The Pennsylvania Public Utility Commission will now decide whether migration riders will be permitted for electricity customers, at the same time it is moving forward with its Retail Markets Investigation and its notable efforts to make the electricity markets more competitive.

As of Friday, May 4, the Replies to Exceptions have been filed with the Commission  by the various parties, seeking to support or overturn the Recommended Decision of Administrative Law Judge Susan D. Colwell in the case that may well have a dramatic impact on the future direction of electricity competition in Pennsylvania.  The case, Petition of PPL Electric Utilities Corporation for Approval to Implement a Reconciliation Rider for Default Service Supply, Docket No. P-2011-2256365, involves PPL Electric’s request to implement a migration rider, labeled as a Reconciliation Rider (“RR”) and a competitive transition rider (“CTR”).

If approved, the RR will permit PPL Electric to charge customers for the costs of default service for up to a full year after customers switch to competitive supply.  Likewise, the RR would allow PPL Electric to not charge customers this same migration rider charge after they switch from competitive supply to default service supply.  This scheme, according to the suppliers in the case, provides incentives for customers to switch to, and stay on default service supply.  These types of migration riders are common in the natural gas industry in Pennsylvania and suppliers have argued that they are one of the primary reasons why natural gas markets are far less competitive than electricity markets.

In her Recommended Decision issued on April 4, 2012, ALJ Colwell recommended approval of the RR, brushing aside without analysis the claims of the suppliers and the Office of Consumer Advocate that the migration rider would have negative effects on competition.  The ALJ recommended rejection of the Company’s proposed CTR, however, which would also have allowed the Company to charge customers for the cost of default service after they had shopped.  The CTR would have allowed PPL to recover balances that accumulated after PPL’s rate caps expired in 2010.  The ALJ’s legal basis for rejecting the CTR is surprisingly similar to the legal theory proposed by the marketers for why the ALJ should have rejected both the RR and CTR.

The PUC must now decide whether it will continue with the trajectory that has been firmly established in its RMI proceeding, and accept the marketers’ view that the RR will damage the competitive markets, or accept PPL’s view that its migration rider is competitively neutral.  This will be a crucial decision for the Commission to show the depth of its support for further development of the competitive market in the electricity sector in Pennsylvania.  Stay tuned.