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Draft Order Would Grant License to Supplier, Require $18,000 Donation To Fuel Fund

April 23, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

A draft Connecticut PURA decision would grant an electric supplier license to REP Energy, LLC, but would condition the license on, among other things, an $18,000 donation to Operation Fuel.

REP Energy, LLC had previously been licensed by PURA, then relinquished its license, only to re-apply for a license some two months later. That prompted PURA to question the managerial competence of the company, but in the draft order, PURA attributes the sequence of events to confusion and the actions of a "rogue" employee, and would conclude that REP Energy possesses adequate managerial capabilities to qualify as an electric supplier in Connecticut

The draft states that, "upon further consideration of the evidence presented at and subsequent to the hearing, the Public Utilities Regulatory Authority finds that REP Energy, LLC has satisfied the technical, financial, and managerial requirements to obtain an Electric Supplier License. Nevertheless, there is sufficient evidence of potential mismanagement based on REP Energy, LLC's previous mishandling of its Electric Supplier License to warrant setting conditions on REP Energy, LLC's license."

As summarized by PURA in the draft, Horizon Power and Light, LLC, which shares principals with REP Energy, had applied in 2010 to transfer its Connecticut license to REP Energy. PURA initially found the application insufficient, but upon the filing of additional information, the application was approved in 2011.

"After the license was transferred, REP filed its first annual report with the Authority indicating that it was not actively doing business in Connecticut on August 22, 2012. Thereafter, however, REP failed to comply with the annual filing requirements. After being notified of this noncompliance and a potential civil penalty, REP's principals, in a letter dated September 3, 2013, requested that its Electric Supplier License be relinquished. Based on this request, the Authority granted REP's request to relinquish its Electric Supplier License by letter dated September 17, 2013," PURA states in the draft.

On November 12, 2013, REP filed the instant application for a new electric supplier license

"Based on the evidentiary record, the Authority finds that the circumstances leading up to REP relinquishing its Electric Supplier License are as follows. In response to correspondence from the Authority to REP's principals regarding a lack of compliance filing and a potential civil penalty, REP's principals requested that its Electric Supplier License be relinquished. It is acknowledged that the principals indicated at the hearing that their request to relinquish the license was premised on an incorrect assumption that the Electric Supplier License had not been transferred from Horizon to REP. Tr., 11/4/14, p.15. Therefore, the principals believed that they had requested the relinquishing of Horizon's License, rather than REP's license. REP Brief, p. 5; Tr., 11/4/14, p. 23. The principals explained that the President of both Horizon and REP, Jamie Rigell, was apparently a 'rogue' employee. Tr., 11/4/14, p. 35. More particularly, REP principals claims that they had directed Rigell not to complete the Electric Supplier License transfer from Horizon to REP. REP Brief, p. 3; tr., 11/4/14, p. 15. Despite this order, Rigell proceeded with the transfer and failed to inform the principals of the Authority's approval. According to REP's principals, after learning of Rigell's unauthorized actions, his employment with Horizon and REP was terminated. Tr., 11/4/14, p. 61."

"The handling of REP's prior license clearly reflects negatively on the Company's managerial capabilities. Specifically, the fact that REP's “rogue” employee was the President of Operations demonstrates a lack of control over its own management team. REP should have exercised direct control over the Company's President of Operations, yet it failed to adequately supervise his employment-related activities. Moreover, the principals concede that they could have checked on the status of REP's license at any time but failed to do so. Tr., 11/4/14, pp. 59-60. Ultimately, these events led to REP's decision to relinquish its Electric Supplier License and then to subsequently reapply for a new license two months later," the draft states.

"While REP's actions can be perceived as lacking managerial competence, the Authority is mindful of the fact that the actions of one employee do not necessarily represent the Company as a whole. Here, the record indicates that REP attempted to rectify its prior managerial issues by terminating Rigell. Tr., 11/4/14, p. 60. Further, REP offered to (1) increase its letter of credit; (2) make the $18,000 penalty that would have been assessed in Docket No. 08-01-13; and (3) retain a third-party consultant to perform a managerial review to ensure compliance with all applicable rules and regulations. Tr., 11/4/14, pp. 74, 76, 93-94," the draft states

"The Authority is cognizant that consumers benefit when they are able to select electric suppliers from a more robust group. Therefore, the Authority will afford REP another opportunity to provide electric generation services in Connecticut. The additional orders imposed on REP will sufficiently address the Authority's concerns pertaining to the Company's managerial capabilities. Accordingly, the Authority concludes that REP possesses adequate managerial capabilities to qualify as an electric supplier in Connecticut," the draft states.

The draft would grant REP Energy an electric supplier license with the following conditions:

• REP Energy shall provide a letter of credit in the amount of $250,000

• REP Energy shall make a payment of $18,000 to Operation Fuel

• REP Energy shall retain an independent compliance consultant to consult with its staff on a quarterly basis to ensure that REP complies with all applicable statutes and regulations, and shall file various compliance reports

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