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Regulator Rejects Transfer Of Retail Customers Between Suppliers, Directs Return Of Customers To Default Service

April 13, 2018

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

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The Connecticut PURA has denied the transfer of Perigee Energy LLC's customers to Spark Energy, and directed, as alternatively proposed by Perigee, that such customers be returned to default service.

As described by PURA, "By letter dated October 27, 2017, Perigee Energy, LLC (Perigee) informed the Public Utilities Regulatory Authority (Authority or PURA) in Docket No. 12-08-23 that it intended to transfer its license to Spark Energy, Inc. (Spark or Company) and its subsidiaries pursuant to §16-245(j) of the General Statutes of Connecticut (Conn. Gen. Stat.)."

We note that in the cited October 27 Perigee letter, Perigee did not, in so many words, seek to transfer its license to Spark. Rather, as more explicitly stated in a subsequent November 2017 interrogatory response, Perigee was seeking to, "transition [its] customers to the Spark Energy license as soon as practicable." Perigee stated that it would relinquish its license upon such transfer of customers.

Previously, by letter dated March 2, 2017, Perigee Energy, LLC had informed the Public Utilities Regulatory Authority in Docket No. 12-08-23 that on February 3, 2017, National Gas & Electric, LLC (NGE) acquired 100% of the membership interests of Perigee and implemented a change of control of the ownership of the company. The Authority subsequently received a letter dated March 23, 2017, wherein Perigee informed the PURA that it would undergo a change of control on April 1, 2017, in which Spark Energy, Inc. and its subsidiaries would acquire 100% of the membership interest in Perigee.

In its October 27, 2017 letter, Perigee stated that it would, "upon the Authority’s subsequent approval will transition its customers to either standard service or Spark Energy."

In an April 12 letter addressing Perigee's petition, PURA said that, "After a thorough review, the Authority finds that Perigee may not transfer its customers to Spark, but may transition them to standard service as proposed in Perigee’s October 27, 2017 letter."

PURA noted that, "Conn. Gen. Stat. §16-245(j) requires the Authority to approve all transfers of licenses."

PURA stated in its April 12 letter that, "As part of this approval process, the Authority examined Spark’s record and notes that it has a repeated history of noncompliance, violations and ignoring Authority directives."

PURA stated in its April 12 letter that, "On September 26, 2016, the Authority sent a letter to Spark in Docket No. 10-06-18 and Docket No. 14-07-19RE01, PURA Investigation Into Redesign of the Residential Electric Billing Format - Billing Format Clarifications, stating that it was noncompliant with the Decisions dated January 21, 2015, in Docket No. 14-07-19, PURA Investigation Into Redesign of the Residential Electric Billing Format, and August 12, 2015, in Docket No. 14-07-19RE01 ... Pursuant to those Decisions, the Phase II Summary Information was required to be submitted by suppliers for display on residential customer bills effective January 1, 2016."

PURA stated in its April 12 letter that, "On October 10, 2016, Spark responded to the Authority’s September 26, 2016, letter stating that due to resource constraints, it failed to adequately oversee the implementation of Phase II Summary information requirements through to completion. Further, it planned on achieving full compliance with the requirements on or before November 15, 2016, and that similar oversights would not occur going forward."

PURA stated in its April 12 letter that, "On March 27, 2017, the Authority sent Spark another letter regarding its apparent ongoing non-compliance with Conn. Gen. Stat. §16-245d(a)(2). The letter stated that in response to Interrogatory SEU-4 in Docket No. 14-07-19RE01, the Connecticut EDCs recently had submitted updated summary reports addressing all suppliers’ compliance with the Phase II Summary Information requirements. The responses show that despite its previous assertion, Spark continued to fail to comply with Connecticut law and the Authority’s Orders."

PURA stated in its April 12 letter that, "On May 1, 2017, Spark again notified the Authority that it was compliant with Conn. Gen. Stat. §16-245d(a)(2). The Authority notes that this third assurance came after many letters from the PURA to Spark as stated above, and a full year and four months from the statutory effective date of January 1, 2016, when the Phase II Summary Information was required by statute to be displayed on residential customer bills. During that time, Spark repeatedly stated that it either did comply or would comply, but did not. Spark’s last promise of compliance was also illusory, because Spark’s responses to interrogatories in Docket No. 10-06-18RE01 indicate that Spark violated the same Section yet again. Responses to Interrogatories SEU 1-8."

PURA stated in its April 12 letter that, "On March 21, 2018, the Authority issued a Notice of Violation and Assessment of Civil Penalty in Docket No. 10-06-18RE01 Application of Spark Energy, L.P. for an Electric Supplier License - Investigation Into Compliance with §16-245d(a)(2). The Authority found that Spark, despite its previous assurances, still was not supplying the EDCs with the next cycle rate as required by Conn. Gen. Stat. §16-245d(a)(2) and the Decision dated August 12, 2015 in Docket No. 14-07-19RE01. Spark was fined $900,000 for its violation. As part of the penalty assessed, Spark was placed under Authority audit for one year. Spark requested a hearing on this Notice of Violation, but has conceded, 'Spark does not factually dispute the issues relating to the transmittal of the Next Rate to the EDCs ... Spark admitted that it had not supplied the EDCs with the Next Rate data in a timely manner ... The sole issues remaining in this proceeding are legal in nature.' Docket No. 10-06-18RE01, Response of Spark Energy, LLC to the Office of Consumer Counsel."

PURA stated in its April 12 letter that, "In addition to these numerous violations and compliance issues, the Authority is currently reviewing Spark’s compliance with Conn. Gen. Stat. §§16-245o and 42-110b with respect to its telephone marketing practices in Docket No. 10-06-18. Spark has been less than forthcoming in this review. On July 26, 2017, the Authority issued a Decision noting that Spark’s responses to the Authority’s interrogatories were inadequate and unsatisfactory. Consequently, the Authority directed Spark to provide answers that were more responsive to its questions. The Authority notes Spark’s lack of cooperation in trying to determine the origins of this issue and reluctance to resolve it expeditiously."

"Spark’s history of non-compliance with statutes, regulations and Authority orders calls into question the Company’s managerial capabilities in maintaining its electric supplier license in Connecticut. To issue a license to an electrical supplier, the Authority must determine under Conn. Gen. Stat § 16-245(c) that the supplier 'has the technical, managerial and financial capabilities' to provide service to customers. To approve a transfer of a license, the Authority must reach the same determinations to protect customers from suppliers who have proven themselves unable to abide by laws and regulations. Based on the numerous violations detailed and Spark’s pattern of inadequately addressing the violations, the Authority cannot find that Spark has the technical and managerial capabilities necessary for the Authority to approve a transfer of Perigee’s customers to Spark," PURA stated in its April 12 letter

"It would be illogical for the Authority to allow Spark to acquire more customers if the Company’s past performance has caused the PURA to doubt Spark’s managerial capabilities and ability to comply with the law and the Authority is currently investigating it for new violations. Moreover, the Authority has placed Spark under an audit for the next year based on its concerns regarding Spark’s managerial capabilities and noncompliance issues in Docket No. 10-06-18RE01," PURA stated in its April 12 letter

As a result, the Authority approves Perigee’s alternative proposal to transition its current customers to Standard Service, and denies Perigee’s proposed transfer of its current customers to Spark.

Per the most recent EDC migration reports, Perigee was serving about 4,400 customers as of February 2018

As of February 2018, Perigee was serving 3,903 customers at CL&P (3,582 residential, 321 business), and 1,448 customers at UI (1,365 residential, 83 non-residential)

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