Pa. electricity market grows as its customer base shrinks
Customers who choose to shop for the source of their electricity in Pennsylvania are increasingly entering a vibrant market of competitors, according to an annual report that ranks states with deregulated energy markets.
At the same time, convincing customers that it is worth their while to explore the kaleidoscope of power generation options remains a challenge for companies and regulators, as the number of Pennsylvanians shopping around dropped to an 18-month low in June, according to data collected by the state Public Utility Commission.
The report, released Tuesday, found Pennsylvania had been among the strongest markets in 2014, out of 16 states and the Canadian provinces of Alberta and Ontario that deregulated ownership of power plants beginning in the 1990s. Customers now have the option of signing up for plans sold by retail electric generation supply companies that offer various rates, contract terms, renewable features and rewards bundles.
Known in short form as Abaccus — an acronym for Annual Baseline Assessment of Choice in Canada and the United States — the report measured about four dozen metrics that cover aspects of market design, the health of the market, and government policies and rules.
In a conference call with reporters that was organized by Distributed Energy Financial Group, the Washington, D.C.-based energy management consulting firm responsible for the report, commissioners from Pennsylvania, Texas and Illinois hailed the report.
Pennsylvania Commissioner Robert Powelson touted PAPowerSwitch, the state’s consumer education website that allows customers to compare supply offers. The commission also has shortened the time frame that customers must wait to switch between suppliers, requiring utilities to process a change in suppliers even if it falls outside a traditional billing cycle.
“We’ve now created an effect in Pennsylvania where customers are very comfortable in the choices
they have available to them,” Mr. Powelson said.
Coinciding with the PUC’s policies, supply companies in recent years have grown in number and expanded their offerings. The commission has approved more than 400 electric suppliers and brokers, and it receives roughly five new license applications a month, said PUC spokeswoman Robin Tilley.
“The commission's objective is to not have our license requirements be an impediment of entry into the market,” Ms. Tilley said. Once a supplier or broker obtains a state license, it must get approval from both the local electric utility and join PJM Interconnection, the Valley Forge-based regional grid operator that oversees the buying and selling of wholesale electricity.
But despite growing options, the states and provinces covered in the report have struggled recently to keep residential customers shopping. In seven states, including Pennsylvania, more residential customers went back to receiving default service from their utility than went shopping.
The number of customers statewide in the marketplace dropped to about 2 million in June — the lowest levels in at least 18 months — representing 36 percent of all utility customers and 66 percent of the total electric load, according to the PUC.
Mr. Powelson attributed the drop to a short-term distaste with the marketplace following unprecedented price spikes resulting from the 2014 polar vortex. He said the commission response last year that punished electric suppliers for unfair tactics provided “a little bit of solace that the market is working and [customers] can jump back in.”
The 189-page report recommended that states phase out “default service” — the regulated rate or electric product that is offered to customers who have not selected a provider. Texas is the only state that has done that for small customers.