FTC Files Comment with Pennsylvania Public Utility Commission About Retail Electricity Pricing and Customer Participation

The FTC has approved the filing of a comment with the Pennsylvania Public Utility Commission (PA PUC) concerning the PA PUC’s implementation plan for its Energy Efficiency and Conservation Program. The comment also replies to the November 18, 2008, presentation made by the Retail Energy Supply Association (RESA) at the PA PUC’s en banc hearing on demand-side response, energy efficiency, and conservation.

According to the FTC comment, dynamic power pricing and demand response involve customers in addressing electric power systems’ most pressing problems, and this has “the potential to enhance consumer welfare and increase economic efficiency at both the wholesale and retail levels.” The Commission commends the Pennsylvania Legislature and the PA PUC for taking the initiative on these important topics, and states that “[m]ore efficient pricing, advanced metering, and improvements in the technology used to determine when (and how much) energy is consumed are all critical to the future performance of the power industry in Pennsylvania and in the United States as whole.”

The comment states that while many of the specific questions proposed at the hearing pertained to Conservation Service Providers, the FTC recommends that these questions be framed in the context of empowering consumers to manage their peak and overall electric power consumption. The comment thus describes several aspects of encouraging demand-side participation, energy efficiency, and conservation as ways to deliver consumer benefits.

The comment also gives examples of how well-designed dynamic pricing and demand response programs can enlist consumers to help meet important challenges facing the power system.

The FTC summarizes its recommendations by stating that the PA PUC should: 1) encourage real-time or other dynamic pricing programs that increase economic efficiency; 2) urge utilities to design and market dynamic pricing programs that appeal to customers; 3) eliminate regulatory provisions that financially penalize power suppliers if they facilitate efficient dynamic pricing; 4) offer fair standby pricing policies for customers with onsite generation investments; and 5) advocate for demand response bid flexibility. The FTC comment states that “[d]ynamic pricing and demand response programs can be powerful tools to empower customers to help manage peak and overall load.”

The Commission vote approving the filing of the comment was 4-0. It was submitted to the Pennsylvania Public Utility Commission on December 17, 2008. (FTC File No. V090001; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 62.2008.wpd)