PUC delays FirstEnergy plan to change default electricity rates

Pennsylvania’s electric market has operated under a competitive framework since 1996, allowing consumers to select generation suppliers outside of their local utility. FirstEnergy, the state’s largest utility provider, filed a proposal in February to alter how customers are treated when those third-party contracts end.

The utility argued that its customers paid $82 million more in aggregate last year compared to what they would have paid under the standard default rate. FirstEnergy serves more than 2 million customers through its subsidiaries WestPenn Power, PennPower, Penelec, and Met-Ed. The company proposed that customers whose supply contracts expire should automatically revert to the utility’s default rate rather than being moved to variable rate plans by suppliers.

On Thursday, the Pennsylvania Public Utility Commission rejected that portion of the proposal by a 3-2 vote. The commission also rejected a provision requiring suppliers to get quarterly affirmative consent from customers paying above the default rate. Instead, PUC Chair Stephen DeFrank directed the Office of Competitive Market Oversight to conduct an expedited review of the issue by June.

DeFrank expressed reluctance to make a profound revision to the retail marketplace for a single company. He noted that current regulations allow suppliers to retain customers upon contract expiration if proper notice is given. The review will determine how much of the excess cost stems from customers choosing renewable energy plans or longer contracts versus simple inertia.

Darryl Lawrence, the state consumer advocate, stated that his office and others have sought these protections for a long time. He explained that customers often miss notices or forget to switch back after short-term teaser offers, resulting in higher variable rates. The Energy Association of Pennsylvania supported the need for guardrails to prevent overpayment, though it noted not all suppliers use short-term teaser rates with incentives like gift cards.

Commissioners Kimberly Barrow and Kathryn Zerfuss dissented. Barrow said the state is in an affordability crisis and customers need immediate relief. She cited evidence that residential customers who shop for suppliers are cut off 10 times more often than non-shoppers and face average per-customer write-offs of $2,200, more than double that of non-shoppers. Zerfuss argued the record already documents the problem thoroughly and questioned the need for further study.

State lawmakers have introduced similar bills. House Bill 2131, co-sponsored by Reps. Elizabeth Fiedler and Heather Boyd, would require consumers to return to their utility’s default rate. Senate President John Kane sponsors a similar measure. With only two voting days left in the session, these bills are unlikely to be considered. Sen. Patrick Stefano said the commission’s action allows for a broader review, while Sen. Gene Yaw argued that significant changes should be authorized by the General Assembly rather than administrative proceedings.