New rule would switch customers back to default utility supplier

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(The Center Square) – Pennsylvania utility regulators are expected to decide soon on a proposal that has sparked a dispute over consumer protections, competition in the state’s retail electricity market, and the potential impact on electricity prices.

In February, FirstEnergy Pennsylvania filed a petition with the PUC proposing changes to its Default Service Plan, or DSP, for June 1, 2027, through May 31, 2031. The utility serves more than 2 million customers across four service territories – Met-Ed, Penelec, Penn Power, and West Penn Power. 

Customers would still have the option to purchase electricity from FirstEnergy’s default service or choose a competitive supplier. The controversy centers on how customers are treated under those arrangements. 

Under existing rules, customers can remain with competitive suppliers after their contracts expire without having to reaffirm their choice. 

The proposed plan would automatically return residential customers to default service when their fixed-rate contracts expire unless they affirmatively choose to remain. It would also require quarterly confirmation for customers on variable-rate plans. 

Additionally, the proposed settlement would prevent competitive electricity suppliers from using FirstEnergy’s Purchase of Receivables, or POR, program for residential contracts priced above the utility’s standard Price to Compare. Suppliers could still charge higher rates but would have to handle their own billing and collections for those contracts. 

A non-unanimous settlement reached in July between FirstEnergy and several participating parties would establish new electricity purchasing arrangements and consumer protection measures for the utility’s next four-year DSP. The agreement, supported by state consumer advocates but opposed by competitive electricity suppliers, would change contract renewal requirements and impose new restrictions on certain competitive supplier arrangements. 

Because parties to the proceeding objected to provisions of the settlement, the PUC must weigh the objections alongside the arguments offered in its favor. 

Supporters argue the changes would strengthen consumer protections, while opponents contend they would undermine Pennsylvania’s competitive electricity market. 

Parties supporting the proposed settlement include the Pennsylvania Office of Consumer Advocate, or OCA; Pennsylvania Office of Small Business Advocate; Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania, or CAUSE-PA; Walmart, Inc.; and Duquesne Light Company. 

The OCA cited evidence that residential customers using competitive suppliers paid approximately $82 million more in 2025 than they would have under default service rates and supported additional protections against higher-cost arrangements. 

CAUSE-PA also presented data showing that low-income customers purchasing electricity from competitive suppliers paid, on average, more than other residential customers in their respective FirstEnergy service territories between 2022 and 2025.

On Aug. 21, two administrative law judges recommended approval of the settlement, citing evidence of consumer harm, including the data presented by OCA and CAUSE-PA. 

Opponents, however, argue that the proposed protections would interfere with consumers’ ability to select and retain competitive electricity suppliers.

Sens. Gene Yaw, R-Williamsport, and Kristin Phillips-Hill, R-York, along with Rep. Carl Walker Metzgar, R-Somerset, have urged the PUC to reject proposed changes, arguing they would undermine Pennsylvania’s competitive electricity market. 

In separate letters, the lawmakers asserted that significant changes to the state’s longstanding electricity choice framework should be considered by the General Assembly rather than through regulatory proceedings. Metzgar specifically objected to automatically returning customers to utility default service when their contracts with competitive suppliers expire, maintaining that the practice would discourage competition and disregard consumers’ original choices. 

UGI Energy Services also raised objections to a provision of the proposed settlement in an Oct. 7 letter to the PUC, arguing that restrictions on suppliers' participation in FirstEnergy's purchase-of-receivables program would undermine competition and limit consumer choice. 

The company warned that suppliers offering renewable energy, fixed-price contracts and other products priced above the utility's default rate could face higher billing and collection costs or withdraw those offerings. UGI urged regulators to reject the provision and consider less restrictive alternatives to address unpaid customer bills.

Frank Caliva, spokesperson for the Retail Energy Supply Association, or RESA echoed those concerns. He told The Center Square Pennsylvania’s nearly 30-year commitment to competitive energy markets has benefited consumers through competitive pressure on wholesale prices, more stable retail prices, renewable energy options, and innovative products and technologies. 

Caliva said opponents of retail competition “are pursuing a backdoor effort to restrict consumer choice in direct conflict with the General Assembly’s longstanding policy on market competition and customer choice.”

He warned that limiting the products retail suppliers can offer through the utility billing system and forcing customers back on utility default service when their contracts expire, would undermine the competitive marketplace in FirstEnergy’s service territories and beyond. 

“We urge the PUC to recognize these broader consequences and reject the proposed decision later this month, reaffirming Pennsylvania's longstanding support to competitive energy markets and the consumers they serve.”

The PUC faces a November 3 statutory deadline to issue its final order on FirstEnergy’s DSP. Its next public meeting is scheduled for Oct. 22.