PUC rules target variable rates, price spikes

Smart meters on a Delco home. The PUC also approved a rule allowing customers to switch energy suppliers more quickly.

The Pennsylvania Public Utility Commission on Thursday approved new rules to address the public outrage that has erupted over unprecedented winter price spikes.

The rule changes, introduced less than three weeks ago, will force competitive energy suppliers to more clearly disclose the details of their offers, especially the risks of variable-rate deals that have generated the most complaints.

Another rule change will allow customers to switch energy suppliers in days rather than weeks, allowing customers to exit a bad deal more quickly.

"This is a watershed moment for the commission," said Robert F. Powelson, the PUC chairman.

More than 5,732 consumers have filed informal complaints with the PUC's Bureau of Consumer Services during the last two months.

The uproar has undermined public confidence in the state's Electric Choice program, an outgrowth of a 1996 law that separated local utilities that distribute power from power generators that produce electricity. About 2.2 million Pennsylvania customers have switched to competitive power suppliers.

Many customers opted for variable-rate plans, where the price can change monthly, depending upon market conditions. Others chose fixed-rate offers that reverted to variable-rate after the terms expired.

The PUC does not regulate those prices, which some customers discovered after they were hit with bills that quadrupled during the severe cold weather in January because of wholesale-market spikes.

The new regulations, which go into effect in June, require suppliers to disclose more information on what conditions can make prices vary, and whether there are limits on how much the price can vary. The suppliers must also provide historical pricing information.

The supplier must notify customers by mail for fixed-term contracts that are expiring, or any changes to terms of service.

One rule change would dramatically speed up the time it takes for customers to switch suppliers.

Currently, it takes up to 40 days to switch suppliers. Utilities are required to allow 10 days for customers to respond to a letter confirming the choice, and then the switch may be delayed, depending upon when the next meter reading is scheduled.

The new rule would require the change to occur within three days of the request. With new smart-meter technology, distribution companies can get an instant reading to measure when the new supplier can begin billing.

The PUC expects that the new rule on switching will go into effect by the end of the year, after review by the Independent Regulatory Review Commission, the Attorney General's office and legislative committees.

Utilities complained that they will be challenged to reconfigure their information management systems to handle the change. Peco Energy Co. says 2,000 to 3,000 of its customers now switch suppliers each week.

But Powelson upbraided the utilities for dragging their feet, saying they demonstrated a "lack of visionary leadership" for not preparing their systems to manage the migration to competitive markets.