Responding to consumer outrage over winter electricity rate spikes, regulators plan to make electric utilities dramatically shorten the time it takes for customers to switch from one supplier to another.
The Pennsylvania Public Utility Commission (PAPUC) has drafted new regulations that would require utilities such as PPL Electric Utilities and Met-Ed to complete a customer’s switch to a new supplier in three business days. That’s far less than the current lag of 11 to 40 days for a switch to take effect.
“Due to the recent impact of wholesale electricity market price increases on Pennsylvania consumers, and concerns that similar events could occur again in the immediate future, the commission determined that the public interest requires extraordinary measures to be taken,” the PUC wrote in a letter seeking comments on the proposed changes.
Utilities would have to implement the changes within six months of the policy’s final adoption. They could apply to the PUC to recover the costs of implementing the changes with an increase to their base rate.
It’s expected to take a few months, under an accelerated review process reserved for “extraordinary” circumstances, to secure final approval of the new policy. The plan needs the PUC’s vote of approval and thumbs up from the attorney general’s office and Intergovernmental Regulatory Review Commission.
“We are hopeful we can have everything processed by June, so it can be in place by the end of the year — in time for next winter,” said PUC spokeswoman Jennifer Kocher.
Consumers technically have been able to shop for electricity since the mid 1990s, when the industry was deregulated in Pennsylvania, but rate caps placed on the utilities prevented other suppliers from competing on price.
Those caps were removed in PPL’s territory in 2010, and multiple electricity suppliers began competing for customers, offering electricity at both steady and variable rates.
But this winter, supply shortages caused some suppliers to double or even triple variable rates, causing bills to soar. The PUC fielded calls from 12,283 customers and took informal complaints from 4,775 of those. Many have expressed frustration with the time it takes to change suppliers.
Current law includes a 10-day waiting period to discourage a scam called slamming, in which unscrupulous operators switch customers without their consent. The wait is designed to allow utilities to contact customers to verify their intent to switch.
Under the PUC’s new proposal, a switch to a new electricity provider would take effect within three days, but could be reversed within 10 days if a utility determines a customer did not initiate it.
PPL supports the PUC’s planned changes, said spokesman Paul Wirth.
“We’re in favor of making it easier for customers to switch and shortening the time,” he said. “We have been communicating with the PUC on this issue and are already in the process of developing what it would take to accomplish this.”
Wirth said PPL is exploring the changes in technology and processes that would be required to accelerate switching, and what that would cost. Meter readings would have to be stepped up, and software would have to be rewritten to better communicate the data to suppliers.
“It is feasible, but it requires changes to our existing system,” Wirth said.
Met-Ed spokesman Scott Surgeoner said the utility would not immediately comment on the proposal.
“Met-Ed’s position is that the Pennsylvania FirstEnergy companies, including Met-Ed, will file comments within the seven days specified in the Pennsylvania PUC’s expedited proceeding,” he said.
The PUC’s proposal comes as several state lawmakers are drawing up legislation to address the problem. Sen. Lisa Boscola, D-Northampton, on Tuesday introduced legislation that would shorten the time it takes to switch suppliers to five days as well as provide consumers with better information about fluctuating variable rates.
“While that is an important component, we can still do a little more to make sure people are advised and notified they are in a variable-rate plan and what that exactly means,” said Steve DeFrank, Boscola’s chief of staff.
Other lawmakers have proposed banning or capping variable rates in addition to other reforms. The PUC has not taken a position on any of the proposed legislation.