PUC imposes limits after electricity customers lose millions

Pennsylvania utility regulators are putting new limits on competitive electricity plans available to some low-income customers in FirstEnergy Corp.’s service regions after regulators found that some of those customers paid more by switching to a competitive supplier.

The unrestricted shopping cost ratepayers millions more than if they had just stayed on the utilities’ default plans, regulators found.

Sixty-five percent of the customers in FirstEnergy’s four Pennsylvania utilities’ low-income assistance programs who signed up with a competitive supplier between 2013 and 2018 ended up in that situation.

The competitive plans cost the customer assistance programs and their participants $18.3 million more over a five-year period than the utilities’ standard “price to compare,” even after factoring in plans that saved ratepayers money.

Nearly $11 million of the excess costs came from the West Penn Power territory, which includes parts of 23 counties, including much of southwestern Pennsylvania, according to case records.

The higher costs harm both low-

income customers who participate in the programs and general ratepayers who subsidize them, the Pennsylvania Public Utility Commission said Thursday.

Customer assistance programs offer discounted monthly bills for low-income customers who would struggle to make full-price payments on time. They also establish a path for forgiveness of past overdue balances.

Eligible customers in Akron, Ohio-based FirstEnergy’s Pennsylvania programs have a gross household income at or below 150 percent of the federal poverty guidelines — $18,735 this year for a single-person household and $38,625 for a family of four.

There were about 66,000 customers in the four utilities’ assistance programs in 2017, according to case records, and about 22,000 of them got electricity from a competitive supplier at some point that year.

But when customers in those programs sign up for contracts with higher rates, they are likely to exhaust their benefits and end up with charges they often can’t pay, the utility commission said.

The problem is with how electricity products are marketed, said Patrick Cicero, executive director of the Pennsylvania Utility Law Project.

“It is not as if low-income customers are necessarily going out, educating themselves about the competitive market and affirmatively choosing a higher price,” he said. “It is that they are often marketed to and then stuck into a higher-price contract.”

Some plans offer low, short-term teaser rates that transition to higher or variable rates if the customer doesn’t opt out, he said.

Customers are often approached through door-todoor sales or telemarketing, and electric bills are difficult to decipher.

The costs of the uncollectible payments are then passed on to the utility’s other residential customers through higher base rates or surcharges.

The PUC on Thursday ordered FirstEnergy’s Pennsylvania utilities — West Penn Power, Penn Power, Met-Ed and Penelec — to implement a program by June 1 limiting shopping by participants in their customer assistance programs to plans that offer rates at or below the utilities’ default prices throughout the length of a contract.

Eligible electric plans also won’t be able charge the participants early termination, cancellation or other add-on fees.

The commission issued a broader order on Thursday asking for comment on a proposed policy that would eventually apply similar restrictions to customer assistance programs offered by all electric utilities in the state when their default service plans come up for review.

Mary Long, the administrative law judge who who reviewed the FirstEnergy programs last year, said, “None of the $18.3 million in additional [customer assistance program] costs — which translates into $3.79 million more per year — are used to promote universal service goals under the Choice Act to assist low-income customers to better meet their home energy needs.”

Comments on the utility commission’s proposed policy change will be due 45 days after it is published in the Pennsylvania Bulletin.

Laura Legere: llegere@post-gazette.com.