The Commission convened a two-day workshop this week to consider the implementation of retail electric competition and associated revisions to the Commission's rules. Chairman Burns noted at the outset that there will probably be additional workshops leading to Staff's preparation of a Proposed Order for the Commission to consider. In opening remarks, Commissioner Olson offered the most vocal support for pursuing retail electric competition in the state (see also Commissioner Olson's recent op-ed on the issue). The Commissioners generally expressed an eagerness to hear the stakeholders' positions prior to expressing their own.

In preparation for the workshop Staff previously prepared draft revised rules on retail electric competition. A key provision of Staff's proposal is to restrict competition to non-residential customers with a peak monthly demand greater than 400 kW, although allowing non-residential customers that don't meet that threshold to aggregate their loads to 5 MW or greater to shop and also allowing for municipal aggregations. Staff said the reason the proposed rules were drafted with this restriction is because of Staff's view that it is not in the public interest to open competition to residential customers today. Staff also claimed that most states limit choice to non-residential customers. Staff expressed willingness to accept stakeholder feedback on this issue.

Staff gave a presentation on the important components of the Phelps Dodge decision and overcoming those issues to introduce competition. Staff also offered an overview of retail electric competition in other jurisdictions.

Following Staff's presentations, the Commission heard numerous stakeholder presentations on Staff's proposed retail competition rule revisions. NEM made a presentation recommending that:
1) all customers should be eligible to shop for electricity;
2) a firm commencement date for retail electric competition should be established;
3) utilities should exit the commodity merchant function and focus resources on maintaining and upgrading reliable delivery infrastructure;
4) unbundling of delivery service rates is critical to the proper functioning of the retail electric marketplace;
5) standard offer service rates should reflect current market-based pricing conditions;
6) supplier tariff filing requirements should be flexible to accommodate product innovation; and
7) the proposed rules should reflect current day best practices and technological innovations.

NEM presented information on the savings realized in customer choice states and the increased installation of renewable generation in choice states. NEM also discussed the price and product benefits realized by Texas consumers.

A number of competitive suppliers offered remarks on the benefits of competition, including efficient product pricing, product innovation and compatibility with a safe, reliable and resilient grid. The advantages of the Texas retail market and ERCOT wholesale market models were also discussed.

The utilities expressed concern with retail electric competition, including the costs and challenges of setting up and/or participating in a wholesale electric market. APS said it did not support deregulation as proposed. TEP/UNS questioned the benefits of retail competition for residential and low income customers and also raised the issue of stranded cost recovery. The electric cooperatives opined that retail competition could result in cherry picking of large customers, leaving remaining customers to cover fixed costs. Chairman Burns asked how to identify or define stranded assets. Staff replied that there is no stakeholder agreement on this issue now and that stranded costs will differ company by company.

At the the conclusion of the workshop the Commissioners gave their thoughts on next steps, with all expressing the need for further information and deliberation. Both Chairman Burns and Commissioner Olson expressed support for moving ahead with competition. Commissioner Kennedy asked Staff to prepare research on the implementation of community choice aggregation in the state. Commissioner Dunn suggested that topic-specific workshops be convened to focus on discrete issues such as rate impacts, market structure, consumer protection, impact on renewable energy standard, RTO participation, and divestiture.

Next steps will proceed as follows: The Commissioners will dockets questions for stakeholder response. Staff will then update the draft rules for consideration and discussion. Multiple workshops will then be held. This will all be prior to the commencement of a rulemaking process.

The full texts of NEM and Other Stakeholder Presentations and Staff's Report are available on the NEM Website.

The Attorney General's Office released a 2019 update to the previous report "Are Residential Consumers Benefiting from Electric Supply Competition?" The report prepared by a consultant is based on supplier data obtained from the electric utilities. The updated report concludes that residential electric consumers paid $76.2 million more under competitive supply than under the basic service rate for the period July 2017 through June 2018. The 2018 version of the report found that, between July 2015 and June 2017, consumers paid $176.8 million more for individual residential electric supply than they would have paid for basic service from their utilities. This results in a $253 million overpayment over the three year period.

The report also specifically found that "on average, 98,902 low income households paid $16.4 million more during the July 2017 – June 2018 study period than they would have paid if they had not contracted with competitive suppliers and instead paid the electric company’s fixed basic service rates. The average low-income household on direct competitive supply lost $166 over the course of the year."

Based on the updated report results, the Attorney General is AG Healey is "renewing her call to stop these companies from making direct solicitations to residential customers."

The full text of the Updated Report is available at this link.

The Department will convene the next meeting of the Customer Protection stakeholder working group on August 6 from 2PM to 4PM at the Department’s Boston offices. Remote participation by telephone will also be available. The purpose of the meeting is to consider straw proposals prepared by consumer advocates and competitive suppliers. The competitive suppliers straw proposals pertain to: language/format of automatic renewal notifications; language/format for the written and oral disclosure of product information; and introductory and closing scripts for door-to-door and telemarketers.

