Pennsylvania

Restructuring Overview  |  Public Benefits  |  Restructuring Resources  |  Consumer Protection  |  News and Analysis

Legislation Passed
Electric Y Gas Y

Electric: 1996, HB 1509; Initial Restructuring Bill

Gas: 1999, House Bill No. 1331; Initial Restructuring Bill

Electric
Overview

• 1999-2002: Under Pennsylvania's 1996 restructuring act, two-thirds of the state's consumers, both commercial and residential, gained choice on January 1, 1999. The final third gained choice in January 2000.
• The Public Utility Commission required utilities to mail information packages to all consumers who had not chosen a competitive supplier by September 1999 explaining consumer choice, the "price to compare," and a list of competitive suppliers serving their rate class and location. The legislation encourages suppliers to use competitive bidding to obtain default, or provider-of-last-resort, service.
• The PUC plan for transition to competition includes two rates caps -- one for generation (actual power) and one for distribution costs -- both to stay in place until the utilities' stranded costs (the costs of their investment in generating facilities) are paid off. The price of default service is closely related to the rate caps. Total rates are capped at 1997 levels until 2005 in many cases, and generation rates are capped at set levels until 2010 in most territories. Customers who try the competitive market and then return to their original utility still receive the protections of the rate cap. The rate caps have so far shielded residential customers from significant volatility in the wholesale market.
• June 2000: The Public Utility Commission addressed specific utility and consumer concerns in the restructuring plans and orders for individual utilities. The PUC approved the proposed merger between PECO Energy Company and Unicom Corporation in June. This merger provides $200 million in rate reductions from 2002 through 2005, an 18-month extension on existing energy delivery rate caps, an additional $3 million for service funds that assist low-income households, quality service benchmarks and performance measurement criteria for electric reliability and customer service, and a nearly $20 million investment to support the development of wind and solar power generation.
• Under PECO Energy Company's restructuring plan, 300,000 residential customers that had not chosen a competitive supplier were randomly chosen and switched to The New Power Company, which was chosen by PECO to provide "Competitive Discount Service" from March 2001 through January 2004. Customers were able to opt out of the program or choose another electricity supplier without penalty.
• June 2001: The PUC approved a settlement with GPU, Inc. and First Energy Corp (a merger between the two utilities is pending) that preserves customer rate caps, encourages customer participation in choosing alternative generation suppliers, and increases support for renewable energy and conservation programs. Distribution rate caps were extended to 2005. Total generation rates continue at the same levels through 2010. There are no rate hikes for customers under the settlement. However, GPU will be allowed to defer all past losses and all future losses through 2005 and carry them on its books through 2010.
• PPL and its marketing subsidiary PPL EnergyPlus completed an agreement to provide default power at pre-established capped prices for customers who do not shop for suppliers in the open market. The contract will run through 2009, the end of the company's transition period.
• 2001: A six-month PUC investigation of PPL Utilities found evidence that the company unfairly manipulated wholesale electricity markets in early 2001, subsequently damaging wholesale retail markets and the public’s confidence in them. The PUC has referred the case to the U.S. Department of Justice, the Federal Energy Regulatory Commission, and the Pennsylvania Attorney General for appropriate action.
• April 2003: Peco began attempts to assign half of its 1.5 million electricity customers to competing energy supplier, as required by a legal settlement under the state’s deregulation law. The utility is offering competitive suppliers the opportunity to bid for them. Customers will then be randomly assigned by computer to the winning bidders, and receive a 1.25 percent discount from Peco's electricity generation and transmission rates for at least one year. Those customers will be notified by postcard, and will automatically begin receiving the discount unless they choose to keep Peco as their supplier.
• June 2003:The Pennsylvania Public Utility Commission begins publishing an online newsletter examining competition in energy and telecommunications markets: http://www.puc.paonline.com/com_info/Keystone_Competition/KC_Summer_03.pdf

Choice Status

• While Pennsylvania’s shopping statistics look better than those of other states, the number of customers served by alternative suppliers has nose-dived since April 2001 when the number peaked at 708,071 residential customers (out of 4.7 million eligible residential customers). As of July 2003, alternative suppliers were serving 232,225 residential customers.

Natural Gas
Overview

• The Pennsylvania General Assembly passed the Natural Gas Choice and Competition Act in June1999 to provide statewide unbundling for all residential and small commercial gas customers by July 1, 2000. The act required all local distribution companies (LDC's) with annual gas operating revenues of $6 million or greater to file restructuring plans with the Pennsylvania Public Utility Commission by November 1, 1999. It also provides for licensing requirements for all would-be gas suppliers, includes procedures for ensuring their financial fitness, and initially designates LDC's as "suppliers of last resort." All municipally owned natural gas distribution systems are now subject to PUC regulation. This means that all municipal systems in the state, including Philadelphia Gas Works, the nation's largest municipal system, will be required to offer their customers a choice of suppliers.

Choice Status

• As of July 2003, 203,915 of the state's 2,050,758 residential natural gas customers (about 9.9%) were served by alternative suppliers.

Choice education
Utility Choice
www.utilitychoice.org/
This state website explains electric restructuring in Pennsylvania and offers suggestions about how to choose an electric supplier. It also features links to other sites that offer pricing information.

