The Commission is charged with taking measures to develop a competitive retail market so that the market can function to the price of electricity down as low as possible for the benefit of consumers. 66 Pa. C.S. § 2802(3), (5). In the Act 129 Final Rulemaking Order, the Commission considered the statutory standards and the intent of the General Assembly when developing the final Regulations. In particular, when considering the “least cost over time” standard in Act 129, the Commission concluded as follows: …that the Legislature, in utilizing the language “least cost over time” did not provide a clear-cut definition of the term. As such, we must be guided by the comments received as well as our own experience and sound discretion in implementing both the Competition Act and Act 129 consistent with the plain language and, where ambiguous, the legislative intent. Act 129 Final Rulemaking Order at 37 (emphasis added). In interpreting Act 129, the Commission has found rate stability to be an important goal when developing a prudent mix of supplies for default service. The Commission recognized the benefits of rate stability as it relates to the “least cost over time” standard, as follows: In our view, a default service plan that the “least cost over time” standard should not have, as its singular focus, the achievement of the absolute lowest cost over the default service plan time frame but rather a cost for power that is both relatively stable and also economical relative to other options. Act 129 Final Rulemaking Order at 40-41 (emphasis added). The Commission further elaborated on the importance of price stability, noting that Act 129 requires a prudent mix of a variety of products. The Commission continued:
The only Party to object to PECO’s proposed eligibility rules for the Opt-In Program was RESA, which asserted that small business customers (i.e., those with loads of up to 25 kW) should be allowed to participate. RESA St. No. 2 at 19-20; RESA R.B. at 28, 30-32. PECO argued that RESA’s recommendation should not be adopted for two reasons. First, the small commercial customer base that RESA proposes to include is far less homogenous than PECO’s residential customer base because small commercial customers are served under different tariff rates, each with different line loss factors. PECO St. No. 2-R at 15-16. Consequently, extending the Opt-In Program to these customers would add complexity because different offers with different prices would have to be designed, solicited and marketed to different subsets of customers. PECO M.B. at 52; R.D. at 56. Second, PECO contended that RESA’s argument, that business customers should be included in the Opt-In Program because their shopping level is only slightly higher than the level of residential customer shopping (RESA St. No. 2-SR at 7), is simply wrong. R.D. at 57-58. Contrary to RESA’s assertion, PECO stated that shopping among small business customers is significantly higher than that of residential customers in PECO’s service territory – 39% versus 25%. PECO St. No. 2-R at 16; RESA Exh. CHK-2 at 1-2 (PECO Responses to RESA-I-4 and RESA-I-5). In addition, PECO stated that the Commission considered and rejected RESA’s rationale relating to improving small business shopping levels when it concluded that opt-in programs should not include small commercial customers at this time. PECO M.B. at 52-53, citing IWPF Order at 42; R.D. at 58. RESA also proposed to preclude customers who already are shopping from participating in the Opt-In Program on the ground that EGSs should not face the risk of losing market share as a result of the Opt-In Program. RESA St. Nos. 2 at 18-19 & 2-SR
to customers who may have agreed to early cancellation fees.” Id. at 25. RESA does not provide any citations to record evidence, but refers instead to its Main Brief at 57-58. RESA avers that “this is particularly true in the PECO territory” and justifies a different conclusion than that reached by the Commission in the FE DSP Order. Finally, RESA suggests a “compromise solution” whereby the promotional materials would state that the Opt-In Program is limited to default service customers, but that any customer who enrolls would be included. RESA states that this would be better than creating the “risk of cannibalizing the existing shopping program.” Id. In Reply, PECO states that RESA has not refuted the ALJ’s conclusion that including small commercial customers in the Opt-In Program would add complexity because different offers with different prices would have to be designed, solicited and marketed to different subsets of customers, which are not homogenous. PECO argues that the number of small commercial customers that are receiving service from an EGS has increased during DSP I and currently stands at 39%. PECO disputes RESA’s characterization of this level of shopping as “dismal.” With regard to shopping customers, PECO argues that its proposal to target marketing to default service customers, while allowing shopping customers to participate in the Opt-In Program, conforms to the Commission’s IWPF Order, which the Commission affirmed in the FE DSP Order. PECO submits that RESA’s Exception should be denied. PECO R.Exc. at 13-14. The OSBA argues in its Reply Exceptions that the Commission’s FE DSP Order is not controlling. Rather, in the IWPF Order the Commission gave some discretion to EDCs to tailor their retail market enhancement programs to their individual situations. In addition, the OSBA states that the FE DSP Order was a complete departure from the IWPF Order on the issue of small commercial customer participation in Retail Opt-In (ROI) Auctions. In the IWPF Order, the Commission concluded that small commercial customers should not be eligible to participate in ROI Auctions because there
is no consistency in the definition of “small commercial” across EDCs, and it would be inappropriate to include a segment of customers that may reflect a wide variation in electric load. However, in the FE DSP Order, the OSBA asserts that the Commission turned 180 degrees on this issue, on the basis that over half of the customers with loads under 25 kW were not shopping. “This new basis for its decision was something that had already been noted and considered, but dismissed by the Commission in the [IWPF Order].” OSBA R.Exc. at 15. The OSBA submits that the Commission changed its rationale for including/excluding small commercial customers, without any explanation, reasoning or analysis to support its change in position. The OSBA notes that the Commission’s rationale in the IWPF Order was not even mentioned in the FE DSP Order. “Therefore, the [FE DSP Order] should not be considered when determining whether small business customers should be eligible to participate in PECO’s ROI Auction.” Id. at 16. In its Reply Exceptions, the OCA submits that shopping customers should be eligible for the Opt-In Program, consistent with the ALJ’s Recommended Decision. The OCA argues that PECO’s proposal to market the program to non-shopping customers, but to accept shopping customers who enroll in the program, is consistent with the Commission’s IWPF Order and FE DSP Order. OCA R.Exc. at 15-16. In response to RESA’s argument that the ALJ ignored record evidence regarding the impacts to EGSs and possible cancellation fees to customers, the OCA submits that RESA failed to provide substantial record evidence to justify a departure from the Commission’s prior ruling on this issue. The OCA submits that barring customers from participating in a Commission-sponsored program would raise the issue of legal, or at least perceived, discrimination, and could damage the public’s perception of such programs. Accordingly, the OCA submits that the ALJ’s recommendation on this issue is in accordance with the law and the evidence of record, and should be upheld. Id. at 17. iv. Disposition