The Commission issued a Tentative Order in the Retail Markets Investigation setting forth a series of default service issues for comment. The Commission stated overall, "we are convinced that development of the retail market will continue to lag behind our expectations until we effectively address the fact that the currently-structured default service product remains highly regulated and does not reflect current market conditions. The proposed changes provide default supply prices that bear a closer resemblance to market conditions. The changes also provide a regulatory framework that encourages further EGS investment in Pennsylvania’s retail electric market. We believe this will move the Commonwealth towards a robust competitive market, where consumers enjoy a wide array of generation supply products and offerings from which to choose."

The proposals for comment are as follows:
1- The utilities shall continue as the default service providers (DSPs) and retain the right to full cost recovery of costs associated with the provision of default service through the use of a reconciliation mechanism. Utilities will remain in this role unless and until the Commission approves an alternative DSP;
2- The default service model changes should be applicable to all electric utilities;
3- Medium and large commercial and industrial customers that have interval meters should be charged hourly LMP and those that do not should be charged hourly LMP by using customer load profiles. This product would be obtained through a quarterly auction product;
4- Residential and small C&I customers should have fixed quarterly Prices to Compare that are established by quarterly auctions that procure all default service load via tranches of full requirements, load-following contracts for the upcoming quarter;
5- All utilities should develop plans that allow their CAP customers to shop for competitive energy without restiction, on or before January 1, 2015;
6- OCMO must provide a recommendation to the Commission by July 2013 as to how to proceed with making supplier consolidated billing available as a billing option for suppliers and third parties;
7- Comments are sought on accelerating the switching process in general, providing for seamless moves, and allowing consumers to be competitive customers on day one of service;
8- All metering services should be retained by the utility;
9- Utilities should continue to provide energy efficiency and conservation services to customers;
10- The treatment of the utilities existing long term contracts should be dealt with in their next default service plan filings;
11- Comments are sought on future alternative energy credits contracts to be procured by a DSP;
12- EGSs should pay an annual licensing fee to the Commission to recover costs of staff review of reports filed by suppliers, oversight of regulatory compliance issues and bonding requirements. The fee could be a flat annual amount ($1,000) or percentage of an supplier's gross intrastate revenues, subject to a maximum cap; and
13- The Commission proposes to seek legislative changes to permit utilities to use an automatic surcharge mechanism to recover electric industry assessments paid to the Commission.

The Commission opined that many of the proposals for comment require legislative changes. However, it said it was committed to making any regulatory changes necessary for the default service structure to be in place by June 1, 2015. Commissioner Witmer issued a separate statement requesting comment on suppliers provision of energy efficiency and conservation products.

Comments on the proposals in the Tentative Order are due December 10, 2012. The full texts of the Tentative Order and Commissioner Witmer's Statement are available on the NEM Website.