Automatic Renewal Notice Proposal:
Any competitive supplier seeking to automatically renew or convert a residential customer from a fixed price to a different price or pricing structure provide the customer with notice of the expiration which includes the following items:
"i. Header or subject line in bold font: “Important information regarding your electricity supply price”
ii. Supplier name, logo, mailing address, DPU license number, and contact information
iii. The date that the current price for electricity supply service is expiring
iv. Information regarding the price and duration of the contract as renewed that will apply if the customer takes no action
v. Optional information regarding other supply offers that may be available from the current supplier
vi. Statement that additional information about Competitive Supply, published by the Commonwealth of Massachusetts, is available at www.energyswitchma.gov"

The automatic renewal notice shall be provided to the customer no earlier than 60 days and no later than 30 days prior the initial contract’s expiration date and may be sent by US mail or electronically, consistent with consumer agreement.

There is also a proposal for voluntary participation in testing the effectiveness of end-of-term notices sent to consumers.

Proposed Telemarketing and Door-to-Door Scripts (verbiage to be changed consistent with in-person sale for door-to-door marketing):
"1. Introductory Script. At call start or within the first minute:
• “My name is [first name only of the telemarketing agent],
• “I am calling on behalf of [name of electric supplier], a licensed electric supplier”, and
• “[Supplier name] is not affiliated with the local electric utility”.

2. Closing Script. After terms have been agreed to with the customer, the following minimum statements should be communicated to the customer:
• “In a few moments you will be transferred to an independent verification company to verify this sale on the terms we have discussed.
• Following verification, you will be sent [optional – by mail, by email, etc.] written materials confirming this sale and providing a copy of the full terms of service.”
• “If you change your mind, you will have three days after receipt of the written materials to cancel the contract without any fees or penalties. Cancellation details will be in the written materials.
• “Thank you and please stay on the call while I connect you to the independent verification company.”"

Written Product Disclosures:
A Massachusetts Competitive Electric Supplier Contract Summary is proposed that would include the following fields: electric generation supplier information; price structure; generation/supply price; statement regarding savings; deposit requirements; incentives/value added products and services; contract start date; contract term/length' cancellation/early termination fees; renewal terms; electric distribution company information; and rate web site information.

The consumer advocates straw proposal pertains to a protocol for competitive supplier oversight of third-party marketing vendors. The consumer advocates propose that supplier licensing and renewal proceedings be publicly docketed and include information on vendor contractors, marketing materials, training materials, compliance policy and notice of lawsuits and investigations.

The consumer advocates suggest the current Notice of Door-to-Door Marketing be changed to include three (up from one) contacts for a third party door-to-door vendor; copy of municipal permit/license for the door-to-door campaign; and zip code where campaign will be conducted. Also, the Notice should be sent to the Attorney General's office and notice should be sent at least two business days before commencement of the campaign.

The consumer advocates propose that in-person (door-to-door) and telemarketing interactions be recorded, upon receiving consumer consent, and recordings be retained for five years.

The consumer advocates also propose that the Department promulgate regulations to ensure the independence of third party verification calls. Toward that end they propose "independent third party" be defined as "1) a vendor whose compensation is not tied in any way to the success, or lack thereof, of customer enrollments or retentions, and 2) a vendor who is not affiliated with the supplier or any third-party marketer who markets, or has marketed, on behalf of the supplier. It is proposed that supplier contracts with third party vendors be filed with the Department.

The consumer advocates propose that suppliers regularly audit recordings of telephonic and door-to-door marketing conducted by third-party marketers and also audit a sample of completed contracts.

Regarding retention of complaint information, the consumer advocates propose that suppliers retain documentation related to customer complaints and inquiries for at least five years. It is proposed that an annual log of customer complaints and inquiries should be provided to the Department and Attorney General.

The full texts of the Straw Proposals are available on the NEM Website.

The Commission opened a default service investigation to gain input on how the investments in smart meter technology in the Commonwealth might be utilized to modify default service rates and cost allocation methods, for example, through the inclusion of various time-of-use rate structures. The Commission also sought comment on whether utility default service plans should incorporate long-term contracts for renewable energy. The Commission noted that it may propose to amend the default service regulations, the default service policy statement or issue other orders based on stakeholder feedback it receives.

NEM filed comments expressing concern that the potential impact of the proposals at issue could undermine two decades of significant achievement in Pennsylvania toward developing a robust competitive retail marketplace. NEM explained that we are on the verge of fully realizing the promise of a competitive marketplace as enabled by technological advancements. Smart meter investments, and the data derived therefrom, will enable a plethora of innovative energy product and service offerings. The competitive market should be relied upon to fulfill this function. Utility-provided default service should retain its character as a “plain vanilla” or “standard offer.” NEM opposed the expansion of utility default service rate structures into a menu of TOU rate offerings that would intrude into the domain of competitive market offerings. NEM also opposed the incorporation of long-term contracts for renewable energy into the utility default service procurement process.

The full text of NEM's Comments is available on the NEM Website.