Pa.’s largest electric company seeks new protections for customers who shop for suppliers

A case before state utility regulators could lead to new guardrails for customers who shop for their energy supplier, as Pennsylvania’s largest electric company says the current system leads to consumers inadvertently paying more.

Existing regulations don’t do enough to ensure that customers understand what they’re signing up for, or that suppliers charge reasonable prices, FirstEnergy Pennsylvania argued in a case filed with the Public Utility Commission earlier this year.

Under a landmark state law passed in 1996, Pennsylvania residents can choose the company that supplies their electricity; otherwise, they receive the “default service” offered by their utility.

But choosing to shop has generally not worked out for residential customers, instead leading to higher bills and greater risk of termination, FirstEnergy says. The company serves more than 2 million customers across the commonwealth under the brand names Met-Ed, Penelec, Penn Power, and West Penn Power.

The case will test whether regulators are willing to reconsider long-standing policies intended to bolster the retail electric market, and comes at a time when rising energy prices are top of mind for customers and politicians. FirstEnergy says it saw a sharp uptick in customer complaints about suppliers last year.

The administrative law judges overseeing the case have recommended the utility commission adopt FirstEnergy’s proposed changes, but those recommendations are not binding. In recent years, the commission has rejected similar but narrower changes in cases involving other utilities.

FirstEnergy’s arguments echo concerns that consumer advocates have raised for years. The proposed changes “would fix some of the extractive loopholes in the market that suppliers take advantage of to jack up prices and confuse consumers,” said Elizabeth Marx, executive director of the Pennsylvania Utility Law Project, which represents low-income customers.

Electricity bills in Pennsylvania have increased sharply in recent years. Surging demand — driven largely by the rapid growth of data centers — and a lag in new energy generation have led to dramatic spikes in wholesale power prices.

Utility profits have also drawn criticism, including from Democratic Gov. Josh Shapiro, who has publicly warned utilities to stop seeking “unacceptably high” rate hikes. Those profits don’t come from the supply for electricity, the part of customers’ bills at issue in the FirstEnergy case. Utilities are required to pass the cost of buying electricity on to customers without any markup.

Suppliers, who vehemently oppose FirstEnergy’s plan, argue they are being scapegoated for recent price increases. They argue the changes would upend years of established policy, undermine state law, and effectively kill Pennsylvania’s retail market.

“Sometimes there’s a tendency to reach for the nearest lever even when it’s not necessarily the right lever,” said Frank Caliva, national spokesperson for the Retail Energy Supply Association.

“The solution can’t be to shut down the market and take away people’s choice.”

A FirstEnergy spokesperson told Spotlight PA that the company “does not comment on pending litigation and legal proceedings.”

Electric bills are made up of two parts: supply — the cost of the electricity itself — and delivery, the cost of the poles and wires that bring it to a customer’s home. Most customers get their electric supply from their utility. State law requires utilities like FirstEnergy to buy power for these customers through a competitive process meant to achieve the lowest cost over time.

Some customers choose to have their electricity supplied by a different kind of company, a retail supplier. They still pay their utility to deliver that power.

In 2025, FirstEnergy customers could pick from more than 80 retail suppliers. A state website — papowerswitch.com — allows customers to compare offers from suppliers with what they’d pay if they stayed with their utility.

Roughly 17% of FirstEnergy’s residential customers were served by retail suppliers in the first three months of the year, state data show — in line with the median rate statewide.

Those customers mostly ended up paying more, according to data FirstEnergy submitted in regulatory filings earlier this year.

In 2025, the data show, residential customers served by an alternative supplier paid almost $82 million more than if they had stayed with the utility — even after accounting for customers who saved money. Suppliers raised various objections to the data, but the administrative law judges overseeing the case rejected their arguments.

Statewide, customers who shopped for their supplier paid $350 million more in 2024 than they would have for default service from their utility, said Andrew Tubbs, CEO of the Energy Association of Pennsylvania, at a legislative hearing earlier this year. His association represents electric and natural gas utilities.

Suppliers argue that some customers are willing to pay more for benefits that utilities cannot offer, like electricity from renewable sources or a price that is guaranteed for a year or longer. The cost of utilities’ default service changes every six months.

FirstEnergy also submitted data showing customers served by a retail supplier were nine times more likely to have their service shut off.

