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Retail Supplier To Provide $2 Million in Refunds, Agrees To Cease Variable Rate Offers For One Year Under Settlement With AG

May 4, 2015

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

HIKO Energy, LLC would provide $2 million in customer refunds and agree to not offer variable rates through June 30, 2016, under a settlement with the Pennsylvania Attorney General and Office of Consumer Advocate to resolve a complaint filed against the suppliers by the AG and OCA.

The complaint alleged deceptive marketing practices concerning high variable rates.

Under the settlement, HIKO is to pay $2 million into a customer refund pool. The pool is in addition to $159,000 that HIKO has already paid in refunds.

For customers enrolled in HIKO's guaranteed 1%-7% savings program, all customers will receive a refund reflecting 3.5% savings as compared to the applicable Price to Compare for January, February and March 2014 after taking into account any refunds a customer may have already received from HIKO. This amount totals about $1.7 million.

The remaining $350,000 shall be allocated as refunds for HIKO's customers not enrolled in HIKO's 1%-7% guaranteed savings program. Refunds shall be provided to all HIKO customers in this group that were on variable rate plans in January, February or March 2014. The AG and OCA will determine the refund amount to offer eligible HIKO customers based on the individual customer's usage, price charged and refund amounts already received directly from HIKO.

Under the stipulation, HIKO agrees that it will not accept any new Pennsylvania customers starting April 1, 2015 and lasting until June 30, 2016; provided, however, that if HIKO finds that it is able to offer a fixed rate product before June 1, 2016, it will be able to do so pursuant to stipulated provisions

Specifically, if HIKO decides to offer a fixed rate product for all residential and small business customers before June 1, 2016, it will be able to do so, after providing ninety days written notice to the Office of Attorney General and the Office of Consumer Advocate. Regardless of the date when HIKO begins to offer fixed rate products for all residential and small business customers, HIKO will offer fixed rate products that run for three months or longer up and until September 1, 2016. HIKO agrees that it will not charge Pennsylvania customers cancellation or termination fees for the company's fixed rate products when such products are offered in accordance with the proceeding provisions.

The settlement also calls for various remedial and compliance measures.

Among these, HIKO, its agents, employees and representatives shall not make representations, either directly or by implication, about savings that consumers may realize by switching to HIKO except when referencing an explicit, affirmative guaranteed savings program; provided, however, that as long as HIKO does not violate this or any other provision of the settlement, nothing herein shall preclude HIKO from including data comparing actual historical HIKO rates with actual rates of the local EDC in any statements made to, or materials provided to, any consumers.

HIKO, its agents, employees and representatives shall refrain from using terms in their variable rate marketing campaigns, such as "risk free," "competitive," "guaranteed," or any other terminology that represents, explicitly or by implication, that HIKO guarantees that the price offered will be lower than the EDC's Price to Compare.

If HIKO offers variable rate products to consumers in Pennsylvania after June 30, 2016, that are not capped or otherwise limited, the HIKO salesperson must include the following statement during any variable rate sales contacts:

"After __ month(s) [if Introductory Price period is applicable], the price you pay under this variable rate contract can change every month. This is not a fixed rate contract. Variable means the price can go up or down. There is no limit on how high the price can go."

If HIKO offers variable rate products after June 30, 2016, HIKO shall not state or represent to customers in the company's variable rate programs that the price HIKO will charge will be market-based unless HIKO provides a specific means or formula, readily understandable for the customers, the Commission, AG and OCA to monitor and confirm that the price charged is market-based.

The settlement also calls for various sales and TPV script changes, and additional training and compliance reporting.

The settlement remains subject to PUC approval.

Docket No. C-2014-2427652

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