The Pennsylvania Public Utility Commission (PUC) is launching a new investigation of the state?s electricity market. The investigation was a requirement of the controversial First Energy/Allegheny Merger that took place this winter. Many players in the state?s electricity market were wary of the merger because First Energy was already the parent company of Penn Power, Pennelec and Met-Ed. The company, based in Akron, Ohio, will now control over 36 percent of Pennsylvania?s 5.5 million customers and serve 50 of Pennsylvania?s 67 counties.

Any investigation by a government body is usually the precursor to more stringent regulations, but because this inquiry is aimed at reducing obstacles to competition it appears some good could come from it. Essentially, the investigation is a positive move towards fine tuning the Pennsylvania marketplace and assessing what barriers are keeping folks from shopping. The process begins with collecting statements from all market players on 11 inquiries regarding consumer?s ability to shop.

Not surprisingly, a particular emphasis seems to be on default service and whether electric utilities should be in the business of purchasing generation for customers who refuse to shop. This service is also known as Provider of Last Resort (POLR). One question asks, ?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.?

Another inquiry worth highlighting is on the unintended consequences of mandating the installation of smart meters at the rate-payers expense, ?Are there potential barriers being created by the implementation of the EDC smart meter plans??

If the PUC were to find the POLR or default supplier function inhibits competition- which it does- it would take legislative action to change the competition law. Nixing this safety net will probably be a hard sell in the state legislature, despite the success achieved in the last three years.

After the PUC has collected feedback on these eleven questions?the deadline is June 3^rd?they will proceed to the next level of the investigation, setting up working groups to determine what needs to be done to address the obstacles to competition. Regulators estimate the investigation will take at least a year. If legislative action is deemed appropriate, passing a revision to the competition law could easily take two years.

What does this mean for Pennsylvania electricity shoppers? Nothing in the short-term, but it could open the door for more competitors in the future, further expanding your choices and the variety of plans available in the keystone state.