Suppliers
www.utilitychoice.org/IndexUC.cfm?catID=pi

Public Benefits

Both electric and the gas restructuring legislation in Pennsylvania required regulated utilities to continue their existing low-income rate assistance and energy efficiency programs and consumer protection provisions as universal service programs. Under electric restructuring, the costs of these low-income energy programs are recovered by non-bypassable, competitively neutral distribution service charges. Gas companies can recover universal service costs through rates or a gas universal service charge. Funding levels were determined as part of individual utility restructuring settlements, with funding for electric assistance programs through 2002 increased almost four times over pre-restructuring levels. As of 2002, electric universal service programs are expected to total about $106 million, with about 80% for rate assistance and 20% for energy efficiency. Gas universal service programs will total about $52 million, with 85% spent on rate assistance, the remainder on energy efficiency. (Click here for details on the state’s low-income energy and general residential energy programs.)

Aggregation - buying coops

• An aggregator is an entity, licensed by the Public Utilities Commission, that purchases and takes title to electric energy as an intermediary for sale to retail customers. Aggregator is included in the definition of electricity supplier. Requirements include furnishing a bond or other security, agreeing to pay applicable taxes, and having an office in Pennsylvania. 
  

State Restructuring Resources

Utility Regulatory Commission
Public Utility Commission
http://puc.paonline.com/

Consumer advocate
Office of Consumer Advocate
1-800-684-6560
www.oca.state.pa.us/

Pennsylvania Department of Energy
www.paenergy.state.pa.us/energyefficiency.htm

Grassroots groups
Citizen Power
412-421-6072
www.citizenpowerinc.org
CITIZEN POWER is dedicated to ensuring that low-income consumers and environmental interests are represented in the process to deregulate the electric generation industry.

Citizens for Pennsylvania’s Future
1-800-321-7775
www.pennfuture.org/
An environmental group with issues that include the status and effects of Pennsylvania's electric restructuring.

Consumer Protection

Disconnection policy

• Suppliers must inform consumers of state consumer protection laws that govern the cancellation or rescission of electric generation supply contracts.
• From December 1 to March 31, utilities must seek permission from the PUC before disconnecting residential natural gas or electric service for nonpayment. In practice, the PUC doesn’t grant permission for disconnection for nonpayment during the winter months.
• Utilities must delay for up to 30 days disconnection of residential service if a medical professional certifies that a household resident is seriously ill. The certificate can be renewed two more times; the customer is required to negotiate a deferred payment arrangement.

• Utilities are required to offer residential customers in danger of service disconnection an opportunity to enter into a deferred payment agreement, and they are required to maintain service to the customer if the customer agrees to the arrangement.
• When residential customers have a delinquent account, a reviewing officer from the Public Utility Commission can mandate the terms and conditions of a deferred payment agreement.

Customer service

• Suppliers must provide notification of change in conditions of service, intent to cease operation as an electric generation supplier, explanation of denial of service, proper handling of deposits and proper handling of complaints.

Right to cancel

• Pennsylvania customers have 10 days from receipt of a confirmation letter from their distribution utility to indicate whether the switch to an alternative suppliers is unauthorized.

Billing and collections

• Customers will either receive a single bill from the distribution company or two bills, one from the generation supplier and one from the distribution company. In some areas, the alternative supplier will be able to issue one bill for generation and other electric service charges.40 Customers who receive Competitive Default Service may choose to receive a single bill from the competitive default service provider, who must then provide all "customer care" services.

Supplier licensing

• Electric generation suppliers offering service in Pennsylvania must be bonded, provide other security to ensure financial responsibility; meet technical and financial guidelines established by the PUC; agree to uphold consumer protection laws and reliability standards; and support the consumer education requirements.

• Any electric distribution company must notify customers if it receives notification of a supplier change; customers must respond to in 10 days if the information is incorrect. During that 10-day interval the customer account will be restored without penalty if customers notify the EDC that they did not authorize the change of supplier.

• Residential and small business customers must contact the party responsible for the service in question as an initial step for complaint and problem resolution. Electric distribution companies and suppliers must give the Commission access to disclosure statements, billing and other customer information resources for compliance reviews as deemed necessary by the PUC. When complaints are brought before the Commission for resolution, the obligation of the supplier shall be extended to the provision of pricing information.

• A supplier may not discriminate in the provision of electricity as to availability and terms of service based on race, color, religion, national origin, sex, marital status, age, receipt of public assistance income, and exercise of rights under the Pennsylvania Consumer Credit Protection Act.

• All distribution companies, electricity suppliers, marketers, aggregators, and brokers must provide accurate information to consumers so they can compare prices and services on a uniform basis and make informed decisions as to their electric service.

• A supplier is responsible for any fraudulent, deceptive or other unlawful marketing or billing acts performed by the supplier, its employees, agents or representatives.

• Private customer information may not be released to a third party unless the customer has been notified and agrees to its release. Customers may restrict the release of their telephone numbers and/or historical billing data during the enrollment and phase-in (this may result in customers receiving limited information from suppliers); once a customer has selected a supplier, the customer's historical data and telephone number will be released to the new supplier.