Will the PUC’s Latest Efforts Create a More Competitive Market for Retail Electricity in Pennsylvania?

Abstract

When the General Assembly passed the Electricity Generation Customer Choice and Competition Act (“Competition Act”), it stated “[e]lectric service is essential to the health and well-being of residents, to public safety and to orderly economic development, and electric service should be available to all customers on reasonable terms and conditions.” Additionally, it was recognized that “[t]he cost of electricity is an important factor in decisions made by business concerning locating and retaining facilities in this Commonwealth.” These goals according to the PUC remain “as true today as when the Competition Act was passed.”Out of concern for competition within the retail electric market in Pennsylvania, in April of 2011, the Public Utility Commission (“PUC”) initiated its Investigation of Pennsylvania’s Retail Electricity Market. The commencement of this investigation clearly indicated that the PUC felt the Competition Act was not achieving its goals upon the retail electric market as envisioned by the General Assembly. This sentiment was most notably expressed when the PUC stated its concerns, during meetings pertaining to the FirstEnergy-Allegheny Power merger, that a statewide investigation would be carried out “with the goal of making recommendations for improvements to ensure that a properly function[ing] and workable competitive retail electricity market exists in the state.” In response to the market’s inefficiency, the PUC directed the Office of Competitive Market Oversight (“OCMO”) to address how to resolve issues the PUC identified as being the most relevant to improving the current retail electricity market. The investigation itself has progressed in two phases. This article reviews each phase and attempts to highlight some important changes and recommendations made by the PUC and the OCMO.