NEM filed in support of a request for rehearing of the Commission’s determination that early termination fees (ETFs) are not “supplier charges” eligible to be treated as “supplier receivables” under POR programs. This determination was to be effective as of July 22, 2011. A written Order has not yet been issued by the Commission.

NEM noted that regulations have permitted suppliers to use ETFs in the dual billing scenario for many years, and suppliers have reasonably acted in reliance on this policy. The Commission should not now make an unsupported change in its longstanding policy. Making a change of this nature to POR programs at this stage of market development could chill supplier market entry and undermine the significant efforts of the Commission and the stakeholders to support the availability of additional energy choice options to consumers.

NEM argued that an ETF should be deemed a “commodity charge” for the purposes of the POR regulations because “but for” the consumer’s decision to purchase the electricity/natural gas from the competitive marketer there would be no contractual obligation and no associated ETF. If suppliers are restricted in their ability to charge ETFs, it will directly harm competition in a number of ways. First, it will result in suppliers being able to offer fewer fixed price products in the marketplace or having to offer such products at less competitive prices. In addition, by eliminating ETFs from the POR programs, it undermines one of the important purposes of POR, namely, that suppliers should not have to retain a costly duplicative billing infrastructure (particularly as in this case it would be for the limited purpose of collecting ETFs).

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

Act 129 was passed by the Pennsylvania legislature in 2008, revising the electric utilities default service obligations. The Commission issued a proposed rulemaking and proposed policy statement to make amendments to conform to the Act 129 requirements. The Commission has now finalized those rules and the policy statement. Although, Vice Chairman Coleman noted in his Motion on the rulemaking that, "our Retail Electricity Markets Investigation remains pending, and these final rules should not be construed to anticipate the particular outcome of that proceeding."

The adopted amendments to the default service regulations pertain to:
"1) provder obligations;
2) service programs and periods of service;
3) procurement and implementation plans;
4) rate design and the recovery of reasonable costs; and
5) Commission review of default service program and rates."
The final rules must now go to the state Independent Regulatory Review Commission for consideration.

The revisions to the policy statement include:
1) removal of the term "prevailing market price" as Act 129 adopted a "least cost to consumers over time" standard for default service procurement;
2) definition of short-term contracts as those contracts up to 4 years in length and long term contracts as those greater than 4 years but not greater than 20 years;
3) long term contracts shall not constitute more than 25% of the default service providers's projected load unless otherwise permitted by the Commission;
4) requiring the default service provider to procure electric generation supply for default customers consistent with Act 129 alternative energy portfolio standards;
5) rates to residential and small commercial customers may change no more frequently than on a quarterly basis.

The full text of the Policy Statement is available on the NEM Website. The full text of the Default Service Rulemaking will be posted when made available electronically.