HARRISBURG — Faced with stark evidence that residents who shop for electricity suppliers pay higher bills and face more frequent shut-offs, Pennsylvania regulators approved a significant policy change sought by the state’s largest electric company.
In a 3-2 vote in late October, the Public Utility Commission agreed to allow FirstEnergy Pennsylvania to limit suppliers’ access to its “purchase of receivables” program based on the prices they charge. But the commission rejected the utility’s attempt to prevent customers from being enrolled in new supplier contracts they have not actively chosen, instead ordering a statewide review of the issue.
The split decision indicates regulators are open to new guardrails on retail suppliers — but only up to a point.
A landmark state law passed in 1996 gave Pennsylvanians the ability to choose which company to buy their supply of electricity from: They can stay on the “default service” offered by their utility, or sign up with a different type of company — a retail electricity supplier.
Under state law, utilities do not make a profit on default service, so FirstEnergy does not lose money when its customers sign up with a supplier. The company said in a regulatory filing in February that it proposed changes in response to growing concerns about the high prices charged by suppliers and a 50% increase in customer complaints about suppliers in 2025.
The changes proposed by FirstEnergy were supported by consumer advocates, but drew fierce opposition from suppliers, who warned the company’s plan would effectively kill the commonwealth’s retail market. In a mail campaign ahead of the vote, the Retail Energy Supply Association framed the case as an existential threat to the industry, urging residents: “Don’t let Harrisburg take your choice away.”
FirstEnergy argued that shopping for a supplier has serious downsides for many customers.
In 2025, according to data FirstEnergy submitted in the case, customers who shopped paid $82 million more than if they had stayed on default service — even after accounting for those who saved money. Customers who shopped were also almost more than 9 times as likely to have their service shut off.
At an Oct. 22 public meeting, the utility commissioners disagreed about how to interpret the numbers.
Stephen DeFrank, chair of the commission, said that while the numbers raise “obvious concerns,” the “root cause” of the extra costs was unclear. He said a statewide review is needed to clarify how many customers choose to pay more for products that utilities cannot offer, like long-term contracts or green energy plans.
Commissioner John Coleman, who called the case “a significant turning point” for Pennsylvania’s retail electricity market, echoed DeFrank’s concerns about the need for more information.
“We have some data this morning that is pretty compelling, and perhaps a bit damning, for the competitive market, but I’d like to hear the whole story,” he said.
Vice Chair Kimberly Barrow, one of two commissioners who voted against the decision, said regulators already have plenty of evidence that changing the rules around contract renewals would save customers money.
“We find ourselves squarely in the middle of an affordability crisis and the customers are asking for relief,” she said.
‘Guaranteed upfront payment’
Like other large utilities, FirstEnergy buys customer bills from suppliers and collects the money that’s owed. The company’s other ratepayers end up shouldering the cost of debt that can’t be collected.
The program, known as “purchase of receivables,” isn’t mandatory. But in the late 2000s, state regulators indicated that utilities should adopt the programs in order to encourage suppliers to enter the market.
Residential customers served by retail suppliers account for a disproportionate amount of FirstEnergy’s uncollectible debt, data submitted by the utility show. Between 2022 and 2025, 40% of such debt came from customers served by retail suppliers, even though only 18% of customers shopped.
The utility commission approved the company’s proposal to limit access to the program to supplier contracts priced the same or less than the cost of its default service. In a written order, regulators said there was “clear and substantial” evidence of harm stemming from suppliers “unrestricted access to guaranteed upfront payment.”
In legal filings, suppliers argued the program is so crucial to their operations that the change would effectively be a price cap that would make it impossible for them to do business in Pennsylvania.
Laurel Peltier, a consumer advocate who helped push for new legal restrictions on suppliers that Maryland passed in 2024, called the move “an interesting experiment,” but added: “We’ll have to see if it actually lowers rates.”
‘Decision inertia’
In addition to changes to its “purchase of receivables” program, FirstEnergy wanted an exemption from existing rules around supplier contract renewals.
Under current regulations, suppliers can enroll customers who don’t take action once their original contract ends into new contracts with new terms and new pricing. Suppliers are required to send customers at least two notices about the changes before the contract expires.
Suppliers often offer lower-priced “teaser” rates to encourage customers to sign up, then increase prices once the initial contract expires, according to FirstEnergy’s testimony.
Consumer advocates say the current system penalizes customers who don’t pay close attention, enrolling them in contracts with high and often unpredictable prices as the result of inaction, not choice.
FirstEnergy wanted to return customers who didn’t take “affirmative action” to sign up for a new contract to its default service. It also proposed new guardrails for customers on variable-rate contracts, in which prices fluctuate based on shifts in the wholesale electricity market.
The utility commission rejected those parts of the company’s plan, instead ordering a statewide examination of the issue, with recommendations due June 1, 2027.
DeFrank, the commission chair, said the review will establish how much of the extra costs paid by shopping customers came from people choosing “value-added products” and how much was the result of “decision inertia.”
He also said he is reluctant to approve “profound revisions” to contract renewals in a case that would only affect customers of one utility.
In November, the state Office of Consumer Advocate filed a petition asking the commission to reconsider its decision and seeking more details on the statewide review, like whether it would involve sworn testimony and legal discovery.
Kathryn Zerfuss, one of two commissioners who voted against the decision, said during the October meeting there were “years of data, reports, and anecdotes” supporting the need for changes.
“I don’t need any data, or any more review,” she said, calling the decision “a missed opportunity.”