Pa. elec­tric­ity mar­ket grows as its cus­tomer base shrinks

Pittsburgh Post-Gazette - - BUSINESS - By Daniel Moore

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.

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