The Public Utility Commission Thursday issued for comment a policy statement on the pricing labels used when selling electric generation service to residential customers.

The Commission voted 5-0 to issue for comment tentative updates to its “electric competition dictionary.” The updates provide guidance to electric generation suppliers (EGSs) on the appropriate use of the “fixed-price” label and the use of pass-through clauses when presenting offers to potential customers and to provide for an additional labeling option.

The Commission proposed the changes after the filing of informal complaints by consumers as well as inquiries from EGSs and electric distribution companies about pricing practices.

Some EGSs are offering fixed-rate products to residential customers but include language in the disclosure statement that allows the EGS to pass through the rate changes if an outside entity such as the Federal Energy Regulatory Commission or the PJM Interconnection imposes costs on the supplier.

The Commission’s main concern is that these types of offers may be misleading, especially when an EGS prominently advertises a fixed price and includes additional costs that are described in the pass-through clause far down in the fine print of the disclosure statement.

The relevant existing definitions are:

-- Fixed price: A fixed electricity rate will remain the same, for a set period of time.

-- Variable price: A variable electricity rate can change, by the hour, day, month, etc. according to the terms and conditions in the supplier’s disclosure statement.

The changes issued for comment in the Tentative Order include:

-- Adding “of at least three billing cycles” to the definition of fixed price.

-- Adding a definition for a “price with pass-through clause” and its use in the disclosure statement as well as direction for notifying customers of pricing changes.

-- Additions to the definition of variable price.

Comments to the Tentative Order are due within 30 days of the entry of the Order. Further filing directions will be available in the Order.

For more on electric competition, visit Power Switch PA website.

5/27/2013