Pennsylvania Public Utility Commission (PUC) Chairman Robert Powelson is frustrated. He can’t understand why the majority of Pennsylvanians continue to pay more for their electricity than they have to. For instance, Pittsburgh area residential and small business area consumers could save 5 to 10 percent, so why are only 20 percent of customers shopping?
The PUC blames the low numbers of shoppers on Pennsylvania’s Electric Choice Law, where customers must initiate the shopping process, even though many have never shopped for electricity before. Today, the majority of Pennsylvanians continue to rely on default providers, like PECO or PPL, to buy generation for them instead of finding a cheaper comparative provider. This is the number one concern of a new PUC investigation into the electricity market. But it’s not the only obstacle to shopping.
Long delays between when a customer agrees to switch and when the change actually takes effect can discourage shopping. Under state law, a customer’s generation company cannot change during a billing cycle. That means the customer must wait till their current cycle is over before benefiting from cheaper power. In some cases, that can be up to 45 days. In contrast, Texas consumers can start saving money from their new contract within a day.
Other suppliers have noted the slanted language in letters, written by distribution companies, which must be sent to customers to confirm their decision to switch. While customers need to be informed of their rights, the tone of communication should be pro-choice in accordance with PUC’s public education campaigns to encourage switching.
The rules governing moving are also hindering Pennsylvanians ability to switch generation providers. When a resident or a business moves they must purchase power from the local default utility for one billing cycle before switching. This applies even if the move is just across town and the default utility doesn’t change. Again the onerous is on the customer to go through the entire shopping process again simply because they cannot keep their competitive supplier when they move.
Competitive suppliers have offered a few suggestions to overcome these obstacles. Direct Energy has suggested requiring customers to select an alternative generation supplier when they move, offering them default supply only if they request it. This process would, overtime, erode the prevalence of default supply and enhance competition in Pennsylvania.
Another suggestion is lessening or ending requirements to procure long-term generation contracts. These contracts can artificially reduce the price of power for default suppliers, making it more difficult for alternative suppliers, who rely on real-time markets, to compete.
Recent surges in shopping in Duquesne Light and other utilities service areas are a positive sign, but in other areas, namely the Pennelec, Met-Ed and West Penn territories located in mostly western Pennsylvania, competition is still sluggish.