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Draft Decision Would Find Retail Supplier's "Confusing" References To Wholesale Costs Not "Plain Language", Would Fine Supplier $2,000 And Order Refund

March 19, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

An initial decision from a Pennsylvania ALJ would find that a Blue Pilot Energy, LLC terms of service contained confusing and "ambiguous" language regarding rate changes, and would therefore find that the terms of service violate Commission regulations that require the use of plain language and would fine the supplier $2,000.

Prompted by a customer complaint in which a commercial customer alleged that Blue Pilot billed it in excess of the agreed upon rate of 7.9 cents per kWh at a rate of 24.9 cents per kWh, the initial decision would find that the Blue Pilot Disclosure Statement violates Sections 54.43 and 111.12(d)(5) of the PUC's regulations, concerning the provision of accurate information to customers.

The initial decision is not final and may be appealed by Blue Pilot Energy.

The Blue Pilot terms of service language at issue is as follows:

"TERMS OF SERVICE: You will pay a variable rate with the starting price set at 7.9 cents per kwh. This initial rate will be effective for at least the first sixty (60) days of service. Thereafter, your price may vary on a month-to-month basis. This price includes Transmission Charges, but excludes applicable state and local Sales Taxes, Gross Receipts Taxes, and the Distribution Charges from your local EDC. At any time after 60 days of service, but not more frequently than monthly, we may increase or decrease your rate based upon several factors, including changes in wholesale energy market prices in the PJM Markets. Your variable rate will be based upon PJM wholesale market conditions. Please log on to www.bluepilotenergy.com or call Customer Service at 877-513-0246 for additional information and updates."

The ALJ would find that, "the fifth and sixth sentences are unclear, not easily understood and ambiguous when read together."

"For example, the fifth sentence states that Blue Pilot 'may increase or decrease your rate' and the sixth sentence states that 'Your variable rate will be...'. Additionally, the fifth sentence references 'changes in wholesale energy market prices in the PJM Markets' and the sixth sentence references 'PJM wholesale market conditions.' The fifth sentence indicates that the rate is based on 'several factors' and the sixth sentence indicates that the rate is based on 'PJM wholesale market conditions.' It is unclear whether the sixth sentence clarifies, or elaborates upon, the fifth sentence or if the sixth sentence replaces the fifth sentence. It is unclear if the paragraph provides two separate ways that rates may be changed – one where the 'PJM wholesale market conditions' are one of the factors that may cause the rate to increase or decrease and one where the 'PJM wholesale market conditions' are part of the 'changes in wholesale energy market prices in the PJM Markets.' If the later [sic], the sixth sentence is superfluous," the ALJ said.

"As a result, the fifth and sixth sentences in paragraph 3 are poorly written and it is not unreasonable that a consumer would be confused when reading the Disclosure Statement. This is particularly true when read in the context of shopping for the competitive provision of electric generation services and not simply because the parties disagree to the meaning. The sentence 'Your rate will be based upon PJM wholesale market conditions' is not clear and unequivocal when read in conjunction with the preceding sentence. The rate charged to Enrico [the complainant] was not based upon PJM wholesale market conditions as the sixth sentence states it would be. Therefore, Blue Pilot has failed to provide 'accurate information about [its] electric generation services using plain language and common terms in communications with consumers' and, thus, violates Sections 54.43(a) and 111.12(d)(5) of the Commission's regulations," the ALJ would rule.

Note that one of the key conclusions is that Blue Pilot's rate, "was not based upon PJM wholesale market conditions."

It's not entirely clear from where this conclusion derives. Although the customer presented evidence regarding PJM daily prices, which were below Blue Pilot's rates, the ALJ does not address whether the uses of these prices as a comparison was appropriate, or if the ALJ's conclusion that Blue Pilot's rate was not based upon PJM wholesale market conditions is based on other evidence (such as Blue Pilot arguing that it had the authority to increase the rate for other factors, and did so).

The ALJ further said:

"Blue Pilot failed to present any evidence during the hearing to support its assertion in its Main Brief that the terms and conditions of the Service Agreement are clear. Blue Pilot failed to cite to any evidence or make any other argument with regard to the clarity or plain language used in the Disclosure Statement, other than to reiterate in its Brief that 'the rate could vary each month to reflect various factors, including wholesale energy prices, and had no ceiling on the extent to which prices could increase.' Blue Pilot could have presented evidence, for example, that no other complaints regarding the clarity of the Disclosure Agreement have been filed. Blue Pilot also could have presented evidence from an expert in plain language in support of its position that the Disclosure Statement was clear and unambiguous. Instead, Blue Pilot presented no witnesses and sought the admission of no exhibits to counter Enrico's argument. In its Main Brief, Blue Pilot focused its argument on whether the Commission has jurisdiction to regulate prices charged by EGSs, interpret a contract between an EGS and its customer or direct Blue Pilot to issue a refund. Blue Pilot made these arguments despite the direction during the hearing that the parties should brief their entire case, not just positions pertaining to the Commission's jurisdiction."

The ALJ would impose a civil penalty of $2,000 on Blue Pilot Energy, and direct the company to refund $27,000 to the complainant (a business).

Docket C-2014-2432979

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