Energy Choice
                            

Matters

State Bans Month-to-Month Rates for Fixed Contract Rollovers, Including Existing Contracts

October 1, 2015

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

The Connecticut PURA issued a final decision which prohibits electric suppliers from serving residential customers on a month-to-month, or variable, rate at the end of a contract term for any contract, regardless of the date of execution.

"Licensed electric suppliers are prohibited from contracting with residential customers for variable products either through an initial term or on a renewal basis, on and after October 1, 2015. To do so would violate Conn. Gen. Stat. §16-245 and such action would be subject to penalty under Conn. Gen. Stat. §16-41," PURA said

PURA noted that variable pricing may continue under contracts executed prior to October 1, 2015. However, such contracts cannot be renewed onto variable pricing.

"[I]f a contract entrance date occurs on or after October 1, 2015, such contract cannot contain variable pricing. Similarly, if a contract is renewed on or after October 1, 2015, such renewal cannot contain variable pricing. However, if the parties contracted for a purely variable product on or before September 30, 2015, the Act gives no authority to invalidate such an existing contract. The licensed electric supplier and the residential customer remain governed by the terms of the contract. However, if such a pre-existing contract contains a renewal to variable pricing after October 1, 2015, the renewal remains expressly prohibited by the Act," PURA said.

"[A]fter October 1, 2015, electric suppliers and residential customers are left to enter into only fixed term contracts, with a minimum term of four billing cycles. As stated above, pre-existing variable contracts are permitted to continue, unless they contain specific renewal terms that are prohibited by the Act," PURA said.

"[A]fter October 1, 2015, no new residential variable offers or renewals to variable pricing are permitted under the plain meaning of the Act," PURA reiterated

As a result, after October 1, 2015, licensed electric suppliers may construct renewal provisions in new residential contracts in one of three ways, PURA said. Licensed electric suppliers may construct the contract language to:

1. return the customer to EDC Standard Service; or

2. keep the customer at the original fixed contract rate until a new contract is entered into or the supplier returns the customer to EDC Standard Service; or

3. renew the customer to a new fixed term of no less than four billing cycles.

"If an electric supplier offers the first option, it should timely inform the EDCs of the number of customers that may potentially be returned to Standard Service and the date(s) upon which such a switch could happen. Regardless of the renewal language, all licensed electric suppliers must comply with other notification and Electric Bill Redesign requirements in the Final Decision dated August 12, 2015 in Docket No. 14-07-19RE01, PURA Investigation into Redesign of the Residential Electric Billing Format – Billing Format Clarifications that allow customers meaningful opportunity to make informed decisions about their generation service options," PURA said.

The Authority recognizes that current law permits automatic renewals. Moreover, Connecticut law permits that a cancellation fee can be applied to auto-renewed fixed rate residential contracts, so long as the contract renewal is administered pursuant to said statute and the cancellation fee does not exceed $50, PURA noted.

PURA stressed that it has identified "challenges" in administering statutes regarding renewals. Specifically, difficulties have arisen in determining the exact date a residential customer receives their electric bill as well as the exact date on which a customer takes action to terminate or cancel the contract (and whether a termination fee is triggered). The Authority has noted a need to establish industry-wide standards for the application of renewals, and is to address a uniform standard for determining the cancellation period outlined in Conn. Gen. Stat. §16-245o(h)(8) in future proceedings to be held under Docket No. 14-07-20RE01

"Until the Authority rules on this matter, suppliers must assure that customers are properly and timely notified of any contract renewal containing a cancellation fee and must carefully document the customer’s actions to cancel such contracts before assessing a cancellation fee. Given the difficulties in pinpointing the exact date a residential customer receives his electric bill, the Authority encourages suppliers to refrain from including early termination or cancellation fees in auto-renew contracts at this time," PURA said

To help inform customers of the variable rate prohibition, PURA "suggests" that customer interaction with suppliers through customer call centers, printed materials, and electronic means provide the following information:

• If you are a commercial or industrial customer, you are not affected by this new law.

• If you are a residential customer and signed up for electric supplier generation service on or before September 30, 2015, this law does not affect your current contract until renewal.

• If you are a residential customer and wish to sign up for electric supplier generation service on or after October 1, 2015, you will be restricted to fixed term offers of no less than four billing cycles. These new fixed contracts will contain specific language about what happens at the end of the initial fixed term.

• If you are unhappy with your current rate you may seek to negotiate a new rate with your current supplier, switch to another supplier or return to EDC Standard Service. Be aware of the terms and conditions of your current contract and whether any early termination or cancellation fee would apply.

"To reiterate, these are suggestions, not orders. However, the Authority believes licensed electric suppliers are in the best position to communicate with their customers about the effect of the Act, and should be both willing and able to do so," PURA said

Docket No. 15-06-15

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Customer Support and Retention Rep -- Retail Supplier -- Houston
• NEW! -- Contracts Analyst -- Retail Supplier -- Houston
• NEW! -- Pricing Analyst -- Retail Supplier
• NEW! -- Billing Analyst -- Retail Provider -- Houston
• NEW! -- Energy Services Program Director - $230K
• NEW! -- Senior Retail Analyst -- Retail Supplier
• NEW! -- Manager, Retail Pricing -- Retail Provider
• NEW! -- Retail Commodity Pricing Analyst -- Retail Supplier
• NEW! -- Director of Pricing, Risk & Portfolio -- Retail Supplier
• NEW! -- Manager/Director, Customer Retention and Satisfaction -- Retail Supplier -- Houston
• NEW! -- Bilingual Rep Support Specialist -- Retail Supplier
• NEW! -- Commercial Sales Support Analyst -- Retail Supplier -- Houston
• NEW! -- Financial Analyst -- Retail Energy Supplier
• NEW! -- Sales Executive -- Retail Supplier
• NEW! -- Manager, Power Retention -- Retail Supplier -- Houston
• NEW! -- Team Lead, Billing -- Retail Provider -- Houston
• NEW! -- Business Development Manager -- Retail Supplier -- DFW