumer advocates as well as utility and supplier representatives.

The hearing is to be held:
12:30 p.m. Nov. 10, 2011
Hearing Room 1
Commonwealth Keystone Building
400 North St., Harrisburg, PA

The hearing is designed to provide insight on key issues that the PUC plans to address either before or as part of the intermediate work plan to promote competition. The PUC has selected panel participants representing a diverse set of perspectives. Panel participants will make a short presentation then the Commissioners will conduct a question and answer session of each panel.

Interested parties are welcome to submit written comments after the en banc hearing no later than Nov. 23, 2011. Comments along with any questions about the hearing should be directed to ra-rmi@pa.gov. The comments will be considered as part of the process to develop an intermediate work plan.

Retail Markets Investigation to Bear Fruit

Todd Stewart on October 7, 2011

The first product of the PUC’s Retail Markets Investigation is expected in the form of a Tentative Order to be voted on at the PUC’s October 13, 2011 Public Meeting, and will address the Electric Distribution Company (“EDC”) Default Service Plans for June 1, 2013 and beyond.

The Retail Markets Investigation, which was launched earlier this year with the intention of making “improvements to ensure that a properly functioning and workable competitive retail electricity market exists in the state,” has been hard at work for several months and this Tentative Order will be the first tangible product of the effort.

The process was initiated by an Order dated April 29, 2011. Investigation of Pennsylvania Retail Electricity Market, I-2011-2237952 (Order entered April 29, 2011). The PUC then held an en banc hearing and has, since late August 2011, been in engaged in a technical conference process where various issues regarding the enhancement of the competitiveness of the electricity markets and the future state of the electricity markets in Pennsylvania, such as eliminating the merchant function role for EDCs, have been under discussion by a wide ranging group that includes market participants and customer representatives. PUC Staff has been presiding over lengthy weekly telephone conference calls that produced lively debate on various subtopics ranging from the design of opt-in default service auctions and the EDCs’ exit from the merchant function to the design of customer information post cards that will be sent out by the PUC in the very near future.

The Tentative Order, to be voted on at the PUC’s October 13, 2011 Public Meeting, concerns the transition/bridge plans that will be needed to follow the utilities’ current default service plans that expire on May 30, 2013. The PUC Staff is expected to recommend that the PUC adopt shorter term (probably one year) plans that will also include the adoption of a number of competitive enhancements that are likely to come out of the technical conference process.

PUC Seeks Comments On Smart Meter Procurement And Installation Issues

Todd Stewart on July 21, 2011

The PUC recently issued a Tentative Order seeking comment on a number of issues involved in the implementation of the deployment of smart meter technology throughout the Commonwealth and the data transactions required to support that implementation. Smart Meter Procurement and Installation, Docket No. M-2009-2092655 (Tentative Order entered June 30, 2011).

The PUC’s June 30, 2011 Order proposes a methodology for providing real time and time-of-use pricing for companies using dual billing and rate ready consolidated billing; the means by which historical interval usage data is transmitted; and, the monthly exchange of bill quality interval usage data recorded at meter level. The Commission also clarified its expectations with regard to the required functionality it wants to see in smart meter deployment plans including the ability for smart meters to provide customers with direct access to their hourly usage and price information, support for automatic control of the customer’s electric consumption by the customer, the utility or the customer’s agent (at the discretion of the customer) and to allow for direct meter access or electronic access to the customer meter data to third parties with customer consent.

Lacking in this order, and left for resolution elsewhere, is the issue of what type of customer consent is required for access to the meter and for access to interval meter data. The issueThe issue of interval usage data privacy has been raised recently by a number of privacy and customer advocates who are concerned that interval meter data in the wrong hands can pose many threats to customers. The specific concern is that in the hands of someone who is capable of correctly interpreting the data, it can be used to learn much about a particular household’s behavior, such as what times they are home or not home, what appliances they use and when and on and on. Accordingly, these advocates want to restrict access to such data and to require affirmative customer consent before such data is released, and in some cases, before it is even gathered. For some, the concerns even involve the potential for the government to use such information to spy on its citizens, creating a very real, “big brother” scenario, law enforcement agencies already have used electric usage information as a basis of probable cause for search warrants, so the idea is not much of a stretch. Some have even raised the concern that customers be able to opt out of having a smart meter installed.

The Office of Consumer Advocates comments in response to the PUC’s Reconsideration Order in Interim Guidelines for Eligible Customer Lists, Docket Nos. M-2009-2183412, et seq. (Order entered June 13, 2011); exerted significant effort on addressing the need for express and affirmative customer consent to the release of any real time usage data. The OCA argues that any data derived from real time metering is subject to such provision under Act 129, 66 Pa. C.S. § 2807(f)(3). Others would argue that only the real time data or access to the meter is subject to the restriction. It is clear that the statute requires some form of customer consent, but so far the PUC has yet to provide guidance on what form that consent must take.

Comments to the data exchange questions posed by the Order are due on July 30, 2011. Reply comments at Docket Nos. M-2009-2183412 are due July 28, 2011.

