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Retail Supplier Returning Customers To Default Service, Relinquishing License Under $5 Million Settlement With Attorney General

February 24, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Palmco Power CT, LLC has entered into a settlement with the Connecticut Attorney General and Consumer Counsel under which it is returning all of its remaining Connecticut electricity customers to default service, and is making a voluntary $5 million donation and contribution to the State of Connecticut

As of the date of the February 15 settlement agreement, Palmco served less than 1,000 customers in Connecticut.

Under the settlement, Palmco further agrees to voluntarily relinquish its electric supplier license in Connecticut for a period of five years from April 15, 2015, the date on which PURA ordered Palmco to cease and desist door-to-door marketing in Connecticut, for a net period of three years, after which time it may seek PURA authority to operate in Connecticut.

The settlement would resolve a PURA investigation into Palmco and various allegations made by the consumer advocates.

Among other things, the consumer advocates has alleged that, despite contractual language stating that Palmco's variable rates would vary, "based on a zonal locational marginal price ('LMP') determined on a day ahead or real time basis, any supply and agency functions that Palmco performs for you, line loss, compliance costs, certain transmission, capacity, ancillary, and administrative costs incurred by Palmco, and other prevailing market conditions," Palmco's variable rates, "bore no relation to ISO New England wholesale prices or zonal LMPs," as the consumer advocates alleged that rates were based on what the retail market would bear

The consumer advocates alleged that, "Palmco's pricing mechanism was deceptive, misleading, inconsistent with the representations in the customer contract and nowhere explained in a 'clear and conspicuous' manner as required by Conn. Gen. Stat§ 16-245o(f)(2)."

The consumer advocates alleged that, "Palmco's Connecticut customers generally paid: (1) the highest rates charged by any supplier in Connecticut; (2) rates 40 percent higher than the next highest supplier in Connecticut; (3) rates nearly triple the standard service rate offered by the utilities; and (4) for an average 750 kWh user, bills more than $100 per month higher than a standard service customer."

The consumer advocates alleged that, "As a result, Palmco's customers paid rates that were more than $10 million higher than if those customers had received standard service for the thirty-three (33) months ending December 2015."

The consumer advocates also alleged various instances of slamming and other alleged deceptive sales practices, such as allegedly impersonating utility employees or guaranteeing savings where no guarantee existed.

Palmco neither admits nor denies that its acts and practices, as set alleged by the consumer advocates, constitute violations of state law, regulation, PURA orders or CUTPA.

The settlement states that Palmco assures that the practices alleged by the consumer advocates have been discontinued. Palmco assures that in 2016, it made various improvements, including hiring several individuals with significant retail electric experience for upper-management positions. Palmco assures that, it has committed to undertake a third-party compliance audit identify improvements to its training, compliance, and marketing functions.

Palmco issued the following statement to EnergyChoiceMatters.com:

"PALMco is pleased to reach an agreement with the Connecticut Attorney General that addresses customer concerns. Over the past year, the company has made several changes to its operations. We have hired senior managers with extensive retail energy experience, and have focused on a number of cultural and operational improvements, including but not limited to, enhanced sales monitoring and oversight mechanisms, as well as new policies and procedures. PALMco is committed to a third party compliance audit, where we will seek to identify further improvements in our training, compliance and marketing functions and to developing some of the best practices in the industry."

Docket 10-01-24RE01

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