IRRC Approves PUC’s Final-Omitted Regulations Addressing Variable Price Contracts

by Buchanan Ingersoll & Rooney PC

On May 22, 2014, the Independent Regulatory Review Commission (“IRRC”) approved by a 5-0 vote the final-omitted regulations adopted by the Pennsylvania Public Utility Commission (“PUC”) which will enhance the information that is provided to customers by electric generation suppliers (“EGSs”), especially when entering into variable price contracts.  This vote followed extensive questioning by the IRRC Commissioners.

Current regulations require disclosure statements to include the conditions of variability (i.e. on what basis prices will vary) and any limits on price variability.  The key changes made by these final-omitted regulations require EGSs offering variable price contracts to provide additional information to consumers including:

  • A clear explanation on any limits on price variability, such as a price cap or maximum percentage increase
  • A conspicuous statement that there is no limit if such is the case
  • The price to be charged per kwh for the first billing cycle
  • Sources for customer to obtain historical pricing data
  • A statement that historical pricing is not indicative of present or future pricing

The final-omitted regulations also require EGSs to provide a one-page Contract Summary to consumers, in a template provided by the PUC.  This Summary will be required to contain an overview, in plain terms, of the most important contract terms, including EGS contact information, price structure, price, statement that price may not always provide savings, deposit requirements, incentives/bonuses, contract start date, contract term, cancellation fees, renewal terms and electric distribution company  contact information.

The other topic addressed by the final-omitted regulations relates to what EGSs must do when a fixed term contract is approaching its expiration date.  EGSs proposing to change the terms of service will be required to provide an Initial Notice 45 to 60 days prior to the expiration of the contract and an Options Notice at least 30 days prior to the expiration date of the contract.  Both notices are intended to ensure that customers understand any changes, what their options are if they do not wish to accept those changes and how to exercise their options.

Promulgating the final-omitted regulations on April 3, 2014, the PUC cited the need to revise its current regulations so that customers have a better understanding of the terms and conditions of their contracts with EGSs.  Using the final-omitted approach, which departs from the traditional notice and comment procedures, the PUC referred to the record-breaking wave of informal and formal complaints filed by consumers concerning electric price increases due to the Polar Vortex in January 2014.

The PUC may now proceed to have the final-omitted regulations published in the Pennsylvania Bulletin.  Upon publication, the final-omitted regulations will go into effect immediately.



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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