“It lacks credibility to suggest that a consumer would knowingly and voluntarily choose a higher price that they cannot afford to pay when the consequence is involuntary termination,” a coalition of consumer advocates said in a filing in the case.

In light of the evidence that signing up with an alternative supplier has serious drawbacks for many customers, FirstEnergy argues that several changes are necessary.

Under current regulations, customers who don’t take any action after their contract with a supplier expires can be rolled into a new contract, with new pricing and new terms. For example, a customer can be switched from a contract with a fixed monthly price to one that fluctuates. The supplier is required to send the customer at least two notices with information about the changes before the contract ends.

Suppliers often offer lower-priced “teaser” rates to encourage customers to sign up, then increase prices once the initial contract expires, according to testimony from FirstEnergy. Consumer advocates say customers can easily miss the required notices and end up funneled into higher-priced contracts through inattentiveness — not by choice.

FirstEnergy wants to flip that on its head by putting a customer back on default service if they do not take “affirmative action” to enter a new supplier contract.

The change would require the state utility commission to waive an existing regulation.

Regulators considered what FirstEnergy is proposing when they originally created the rule, but “we wanted to fulfill the legislative intent to make electric choice work,” said James Cawley, who served on the utility commission at the time and now works as a consultant for NRG Retail, one of the largest competitive suppliers in the U.S.

“We wanted customers to stay shopping.”

Suppliers argue that contracts that automatically renew are common in many industries, including cell phone plans and streaming services. When customers don’t respond, the last clear choice someone did make — in this case, to sign up with a supplier — should be honored, they say.

FirstEnergy also wants new safeguards for customers on variable-rate contracts, in which prices can change daily or even hourly as the wholesale electricity market shifts. The company’s plan would require suppliers to certify every three months that residential customers on variable contracts have consented to those terms. Suppliers argue the change is unnecessary and would require customers to repeatedly confirm choices they already made.

At a legislative hearing in January, state Consumer Advocate Darryl Lawrence said his office tells customers to steer clear of variable-rate contracts.

“Unless you’re an energy expert, it’s probably not something you want to engage in,” he said.

FirstEnergy also seeks major changes to a program that suppliers say is essential for the competitive market to function.

Under the program, the utility buys customer accounts from suppliers — before customers have paid their bills. That means suppliers get paid upfront, regardless of how much money FirstEnergy is able to collect from customers. The utility’s ratepayers ultimately shoulder the cost of any debt that cannot be collected.

The program provides an “enormous benefit” to suppliers, “totally eliminating the risk that some of their customers will not pay their bills,” FirstEnergy argued in a filing in the case.

FirstEnergy wants to restrict access to the program to suppliers whose prices are the same or lower than the cost of its default service at the time a customer signs up. Suppliers say the utility’s proposal amounts to a price cap, which state law prohibits.

Because of the program, suppliers “do not need to screen customers for payment risk,” a witness for Town Square Energy testified. If suppliers like Town Square had to “bear full credit risk” for their products, many would reduce their offerings, or leave Pennsylvania altogether, he said.

Other large utilities in Pennsylvania offer similar programs. They aren’t required to by law, but in the late 2000s, the utility commission signaled that utilities should adopt them 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 uncollectible debt came from shopping customers, even though only 18% of customers shopped, according to the data.

In August, the administrative law judges overseeing the case included FirstEnergy’s proposed changes in their recommendations to the utility commission. Next, the commission will vote on the recommendations at a public meeting. The commissioners can accept, reject, or modify the recommendations.

Critics say such significant changes should not be made on a case-by-case basis.

“If you’re going to make major changes, it should be elevated to a widely noticed rule-making proceeding,” said Cawley, the former PUC commissioner.

“That’s really the unfairness of doing this piecemeal.”

Several Republican lawmakers have also written to the utility commission, arguing that changes of the kind FirstEnergy wants would require legislative action.

Democrats in the state House and Senate have introduced bills that would change the rules around contract expiration, similar to what FirstEnergy is proposing, but the legislation has not advanced.

Any changes approved by the utility commission would apply only to customers of FirstEnergy, but the case could set a precedent for other utilities to follow.

If approved, the changes would go into effect June 1, 2027.

This story was originally published by Spotlight PA and distributed through a partnership with The Associated Press.