Press Release

PUC Finalizes Three Proceedings as Part of Overall Strategy for Addressing Electric Generation Rates

Published on 5/10/2007

Filed under: Electric

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today approved the final regulations and policy statement that will establish the rules for default service for electric generation as well as a plan to mitigate and prepare Pennsylvania electricity customers for potential significant price increases that included the possibility of a $5 million consumer-education campaign.

As part of this overall strategy for preparing consumers for potential increase in generation costs, the Commission voted 4-0 to approve a motion by Commissioner Terrance Fitzpatrick that included initiating consumer-education efforts regarding energy efficiency, conservation and demand side response and low-income programs. Chairman Wendell F. Holland issued a concurring and dissenting statement on the plan.

The Commission also voted unanimously to adopt the final rulemaking and policy statement that governs how electric generation service is provided to customers who choose not to obtain generation service from an alternate electric generation supplier.

           The default service regulations are one of the most important rulemakings for the Commission since the restructuring of the electric industry. The Commission reopened the public comment period for the regulations in November 2005 to address conditions in the wholesale market and the relationship between the default service rulemaking and the Alternative Energy Portfolio Standards Act of 2004.

Rulemaking for default service regulations

In developing the final rulemaking, the Commission attempted to craft rules that represented a balanced approach to acquiring reasonable priced supply in a manner that balanced the interest of all stakeholders, while meeting the requirements of the 1996 electric competition law. The law requires electric distribution companies, or a Commission approved alternative supplier, to provide default electric generation service to customers who have not selected an alternative electric generation supplier.

The final rulemaking addresses:

• Competitive safeguards;
• Program terms and conditions of service;
• Procurement and implementation plans;
• Standards for transferring customer accounts;
• Rate design including the “price to compare;” and
• Recovery of costs.

The rulemaking now goes before the state’s Independent Regulatory Review Commission, the Office of Attorney General, Governor’s Budget Office and the standing committees in both houses of the General Assembly for review. Once that review is completed, the regulations would become file one published in the Pennsylvania Bulletin.

Policy statement for default service regulations

The policy statement contains guidelines for the default service providers in the areas of procurement, rate design and cost recovery. The Commission recognized that some elements of the default service rules should be addressed in a policy statement rather than a rulemaking because changes in markets and technology may result in an approach that is too narrowly tailored or too unresponsive to serve the state’s interests.

The policy statement:

• Addresses retail market issues;
• Recommends that default service providers give customers the option to defer paying some portion of a rate increase for a period of time under certain conditions;
• Addresses interim price adjustments and cost reconciliation;
• Allows default service providers to craft an approach for electric generation supply procurement that is best suited to its own territory; and
• Includes an array of guidelines intended to improve competitive solicitation processes.

The policy statement also establishes a Retail Markets Working Group to develop policy recommendations, which are aimed at removing barriers to retail market development including rate-ready billing, customer referral programs, uniform statewide supplier tariffs and a retail choice ombudsman at both the Commission and Electric Distribution Companies.

The policy statement will become effective when published in the Pennsylvania Bulletin. The policy statement may be revised based on experience gained from future proceedings. The Commission also may move some elements of the policy statement to the default service regulations in the future.

Please follow the link below to read the rest of the press release:

http://www.puc.state.pa.us/general/press_releases/press_releases.aspx?ShowPR=1753

Contact:

• Press Secretary
  717-787-5722