FERC Filings

COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION-Comments Regarding Retail Electric Competition-V010003

III. Provider of Last Resort

The importance of provider of last resort (POLR) issues to the development of competitive markets cannot be overstated. In the transition to a fully competitive market, legislators, regulators and consumer advocates have been understandably concerned about ensuring small customers receive continued generation service at a reasonable price. Customers should be assured a continuous source of electricity, even if they do not choose a new supplier. In addition to those customers who choose not to choose, other customers who must also be assured access to electricity include: (1) customers who need POLR service because they are unable or unqualified to obtain service from a competitive power supplier, and (2) customers whose service has, for whatever reason, been terminated by their supplier and who need “backstop” service. State regulators must decide who will provide the electricity service to these customers. It is important that policymakers design POLR programs to maximize customers choice, and minimize the number of customers who take POLR service.

Allowing new market entrants (including competitive utility affiliates) to bid to provide POLR service is essential. If customers can, by not choosing, remain with the incumbent utility, then the incumbent utility has gained a significant competitive advantage. Competitive suppliers will have a tremendous struggle to break in to the market, which may discourage them from doing so.

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