Energy Choice
                            

Matters

On Rehearing, Regulator Revises "Fixed-Means-Fixed" Retail Contract Price Rule To Not Include Certain Customers

Clarifies Requirement For All Products To Use One Of Three Labels

Reiterates Use of Regulatory Out Clause Requires Drop of Customer To Default Service, Absent Affirmative Consent To Changes

March 30, 2017

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

The Public Utilities Commission of Ohio issued an order on rehearing in which PUCO revised its earlier adoption of a "fixed-means-fixed" requirement for all electric supplier contracts for all customer classes, as PUCO has now ruled that the "fixed-means-fixed" requirement should not apply to mercantile customers

Furthermore, given the limited, specific definition of mercantile customer, PUCO said that it would further consider whether the "fixed-means-fixed" requirement should not apply to any non-residential customers, other than small commercial customers.

As previously reported, PUCO in 2015 ruled that fixed rate electric contracts, for all customer classes, may not contain pass-through clauses (fixed-means-fixed), but allowed for regulatory-out clauses that allow suppliers to cease service under fixed rate contracts under terms as delineated in the contracts. Under the prior order, any contract with a pass-through must be labeled a "variable" or "introductory" and cannot be called fixed.

"The Commission acknowledges that large mercantile customers are typically sophisticated purchasers represented by counsel. Thus, the protections afforded to small commercial and residential customers may not always be necessary. Further, we note that because of the higher levels of sophistication and consumption, large mercantile customers may have more complex contracts and billing procedures. As a result, requiring specific contract labels could be a limiting factor for these customers," PUCO said

"Therefore, we find that the fixed-means-fixed guidelines should not apply for mercantile customers," PUCO said

Under R.C. 4928.01(A)(19), "mercantile customer" means a commercial or industrial customer if the electricity consumed is for nonresidential use and the customer consumes more than 700,000 kWh per year or is part of a national account involving multiple facilities in one or more states.

"In making this distinction, we are cognizant that utilities have varying definitions of large and small commercial customers and R.C. 4928.01(A)(19) only differentiates between mercantile and non-mercantile customers. Consequently, we will revisit whether the fixed-means-fixed guidelines should be further limited to small commercial customers and whether 'small commercial customers' should be more stringently defined in the future rules proceeding," PUCO said

"We note, however, that while we limit the fixed-means-fixed guidelines to non-mercantile customers, we are not limiting the ability of CRES providers to include regulatory-out clauses in contracts with mercantile customers," PUCO said

PUCO also clarified that, for residential customers, all contracts must be labeled as either "fixed," "introductory," or "variable" rates (see prior story for further definition of these terms).

PUCO noted potential limitations by only using such categories, and said that the issue would further be considered in a forthcoming rulemaking as envisioned in its original order. Additionally, PUCO said suppliers with a specific product that the supplier feels cannot be accurately categorized into one of these three categories may apply for a waiver.

"For non-mercantile commercial customers, we strongly encourage that CRES providers similarly label contracts or take additional steps to ensure that their customers fully understand the terms and conditions and how the contract price may vary," PUCO said

"As this may not have been evident in the Order, CRES providers have six months from the issuance of this Entry in order to comply with this clarification," PUCO said

"With respect to mercantile customers, we believe that this protection is unnecessary and inappropriate because mercantile customers tend to be more sophisticated and to be represented by counsel and because contracts between mercantile customers and CRES providers tend to be more complex. Moreover, we will revisit this guidance in the future rules proceeding to determine if this guidance should be extended to a more stringently defined class of small commercial customers," PUCO said

PUCO also clarified that, to the extent it was unclear whether existing contracts were exempted from its original November 2015 fixed-means-fixed order and associated guidelines, "the Commission clarifies that they are."

"[T]he Commission specifically declined to rule on existing contracts, issued guidelines on a 'going-forward' basis, and, further, made no finding whether pass-through clauses in existing contracts are misleading, deceptive, or unconscionable," PUCO said

While PUCO will allow for regulatory out clauses for customer classes covered by the fixed-means-fixed rules, PUCO reiterated that such clauses are, "intended to be invoked only in very limited circumstances, such as, as its namesake indicates, a regulatory change in law for which a CRES provider would be unable to hedge." (see prior story for further discussion on the intent for regulatory out clauses to be limited)

"Clearly, a change such as the general rise and fall of prices offered in the market would not constitute a circumstance under which a CRES provider could invoke a regulatory-out clause, or a change in which a customer should be entitled to leave a contract," PUCO said

"[W]e will also clarify that, when a CRES provider invokes the regulatory opt out clause, it is the CRES provider's responsibility to return the customer to the standard service offer unless the customers affirmatively consents to new prices, terms, or conditions," PUCO said

"Absent such affirmative consent, the invocation of the regulatory opt out clause will terminate the contract and the CRES provider may not retain the customer even under the previous contract's prices, terms and conditions. Instead, the CRES provider must return the customer to the standard service offer after a reasonable period for renegotiation of the contract," PUCO said

Case 14-568-EL-COI

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Sales Manager -- Retail Supplier -- New York
• NEW! -- Sales Manager -- Retail Supplier -- MA / NJ
• NEW! -- Sales Agent -- Retail Supplier -- Multiple markets
• NEW! -- Customer Retention -- Retail Supplier -- Houston
• NEW! -- Director of Channel Sales -- Retail Supplier
• NEW! -- Regulatory Response I/C -- Retail Supplier -- Houston
• NEW! -- Channel Manager, Sales -- Retail Supplier -- Houston
• NEW! -- Commercial Sales B2B -- Retail Energy
• NEW! -- Brand/Marketing/Channel Manager -- Retail Energy
• NEW! -- Business Development Professional -- Retail Supplier -- Houston
• NEW! -- Senior Analyst -- Retail Energy -- Houston
• NEW! -- Manager of Regulatory Affairs -- Retail Supplier
• NEW! -- Channel Manager, Sales -- Retail Supplier
• NEW! -- Implementation Manager -- Retail Energy -- Houston