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Consumer Counsel Seeks Rate Cap on Retail Suppliers Equal To Default Service Rate

November 2, 2015

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

The Connecticut Office of Consumer Counsel urged the Connecticut PURA to impose a price cap on legacy variable rate products in the state such that suppliers may not charge variable rate customers in excess of the Standard Service rate

While new variable rate contracts and renewals onto variable rates were banned for residential customers effective October 1, the OCC noted that, since existing contracts were not affected, "some residential customers may continue to be on variable rates for years."

"At this point, OCC suggests that PURA recommend that the Legislature set a cap on variable rates for residential customers at the level of the currently-prevailing standard service rate in the customer’s territory (unless the customer is purchasing a 'green choice' offer involving substantially more Class I renewable energy credits than the minimum legal requirement)."

OCC reasoned that, given the accelerated returns allowed to default service, no customer on a variable rate plan would knowingly wish to continue on such plan with a rate in excess of default service.

"If a residential customer is on a variable rate, there is no conceivable benefit to the customer of paying more than standard service. Since the standard service rate is available to all residential customers within 72 hours, a rational customer possessing all necessary information would not be willing to pay more than standard service on a month-to-month basis. Please note that OCC is not recommending that residential customers who remain on variable rates be automatically switched from their supplier to standard service; rather, suppliers should be given ample opportunity to retain such a customer by charging variable rates at or below standard service while negotiating a new fixed rate with the customer," OCC said

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