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Regulator Interpreting Orders As Requiring Advance Notice of Plans to Sell Customer Book?

June 18, 2014

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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

In another part of a Connecticut PURA response to a draft Hop Energy customer notice informing customers of their assignment to Public Power that should give retail suppliers pause, PURA appears to suggest that PURA must receive advance notice of any agreement to assign customers to another supplier.

Specifically, noting that Hop informed PURA of the assignment in a June 12 letter, with an intent to issue customer notices on June 18 (with actual transfers starting 30 days thereafter), PURA directed Hop Energy to show compliance with the following:

• "HOP was granted its Electric Supplier License by Decision dated December 15, 2010, in the above-referenced docket. Pursuant to Order No. 6 of that Decision, HOP is required to notify PURA of 'any changes to [the Company’s] customer service practices, procedures or policies in writing at least 10 business days prior to the effective date of such changes.' Provide evidence showing how HOP has complied with this Order. Specifically, show how HOP’s correspondence [to PURA with a draft customer notice regarding assignment], which is dated June 12, 2014 and received by the Authority on June 13, 2014, can be at least 10 business days prior to either (1) the date of execution of HOP’s Account Purchase and Sale Agreement with Public Power, LLC., [sic] or (2) June 18, 2014, the date HOP 'will begin to send notice letters to its customers.'"

• "Pursuant to §16-244c-12 of the Regulations of Connecticut State Agencies, electric suppliers exiting the market are required to provide numerous notices at least 60 days prior to the cessation of Connecticut business operations or any portion thereof. Show how HOP has complied with all the requirements prescribed in this regulation."

With regard to the first point, PURA is basing any requirement on the standard ordering paragraph that suppliers inform PURA of changes to, "customer service practices, procedures or policies."

While an assignment of a customer book is certainly a change in business plans, and while PURA could require advance notice of plans to undertake an assignment under general requirements (similar to "duty to update any information relied upon in granting this application" in use in other states), basing any required advance notice of a book sale on the duty to update a supplier's, "customer service practices, procedures or policies," is arguably a stretch, particularly in cases where a supplier is not exiting the market, but is only monetizing an existing book but intends to continue as a supplier enrolling new customers (which admittedly is not the case here).

The only change in Hop's customer service practices, procedures or policies is arguably the cessation of customer service once it exits that market, but under Hop's timeline and as specifically listed in Hop's draft notice, that would not occur until July 18, and that date would be well after the 10-day notice referenced by PURA.

While PURA did not yet find that Hop's notice failed to meet the 10-day requirement to update "customer service practices, procedures or policies", and only asked that Hop show compliance, if we were a retail supplier, we would be concerned that PURA is interpreting this ordering paragraph language as requiring advance notice before a customer book sale is executed, and not just before the assignment notice is issued to customers.

As to the second point, we would note that, if Hop Energy were not exiting the market, these requirements would be moot. While we understand suppliers' eagerness to end liabilities and have bonds or other security returned to them (at both the state and ISO), for future suppliers considering a Connecticut book sale and market exit, they may wish to not signal an intent to "exit" the market until after the customer transfer process is complete, which will extend the time for which they remain suppliers, but which may also smooth the assignment process.

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