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.