Most Pennsylvania residents are aware that they can shop for electricity suppliers other than their utilities but only about a quarter have switched away from default suppliers more than two years after the state began restructuring its retail power market, the Pennsylvania Public Utility Commission heard on Thursday.
The panel held a special en banc hearing in its ongoing retail markets investigation which aims to boost competition and consumer choice in reforms that are being closely watched across the US as a model of deregulation.
Commissioners sought input from generators, suppliers and consumer advocates on how to persuade more residential customers that they can save money and maintain current standards of reliability by switching to competitive electric suppliers.
Only 19% of 801 people in a September survey had switched their supplier compared with 88% who said they knew it was possible to switch, and 44% who had looked into changing their supplier, according to a survey by Terry Madonna Opinion Research, a polling company whose results were presented to the PUC hearing.
Those who didn’t switch said they were happy with their default supplier; were not convinced they would save money, or saw switching as too much trouble, the firm’s principal, Terry Madonna, told the panel in Harrisburg.
This is complicated stuff for the average consumer
“This is complicated stuff for the average consumer,” said Madonna, who is also a political science professor at Franklin & Marshall College in Lancaster, Pennsylvania. “This is a huge change in a relatively short period of time.”
Another survey for Direct Energy found just 34% of 800 customers contacted had switched to competitive suppliers, largely because of lower prices. Many of those who had decided not to switch said they didn’t understand the process of switching or saw it as too much of a hassle, both factors that are within the Commission’s control, according to the study, conducted in May by the Zogby organization.
Despite some success achieved by the PUC’s website, papowerswitch.com, in educating the public, more needs to be done to convince people that they are “leaving $100 bills on the street,” said Commissioner James Cawley.
“People just don’t understand the difference between a generation company and a distribution company,” Cawley said. “That’s where we’ve really got to concentrate our education efforts.”
Michael Meath, a regulatory consultant for the Pennsylvania Energy Marketers Coalition [PDF], said some consumers avoid switching because they fear retribution from existing suppliers.
“Consumers are concerned about how they are going to be treated by the incumbent utility if they switch,” he said. “It’s a huge impediment.”
Among measures being considered by the commission to stimulate consumer switching are opt-in auctions, in which suppliers would bid for the business of groups of consumers who would be given cash incentives to switch.
The commission is also weighing shortening the waiting period before a supplier switch becomes effective, on the grounds that some consumers find delays of up to 45 days to be a deterrent to choosing a new supplier.
The panel on Thursday invited public comments on proposals including eliminating a 10-day waiting period initiated by a distribution company confirming that a customer has switched suppliers.
Separately, the commission called for comment on proposed requirements to improve maintenance of natural gas pipelines for the state’s booming Marcellus Shale industry.
It also put the power industry “on notice” that it plans to develop similar proposals for electricity distributors the “near future.”
Other states have chosen to force customers to choose suppliers in the hope of boosting switching rates. Read more here.