March 13, 2014
The impacts of the recent, unprecedented Polar Vortex have highlighted the potential for improvements so that customers are better protected from extraordinarily high energy bills during short term market events. Direct Energy, North America's largest energy and energy-related services provider, is announcing that effective April 1, the Company will add a price protection feature to its current residential electric variable rates in each Pennsylvania utility service area in which the Company serves. This will provide Direct Energy variable customers with the flexibility of a month-to-month plan with protection against extraordinary price spikes.
With this new residential electric variable rate protection, Direct Energy is providing the highest level of price protection available for residential electric variable rates in Pennsylvania today. While these price protection levels are above Direct Energy's current residential electric rates, these price protection levels represent the maximum variable residential electric rates Direct Energy would charge in Pennsylvania in the event of another round of unforeseen and unexpected extreme market volatility.
Direct Energy's maximum residential electric variable price protection levels range from 11.2 cents per kilowatt-hour to 14.5 cents per kilowatt-hour for the Pennsylvania utility areas in which the Company serves customers. The Company is committing to these price protection levels for a six month period. The utility areas are as follows:
- Duquesne Light Company: 13.0 cents per kilowatt-hour
- Metropolitan Edison Company (MetEd): 12.2 cents per kilowatt-hour
- PECO Energy Company: 14.5 cents per kilowatt-hour
- Penn Power: 11.3 cents per kilowatt-hour
- Penelec: 12.2 cents per kilowatt-hour
- Pike County Light & Power Company: 14.2 cents per kilowatt-hour
- PPL Electric Utilities: 13.7 cents per kilowatt-hour
- West Penn Power: 11.2 cents per kilowatt-hour
By offering this level of price certainty, Direct Energy will continue to serve its customers with competitive pricing which will not exceed the price protection levels during this six month period.
After the initial six month variable price protection period ends, to the extent that Direct Energy determines it needs to adjust these price protection levels, Direct Energy will provide its residential customers with a minimum of 30 days advance notice of any proposed change to enable those customers to determine which plan is right for them.
Direct Energy has been working closely with stakeholders to enhance the competitive marketplace across the Commonwealth. In addition to its voluntary actions announced, Direct Energy is proposing the following improvements to the state's competitive retail energy market to enable customers to have both choice and control of their energy bills:
- A new standard for retail suppliers to offer residential variable electric rates with price protection. Direct Energy believes that all retail suppliers should provide a specific cents-per-kilowatt-hour maximum variable rate for any residential variable electric price products and provide customers 30 days advance notice of any changes the retail supplier makes to that price protection level. This gives customers the ability to make better budgeting, shopping and switching decisions.
- Clearer customer disclosures. Direct Energy believes all suppliers should be required to identify and communicate clearly to customers all pricing and term information, any early termination penalties and the details for how the supplier will serve the customer after the expiration of any initial contract period.
- Minimize delay when changing suppliers. Currently, when a customer wants to change suppliers, the process can take one to two billing cycles to complete. Direct Energy supports working with stakeholders to make efforts to ultimately move to a same-day switch model, but in the interim work toward a target of three to five days.
- Full smart meter deployment. Smart meters enable retail suppliers like Direct Energy to offer advanced products and services. This not only fosters greater customer engagement but also gives customers fuller control of their energy usage and bills. Direct Energy already offers several innovative products that use smart technology to help customers manage their energy use, which can be particularly helpful during unpredictable weather conditions. Full smart meter deployment would enable Direct Energy and other suppliers to offer more of these types of products and services across the state.
- Wholesale market risk allocation. Direct Energy believes that certain underlying wholesale market conditions and infrastructure constraints need to be addressed to mitigate the impacts of extreme weather events, such as the Polar Vortex or other situations, on end use customers. The Company is advocating that the emergency costs needed to run the system in these types of situations be included in the locational marginal price to give prudent retailers the opportunity to plan ahead and minimize the impact to customers.
"Direct Energy has listened to our customers and we believe these proposed improvements will make the retail market a more simple, friendly and direct environment for all customers to better realize the benefits of competition," said Manu Asthana, president of Direct Energy's residential business. "In addition to these priority areas, Direct Energy also supports enhancements that include increasing the financial fitness standards for retail suppliers, stronger enforcement against suppliers and sales representatives that violate customer protection regulations, and new measures to promote fixed price contracts."
"We continue to work to provide integrated home services and cost-effective energy products within competitive markets because we understand the benefits they can bring to our customers," Asthana added.
In Pennsylvania, Direct Energy has more than 286,000 customer relationships. The Company has grown employment levels to more than 1,000 people with corporate offices in Pittsburgh and Harrisburg. It also has 29 home services franchise offices throughout the Keystone state operating under the names One Hour Heating and Air Conditioning, Heating and Air Conditioning, Mister Sparky and Benjamin Franklin Plumbing.
- The residential electric variable rate price protection does not include incremental services procured including but not limited to: green products, rewards, home services, or other non-energy related items.
- The residential electric variable price protection levels are the absolute highest rates pending any future regulatory or legislative changes that impose greater costs on retailers
About Direct Energy
Direct Energy is one of North America's largest energy and energy-related services providers with six million residential and commercial customer relationships. Direct Energy provides customers with choice and support in managing their energy costs through a portfolio of innovative products and services. A subsidiary of Centrica plc (LSE:CNA), one of the world's leading integrated energy companies, Direct Energy operates in 46 U.S. states plus the District of Columbia and 10 provinces in Canada. www.directenergy.com
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