Energy Choice
                            

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Draft Order Would Require Retail Supplier to Provide Refund to Customers Who Did Not Receive Contract Expiration Notices

May 28, 2015

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

A Connecticut PURA draft decision would require Choice Energy, LLC to provide refunds to certain customers, who were served under a fixed rate contract, that the draft would conclude did not receive a notice about a change in their generation price 30-60 days before the end of their contract as required under Connecticut General Statutes §16-245o(g)(1).

PA 13-119, codified as Conn. Gen. Stat. §16-245o(g)(1), became effective on October 1, 2013 and provided that, "Between thirty and sixty days, inclusive, prior to the expiration of a fixed price term for a residential customer, an electric supplier shall provide a written notice to such customer of any change to the customer's electric generation price."

The case concerns 3,809 Choice residential customers whose fixed prices expired in December 2013.

Choice Energy had argued that its welcome letter, which specifically stated that, "[t]he rate that you pay is fixed through December 2013, after which it may vary from month to month based on market conditions and our wholesale supply costs," provided sufficient disclosure to the consumers of the pricing terms that would govern at the end of the fixed price period

The draft order would find that the language in the welcome letter did not provide information required under Conn. Gen. Stat. §16-245o(g)(1) because the welcome letter did not identify a price that a customer would be charged at the end of his initial fixed rate term. Instead, the welcome letter informed customers that their price may vary from month to month.

"[T]he Welcome Letter informed residential customers about a potential change in their rate plan and not a specific change to their generation price," the draft states

To resolve the matter, Choice Energy proposed to provide refunds to certain customers who left their rollover variable product shortly after the fixed price term ended as follows:

• The refund would apply to Eversource customers whose fixed rate contract ended in December 2013 and who left Choice Energy within two months of being billed under the variable rate

• The refund would apply to UI customers whose fixed rate contract ended in December 2013 and who left Choice Energy within three months of being billed under the variable rate (three months is proposed here due to pro-ration of UI billing)

• The refund would be calculated as the difference between the variable rate the customer was charged and the then-current Choice Energy fixed rate offer

Choice Energy argued that refunds to customers who remained on Choice's rollover variable rate beyond two months are not appropriate since, after several billing periods, such customers were aware of the variable rate (as they would have been had Choice sent notices in the manner prescribed by PURA) and still elected to remain with Choice.

Choice's proposed settlement would include about $117,000 in refunds to some 1,100 customers.

Choice also provided refunds to customers who, after being switched to a variable rate, contacted the company to explain that they did not want to be on a monthly variable rate or otherwise complained about the rate and agreed to remain with Choice Energy under its then-current fixed rate plan.

However, the draft would find the proposed settlement inadequate, and would direct Choice to provide refunds to the remainder of the 3,809 customers, rejecting Choice's rationale that customers who received several bills with the rollover variable rate received adequate notice of the rate change.

"Conn. Gen. Stat. §16-245o(g)(1) was implemented to better inform residential customers about the cost of their generation service options and to provide specific notice about the potential change in generation price that would occur at the end of a fixed rate term. The Legislature is aware that all customers have access to the generation price that appears on their electric bill. In all likelihood, the Legislature would not have implemented Conn. Gen. Stat. §16-245o(g)(1) if it felt that a customer's bill provided adequate notice of changing generation prices. Instead, because the generation price paid by each customer is not known until the customer receives their electric bill (i.e., after service has been rendered and the cost incurred), the Legislature sought to notify these customers in advance of changing generation prices," the draft states.

The additional refunds directed by the draft would be in lieu of a civil penalty. Based on the use of Choice's fixed rate, the incremental amount of additional refunds would be about $670,000; however, as noted below, the draft would potentially adjust the price used to calculate the refund.

Specifically, the draft would require Choice Energy to calculate the refund as the difference between the variable rate that was assessed to each customer in each billing cycle and the lesser of the then-current Choice Energy fixed rate and then-current UI and Eversource Standard Service generation rate times the customer's billed consumption for calendar year 2014.

"The Authority recognizes that Choice Energy may not be able to locate all the customers affected by this directive. Choice Energy must make a reasonable effort to locate all customers. The refund(s) associated with customers that cannot be located by Choice Energy shall be forwarded to Operation Fuel," the draft provides

In a statement to EnergyChoiceMatters.com, Choice Energy said that, "We are in the process of reviewing the CT PURA draft order released this morning and, in particular, the portion requiring a refund obligation that is substantially higher than Choice Energy proposed during the proceeding. At this point, the refund obligation appears to be excessive and meriting reduction for reasons we will explain in the response filing due to CT PURA in early June."

Docket 10-04-03RE01

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