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In a 3-to 2 vote, the Pennsylvania PUC decide to modify the Administrative Law Judges (ALJs) recommended decision and related non-unanimous settlement agreement in FirstEnergy’s default service proceeding that would among other things ban residential autorenewals.

In particular, the PUC adopted a motion from Chairman Steve DeFrank’s rejecting the ALJs’ recommended decision to ban auto-renewals of fixed price residential electric contracts in favor of expeditiously addressing fixed price auto-renewals, and continued monthly service under variable rates, on a statewide basis.

In particular the Chairman’s motion denies the following proposal: “EGSs entering into new contracts with residential customers after June 1, 2027, must return those residential customers to default service at the conclusion of the fixed duration contract term absent an affirmative choice to remain with the EGS in response to the notices required by the Commission’s regulations at 52 Pa. Code § 54.10. In addition, commencing June 1, 2027, EGSs will be required to provide an attestation of affirmative customer consent on a quarterly basis for all residential customers on variable-priced month-to-month products.”

DeFrank said that data, showing that FE PA residential shopping customers paid approximately $82 million more in net generation charges in 2025 than they would have paid if they were on default service, “raise obvious concerns,” but the Chairman was reluctant to make changes within a single utility service territory rather than on a statewide EDC service territory basis.

The PUC therefore directed the Office of Competitive Market Oversight (OCMO) to expeditiously address fixed price auto-renewals, and continued monthly service under variable rates, on a statewide basis and provide recommendations due by June 1, 2027.

Chairman DeFrank’s Motion – “While the claims on the record here do raise obvious concerns, I am hesitant to make such profound revisions at this time in the retail electric marketplace of a single EDC. First, Section 54.10 of the Commission’s regulations underlie the existing market rules applicable to these circumstances, permitting EGSs to retain customers upon contract expiration after proper notice. Second, I am unable to ascertain the root cause of the increased costs highlighted in the Settlement. Third, I question whether it is appropriate to make this modification in a single service territory or if such a determination is best implemented universally across the state, for instance, via rulemaking. Therefore, I am interested in conducting a more comprehensive and diligent review of this issue to ascertain what portion of the costs noted on the record here are the result of customers choosing value-added products, renewable products, long-term fixed rates products, time-of-use, or other types of products versus those costs that were manifested due to customer ‘decision inertia.’ As well, should retail market modifications be needed, I am interested in determining how best to implement those modifications.

My preference therefore is to deny and eliminate these provisions from Paragraph 66 of the Settlement. Instead, I find it appropriate at this time to direct the Commission’s Office of Competitive Market Oversight (OCMO) to conduct a paper proceeding on an expedited basis intended to review these concerns statewide. This review would be separately docketed and culminate with any recommendations that OCMO deems prudent to be provided to the Commission by June 1, 2027, whether that be via a proposed rulemaking, order, advisory memo, report, or any other transmittal deemed appropriate.”

“I acknowledge this action involves modifying the instant Settlement and may result in parties’ withdrawal from the Settlement. Further, I acknowledge that such potentiality may result in this proceeding passing the nine-month period for the Commission to issue a final order as required by the Public Utility Code. Section 2807(e)(3.6)6 states in pertinent part:

If the commission fails to issue a final order on the plan within nine months of the date that the plan is filed, the plan shall be deemed to be approved, and the default service provider may implement the plan as filed.

I highlight the phrase “…the default service provider may implement the plan as filed.”7 Should the Settlement be withdrawn, I ask that FirstEnergy consider acting in good faith to not implement the DSP VII as originally filed in order to permit the Commission time make a prudent and final determination as expeditiously as possible.”

Vice Chair Barrow Statement – Return of Customers to Default Service at Contract Expiration – “We find ourselves squarely in the middle of an affordability crisis and customers are rightfully asking for relief. FirstEnergy’s proposal to return residential shopping customers to default service, at contract end, would clearly help those shopping customers to avoid exorbitant variable rates. The Commission has the authority to grant the requested relief now.”

“With this ongoing affordability crisis, immediate attention is necessary. The record evidence supports granting First Energy’s request. And, granting the request to allow residential shopping customers who have not affirmatively opted to continue on EGS contracts, to be returned to default service will save that subset of customers money.”

“While I have been advocating for the Commission to convene another retail market investigation, that particular horse has left the barn in that the largest electric distribution company in the state is now asking for relief that such an investigation could deliver. I see no reason to deny FirstEnergy’s proposal when a substantial record from a litigated proceeding is already before us; doing so would be a waste of Commission resources.* I am still supportive of a broader investigation, but it should not delay action here.”

Long-Term Contracts – “I believe our electric distribution companies should increase procurement of generation supply utilizing long-term contracts. In my view, the 10% slice of long-term contracts agreed-to here is not enough to signal to the generators to build or to continue operating. The statute’s prudent mix standard protects against an inordinate shift to more than 25% long-term contracts for good reason, but our electric markets have changed markedly since the passage of the Act, and without adequate market signals, Pennsylvania will continue to see a shortfall of capacity in years to come, with prices over time increasing at a dramatic pace. As such, we should utilize the discretion granted to us by the Act to increase the percentage of long-term contracts.”

Commissioner Zerfuss Statement – “First and foremost, I support the settlement’s requirement that residential customers who shop with electric generation suppliers (EGSs) confirm their intent to stay with their chosen EGS when their fixed-rate term is about to expire.  This would return customers to default service if and when no such consent is granted.”

“Under the settlement and the Recommended Decision, for all new residential EGS agreements entered into after June 1, 2027, customers will return to default service at the end of the fixed-rate term unless they affirmatively choose to remain with their supplier in response to the required notices. . . . This mechanism preserves customer choice while adding an important safeguard, particularly for our most vulnerable customers. The required expiration notices then give the customer an opportunity to remain with the same supplier, select another supplier, or receive default service.”

“These safeguards support informed consent while preserving customers’ abilities to choose competitive supply.”

“The measure is also wholly consistent with the statutory text, which preserves the customer’s ultimate choice” and requires direct oral confirmation or “written evidence of the customer’s consent” to a supplier change.  The contract contemplated by the settlement provides just that consent, with another opportunity to choose at expiration.  Waiving the regulatory requirement of automatic renewal preserves informed choice while addressing the affordability concerns in FirstEnergy’s territory, which includes nearly two million residential customers.”

An order was not available at the time of publication so stay tuned for more details including resolution of purchase of receivable and other matters.See also most recently filed comments by Senator Keefer Letter.