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Utility regulators move swiftly on rate volatility complaints

| Wednesday, March 19, 2014, 3:57 p.m.

State regulators are moving quickly to address complaints by thousands of consumers whose electric bills increased dramatically this winter because they were locked into variable-rate plans that were subject to wild swings in wholesale power prices.

The Public Utility Commission this week proposed regulations that would shorten to three days the amount of time it takes for a customer to change electricity suppliers and improve disclosure of prices and contract terms.

The commission is expediting the process to get changes in place within six months, before another winter of price spikes.

“This typically takes a year or more,” said commission spokeswoman Jennifer Kocher.

Fuel shortages and harsh winter weather caused wholesale electricity prices to surge. Some consumers who had switched electricity suppliers, especially those who went to variable-rate plans that fluctuate based on wholesale prices, watched their bills increase 300 percent or more without notice.

Consumers said in more than 12,000 calls to the PUC and 4,800 informal complaints that they often did not know their bills could swing so wildly. They repeated a complaint the commission and others have heard since electric choice began in the state in 1997: It can take as much as 40 days to change suppliers, during which time people are charged higher prices.

Faster change times “work best on the behalf of the consumer,” said Bryan Lee, a spokesman for the Retail Energy Supply Association, which supports the three-day limit for switching suppliers. “The consumer is not locked in a bad deal and can get out of that deal.”

The commission proposed clear rules for the information suppliers give customers about plans and prices, including uniform language for contracts and notices.

“This is where we could make changes to regulations,” Kocher said, noting the complaints brought the price and language concerns to the forefront.

Utilities, consumers and advocates have about a week to comment on the proposals issued Tuesday and Wednesday.

“There's no question that customers will benefit from faster switching and greater disclosure of the specific terms of contracts,” said Doug Marcille, CEO of U.S. Gas & Electric, a retail energy supplier that competes in Pennsylvania.

The Pennsylvania chair of the Retail Energy Supply Association will be among several people testifying on Thursday before a state House committee in Harrisburg. Rep. Robert Godshall, R-Montgomery County, proposed legislation that would make similar changes to the regulations.

Acting Consumer Advocate Tanya McCloskey will testify, along with PUC Chairman Robert Powelson and others. McCloskey said she has some concern about the speed at which the PUC is moving, and she wants to ensure utilities don't pass to customers huge costs for changing disclosures and billing systems. She wants to ensure that three days gives utilities time to confirm people really are making changes and aren't victims of “slamming” scams in which accounts are switched illegally.

“We don't want to trade one problem for another,” McCloskey said.

Kocher said utilities cannot impose fees to cover costs involved; they must use rate-change proposals that take nine months for approval. Supplier changes can be reversed retroactively in cases of slamming, she said.

David Conti is a Trib Total Media staff writer. Reach him at 412-388-5802 or dconti@tribweb.com.

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