Localities could offer opt-out electricity programs

Summary#

HB 2853 would amend Pennsylvania’s Titles 53 and 66 and add rules for local community choice aggregation programs. Its stated goal is to give local governments a way to combine customers’ electricity purchases, with the aim of expanding choices and lowering costs. The bill is introduced and has not become law; it would take effect 60 days after enactment.

  • Municipal corporations could establish programs for customers in their jurisdictions. The bill also authorizes municipal authorities to establish, manage and operate them, and exempts this work from a limit on competing with existing businesses.
  • A program could offer electricity service on an opt-out basis to eligible residential and small-business customers who receive default service. Customers could remain on default service by opting out.
  • The program could use an administrator or contractor, use the local electric distribution company’s billing services, and undertake other activities authorized by its sponsor, including energy-efficiency work, demand response, local generation support and education.
  • Sponsors and contractors would generally be exempt from electric-generation-supplier licensing requirements, but must follow applicable commission rules, report customer information and pay fees as specified in the bill.
  • Low-income customers could not be enrolled through opt-out; they could choose to join. If enrolled and their eligibility is established, the program must guarantee their average annual electricity price is no higher than the utility’s default rate.

What it means for you#

  • Residential and small-business customers: If you are an eligible default-service customer in a participating jurisdiction, a program may offer to transfer you without further consent. You must get at least 15 days to consider the offer and a chance to stay on default service. After transfer, you may switch back, choose an eligible utility tariff, or choose another supplier or program at any time without a fee or penalty.
  • Customers who are not eligible default-service customers: The opt-out transfer rules do not cover customers already enrolled in certain tariffs or programs they had to select or apply for, or customers who have elected to keep their information private.
  • Low-income customers: A program may invite you to join, but cannot enroll you through opt-out. The bill defines low-income customers as people whose household income is verified below 150% of the federal poverty level, including people enrolled in LIHEAP or crisis programs. An offer must explain utility customer-assistance eligibility and encourage applications.
  • Municipalities and authorities: They may create or help operate programs; they are not required to. Municipalities in the same county may form a program by agreement, and it may serve unincorporated areas in that county. The bill does not clearly say whether a county may establish a program on its own.
  • Electric distribution companies: They must identify eligible customers and provide specified information to programs, including identifying some low-income customers through existing assistance programs. If a program meets the bill’s conditions, the company must transfer customers who do not opt out.
  • The bill does not guarantee lower prices, require every municipality to create a program, or guarantee that a program will use renewable electricity. It requires commercially reasonable efforts to meet goals in the state’s most recent climate change action plan.

Money#

The bill requires annual program fees and may require payment of gross-receipts tax, but no cost estimate is available.

  • Programs would pay the same annual fee, on the same basis, as electric-generation suppliers. The bill gives no fee amount.
  • The sponsor or administrator responsible for overall operation must pay, or arrange payment of, gross-receipts tax on the same basis as an electric-generation supplier.
  • The bill authorizes use of staff, administrators and contractors but gives no staffing or operating-cost estimate. No publicly available information.

What is unclear#

  • The bill does not set rules for selecting electricity suppliers, setting program prices, or deciding which electricity sources a program will buy.
  • The Public Utility Commission must regulate the form of opt-out offers and educational materials, but the bill does not give a full program approval, oversight or complaint process.
  • The bill requires customer reports but does not specify reporting frequency or public reporting.
  • The bill does not explain how low-income customers who do not appear in a utility assistance program would be identified and protected.
  • The supplied materials do not include the full current laws or regulations being amended, so the existing rules and how these programs would interact with them could not be fully verified.

Case for#

  • The bill’s findings say residential and small-business customers have not benefited from retail electricity choice as much as large commercial and industrial customers. Combining smaller customers’ purchasing power could give them access to more choices.
  • Local governments could organize a program around local needs, while customers would have a chance to opt out and could leave later without a penalty.
  • The bill bars opt-out enrollment for low-income customers and requires a price guarantee for those who join and meet the stated eligibility test.
  • Programs could also support energy efficiency, demand response, local generation and public education, if their sponsors authorize those activities.

Case against#

  • An opt-out transfer can move customers who do not respond, rather than only those who actively choose the program. The bill leaves important details of the notices and customer protections to commission rules.
  • The bill gives programs broad powers and allows activities beyond buying electricity, but provides few details on how sponsors will oversee contractors or report results.
  • The bill does not require savings or clean-energy results. Its price guarantee applies only to enrolled low-income customers and compares their average annual program price with the utility default rate.
  • Requiring utilities to identify and share customer information, and requiring program fees, taxes and administrative work, could create costs; the bill provides no estimate.