PUC en banc Hearing: A Resounding Success

Judith Cassel on June 17, 2011

The PA PUC’s recent public hearing to explore the future of the competitive electricity markets in Pennsylvania was no less than a resounding success according to Chairman Robert Powelson of the Commission.

On June 9, 2011, four panels of witnesses provided testimony before all five Commissioners sitting en banc. The witnesses included Former Secretary of the Department of Environmental Protection, John Hanger; Chairman of the Texas Public Utilities Commission, Barry Smitherman; the Chief Executive Officers of all Pennsylvania’s electric distribution companies; and a number of representatives of electric generation suppliers operating in the Commonwealth. As expected, the witnesses representing “consumer” interests testified that the existing market structure and performance are well within acceptable limits. As part of his concluding remarks, however, Chairman Powelson responded to those contentions, stating that “the status quo is not an option.” Also notable was that the CEOs of each of Pennsylvania’s electric distribution companies agreed (some more than others) with Chairman Powelson’s suggestion that the best use of the talents of the EDCs is to be “infrastructure companies,” rather than default suppliers, assuming the opportunity for an orderly transition out of the default service business.

There were a number of other constructive proposals for near term changes that could be made to the electricity markets to make robust competition more likely, short of requiring the electric utilities to exit the merchant function, though most would require legislative change. John Hanger, himself a former PUC commissioner, had a number of excellent suggestions, including requiring new customers to affirmatively choose a supplier out of a list of suppliers that may include default service as an option. This same requirement would apply to customers who move within a service territory or who are disconnected for whatever reason.

Comments have been filed by well over twenty (20) parties not including those that testified, which shows a tremendous amount of interest in the development of competition in Pennsylvania’s electricity markets on a going forward basis. The Commission expects to hold at least one more en banc hearing, possibly two, to thoroughly vet all of the ideas before reaching any final decisions.

PUC Launches Investigation of Pennsylvania’s Retail Electricity Market

Todd Stewart on April 28, 2011

In a 4 to 1 vote, the Pennsylvania Public Utility Commission “officially launch[ed] the investigation of the competitiveness of the retail electric market with the goal of making recommendations for improvements to ensure a properly functioning and workably competitive retail electric market.”

On the Joint Motion of Chairman Powelson and Vice Chairman Coleman, the Commission launched a two-phase investigation that will first assess the current status of the retail market and explore what changes need to be made to allow customers to see the benefits of competition. This first phase will include an en banc hearing currently scheduled for June 8, 2011. The second phase of the investigation will be an examination of how best to resolve the issues raised and implement prudent changes. The second phase also will include an en banc hearing to be scheduled later.

As an initial step, the Commission has asked interested parties to address a list of eleven questions by June 3, 2011. The inquiries include:

• The present status of competition by class and service territory for alternative suppliers;

• Whether the present market design in Pennsylvania presents barriers to a fully workable competitive retail market and do those barriers vary by customer class to the extent they exist;

• What economic and managerial costs are associated with fulfilling the default service role by EDCs;

• Whether there are unintended consequences associated with EDCs providing default service; and,

• Whether the parties believe that default service should continue its present form or be fulfilled by another entity.

These and the other questions make it clear that the Commission is considering all issues and options to be “on the table,” including whether the Commission should advocate requiring electric distribution companies to exit the merchant function. Such a move would require legislative action, but it would appear at least that the Commission is prepared to seek legislative authority if there are facts to support such a policy shift. It is likely that the entire process could take at least nine months to a year.

PUC Stalls Met-Ed/Penelec Customer Education Plan

Todd Stewart on April 4, 2011

The Pennsylvania Public Utility Commission unexpectedly voted to delay implementation of the electricity shopping Customer Education Program for Metropolitan Edison Company and Pennsylvania Electric Company. The Commission was addressing an audit of the plans, which cost about $900,000 each, when it suspended implementation pending further comment from participants. The Commission appears to be concerned that, due to lack of electric generation supplier participation in those territories, customer education about competitive alternatives may be premature.

The March 31 Commission vote was prompted by Commissioner Cawley’s motion, which noted that there are only two or three electric generation suppliers serving each of the Met-Ed and Penelec service territories, and questioned whether it is appropriate to “roll-out” retail choice education until the market further matures. The Education Programs at issue were agreed-to as part of the settlement of the Companies’ latest default service cases. The settlement requires Met-Ed and Penelec to notify residential and small commercial customers of participating EGS offers by mail.

The Commission has asked stakeholders to address a number of questions, including:

(1) whether the Customer Education Program should be delayed until a certain number of EGSs have entered the market, and, if so, what the threshold number should be;

(2) whether the Education Program should move forward for either residential or small commercial customers separately or for both at the same time; and

(3) whether there are EGSs that intend to enter these service territories in the near future and whether a delayed and more concentrated campaign might be more effective at a later date.

The Commission suspended the implementation of the Education Program until it has received these answers and has an opportunity to review them.