Let Customers, Not Regulators, Decide What Happens When an Electricity Contract Ends

A proposed FirstEnergy settlement could pull some Pennsylvanians off cheaper electricity deals. The administrative judges who reviewed it did “not find it a fault.”

By October 22, the Pennsylvania Public Utility Commission (PUC) will decide what happens when an electricity supply contract ends for residential customers of FirstEnergy’s Pennsylvania utilities: Met-Ed, Penelec, Penn Power, and West Penn Power. The settlement between FirstEnergy and several parties, which the administrative law judges recommend approving as written, would waive the commission’s own renewal rule and return shoppers to the utility when their contracts end unless they act.

Since the 1996 Choice Act, Pennsylvania customers have been able to buy their electricity from a competitive supplier instead of their utility. The same law kept the wires a regulated monopoly, stating, “It is in the public interest for the transmission and distribution of electricity to continue to be regulated as a natural monopoly subject to the jurisdiction and active supervision of the commission.”

Even in states that opened their electricity markets to competition, power delivery remains subject to several key government interventions. As Robert Bradley explains for the American Institute for Economic Research, utilities receive a state-granted service territory, earn a regulated return on investment, and must connect any customer and carry power for any supplier. In Pennsylvania, the utility still delivers the power and usually handles billing for competitive suppliers.

Customers who don’t choose a supplier get the utility’s default service. The utility buys that power through regular auctions it holds with wholesale suppliers. Its rate, known as the “price to compare,” appears on customers’ bills and serves as the benchmark for supplier offers. From 2022 to 2025, about 18 percent of FirstEnergy’s residential customers shopped, on average. Customers can compare offers on the PUC’s PAPowerSwitch website.

Under current rules, shoppers who switch to a competitive supplier and do not act when their contract expires are rolled into a month-to-month or new fixed contract with the same supplier without cancellation fees. Instead, residential customers who do not respond would be sent back to the utility, per the proposed settlement.

The current rule can leave some residential shopping customers paying more than the utility’s default service. Since 2017, FirstEnergy’s residential shopping customers have paid $888 million more than default service, according to the judges’ recommended decision.

The concern is legitimate, but that figure covers all shoppers and does not separate unintended renewals from informed choices. By changing the default from the competitive supplier to the utility, the settlement would cause customers to automatically return to the utility even when their existing competitive supplier’s renewal is cheaper.

Assuredly, some customers intentionally choose a more expensive energy supplier. Some, for example, prefer all-renewable energy.

But most Pennsylvanians—nearly two-thirds of whom say energy is unaffordable in the commonwealth—would likely prefer a more affordable option.

Any policy that undermines consumer consent deserves opposition.

The settlement also reaches beyond renewals. Residential suppliers bill their customers through FirstEnergy, which buys and collects those bills at full value—a program called “purchase of receivables.” The settlement conditions suppliers’ access to FirstEnergy’s purchase of their receivables on pricing at or below the price to compare. The judges’ decision acknowledges no residential supplier operates without it. In practice, this would function as a price cap, even for customers who prefer to select a higher-priced product.

Shopping accounts do go unpaid more often. From 2022 to 2025, FirstEnergy’s write-offs for unpaid bills averaged about $23 per shopping customer, compared to about $8 per default service customer. If suppliers’ customers generate more bad debt, suppliers should pay for and absorb the risk.

Consent is the heart of customer choice. And competition, in both wholesale generation and retail supply, underpinned the low, stable rates Pennsylvania enjoyed for most of the past two decades. Consumers also benefited from a cleaner, more efficient fleet, with emission rates in the PJM region at an all-time low.

Rising prices are not due to competitive contracting. According to the Independent Fiscal Office, Pennsylvania’s residential electricity prices rose by 45 percent from 2018 to 2025.

State and regional supply constraints—restrictive permitting, a backlogged interconnection queue, and carbon-pricing programs across the region—have limited new generation. On the demand side, PJM’s capacity market design has spread the cost of data-center load growth onto other customers. Pennsylvania then layers its own taxes and mandates on top.

Restricting customer choice will not address fundamental affordability issues.

The commission or legislators can address the concerns of customers who unknowingly pay a premium for their electricity without removing consumer consent. This could be achieved with a simple required question at sign-up that offers two choices: “When my contract ends, return me to the utility’s default service” or “renew me with this supplier.” Customers could change their answer any time online or by phone. The existing contract-expiration notices would then be modified to remind customers of their choice and explain how to change.

The settlement, by contrast, would require shoppers to act at every renewal to keep their supplier and require suppliers to reconfirm variable-rate customers’ consent every quarter.

The right decision is to reject the judges’ recommendation—specifically, paragraphs 66 and 67—and leave the current renewal rule in place. Pennsylvania Sen. Gene Yaw, Rep. Carl Metzgar, former PUC Chairman James Cawley, and former PUC Commissioner John Hanger have all urged the commission not to let one utility’s settlement rewrite the rules of retail choice.

Contract renewals affect shoppers in every utility territory. If the rules need to change, either the commission or the General Assembly should change them statewide.

Either way, the decision should stay where it belongs: with the customer.