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Senate of Pennsylvania
Session of 2013 - 2014 Regular Session


Posted: June 10, 2013 01:12 PM
From: Senator Bob Mensch
To: All Senate members
Subject: Restructuring of electric default service
I am introducing legislation to amend Chapter 28 of Title 66 (Public Utilities) to restructure the current process for electric default service. My proposed legislation would create a more robust retail electric marketplace with residential and small commercial customers receiving a 5% discount, raising hundreds of millions of dollars to benefit the Commonwealth’s citizens while assuring that all customers have access to safe and reliable electric service. All existing consumer protections would remain in place and low-income customers would retain their existing benefits.

Chapter 28 of Title 66, also known as the Electricity Generation Customer Choice and Competition Act of 1996, gave all Pennsylvanians the right to choose their electric generation supplier. The Public Utility Commission has made progress to foster the market however two-thirds of customers in the Commonwealth have not switched despite savings opportunities and other value propositions. This can be explained by customer confusion. They think switching is complicated or they have misunderstandings like switching will financially harm the utility which it doesn’t or they will receive a lower level of service reliability and outage response if they switch.

Specifically, my bill would implement an opt-out, competitive assignment process of existing residential and small commercial customers that are still on default service (not shopping for their electric generation portion of their bill). The Public Utility Commission would establish rules and procedures for the competitive assignment process, which is designed to produce at least $100 to $125 per customer payment by electric generation suppliers to be paid to the General Fund and a price for residential and small commercial customers, which is 5% less than the applicable default service price to compare. This assignment process has the potential to provide residential and commercial customers substantial savings almost immediately through lower electric charges compared to the current default service rates and potentially generate up to $370 million to $462.5 million for the Commonwealth’s utilizations in the General Fund.

Customers agreeing to the assignment process would not only be helping to generate benefits for the Commonwealth but would also receive a one year electric rate 5% lower than the EDC’s - then applicable default rate, with no switching or cancellation fees.

Most importantly, my bill does not change the structure in which electric generation is distributed to residential and small commercial customers. Electric distribution companies would still continue to deliver the electric service to the customers, provide meters, scheduling, service, terminations and most importantly, maintain and update their distribution systems.

Statewide surveys demonstrate overwhelming customer support for this effort. This bill complements and furthers the Public Utility Commission’s Retail Market’s Investigation efforts.

If you have any questions, please contact Geri Sarfert, legislative director, at 787-1640 or gsarfert@pasen.gov.

Introduced as SB1121