PUC approves plan to assign PECO residential customers to alternative electricity suppliers

HARRISBURG, Pa., May 2, 2003 — Approximately 400,000 of PECO Energy’s residential customers could be randomly assigned to alternative electricity suppliers under a plan approved recently by the Public Utility Commission (PUC) to encourage electric competition in the Philadelphia area.

The “market share threshold” plan is a requirement of PECO’s 1998 restructuring settlement. It states that the company must randomly assign customers to alternative electricity suppliers if less than 50 percent of its customers had selected another supplier as of Jan. 1. As of the first of the year, approximately 7.6 percent — or about 104,000 — of PECO’s 1,375,666 residential customers were being served by another supplier.

“The plan approved today will result in new opportunities for PECO customers to receive discounted electricity from alternative suppliers,” PUC Chairman Glen R. Thomas said. “Assignment will help to boost competition in the PECO distribution service territory by giving new providers a customer base while guaranteeing customers a stable, lower rate.

“Revolutionizing Pennsylvania’s electricity markets will take time and, occasionally, a little prodding. I am nevertheless confident that our success will continue because of the determination of Pennsylvania’s stakeholders to make it work.”

Today’s plan was approved 3-2, with Commissioner Terrance J. Fitzpatrick and Commissioner Kim Pizzingrilli dissenting.

The market share threshold plan will be completed in two phases. In the first phase, 100,000 customers will be randomly assigned. Customers will begin to receive service from the new suppliers in mid-June or July of this year. The bidding process for the second phase will begin in September, with the remaining customers receiving service from the new suppliers around December.

In both of the bidding processes, 80 percent of customers will be assigned to suppliers who offer the lowest price for electricity through a reverse auction. (In a traditional auction, a product is sold to the highest bidder. In a reverse auction, a product is sold to the lowest bidder.) Bids for this service must offer at least a 1.5 percent discount from PECO’s price to compare for residential accounts and at least a 0.5 percent discount from the price to compare for residential heating accounts.

The remaining 20 percent of customers will be assigned to suppliers offering service with a renewable resource component. Minimum bids for this service must contain at least 5 percent renewable resources. Bids for this service do not have to offer a discount from PECO’s price to compare.

Although customers will be assigned to a new supplier, they are not required to participate in the program. Once the bidding and assignment processes are completed, customers will receive several notices and will have at least two opportunities to opt out. They can remove themselves by calling PECO or by returning a postage-paid postcard that they will initially receive from the new generation supplier. Also, customers can switch suppliers or return to PECO at any time without paying a switching fee.

Customers will still receive one bill from PECO, which will include charges from the generation supplier.

The Pennsylvania Public Utility Commission ensures safe, reliable and reasonably priced electric, natural gas, water, telephone and transportation service for Pennsylvania consumers, by regulating public utilities and by serving as responsible stewards of competition.

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