Regulator Issues Temporary Emergency Stay To Prevent Utility From Sending Letters To Recently Switched Customers Encouraging Customers To Review Their Supplier Choice
June 7, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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The Connecticut PURA has issued a temporary emergency stay and has instructed The United Illuminating Company not to issue customer letters intended to inform recently switched customers of incorrect standard service rates for the upcoming period beginning July 1 that had been previously posted
The stay had been requested by the Retail Energy Supply Association, which moved to intervene in the proceeding and raised various concerns with the copies of the letters that UI had filed on June 5
On average across various customer classes, the incorrect standard service rates that were posted were approximately 0.6 cents per kWh higher than the correct rates
For residential customers, UI's correct Standard Service rate effective July 1 is 8.3532 cents per kWh, versus the previously filed incorrect rate of 8.9752 cents per kWh. The current January-June residential standard service rate is 11.2263¢/kWh cents per kWh
PURA had expressed concerns that such inaccurate rates may have influenced customers' electricity shopping decisions, and directed UI to file a list of recently switched customers
PURA had also said that, upon review of such information, the Authority may require UI to contact those customers to inform them of the standard service rate error, allow them to switch to standard service, and compensate the customer for any supplier cancellation fee resulting from the switch
As reported in our exclusive story yesterday, such letter, which was to be sent to all recently switched customers (including switches from one competitive supplier to another) encourages customers to, "Please review your generation services supplier choice, and if the corrected rates have impacted your supplier choice, consider taking additional steps based on the correct SS rates, which may include re-enrolling with that supplier or another supplier, or reverting to SS."
The letter informs customers that UI will reimburse customers for any supplier cancellation fee resulting from a switch of supplier.
RESA filed a motion for an emergency order of stay
RESA in its motion said that, "RESA does not have an objection to UI sending letters to all of its Standard Service customers notifying them of the corrected Standard Service rates. However, any letters that indicate that customers should reevaluate their contractual arrangements with suppliers and can terminate their contracts with those suppliers as a result of UI’s error could violate the Contracts Clause of the United States Constitution and constitute tortious interference with supplier contractual relationships."
RESA asked that PURA direct UI to modify the group of customers to whom the notice is sent and the content of that notice.
RESA noted that while UI is offering to compensate customers for early termination fees, retail suppliers could still incur "substantial losses" even if the termination fee is paid, due to a statutory cap on early termination fees (ETFs).
"[S]uppliers could incur substantial losses. Although UI would pay ETFs on behalf of customers who terminate their supplier contracts as a result of the Proposed Customer Notice, that may not be sufficient to cover all supplier losses. For instance, as the Authority is aware, residential ETFs are limited to fifty dollars. However, suppliers frequently incur higher costs to acquire these customers and for the hedges to serve those customers," RESA said
"Moreover, some suppliers have made the business decision not to charge certain customers ETFs. Thus, if the contracts of these suppliers are terminated prematurely, those suppliers could incur considerable losses that are not even partially reimbursed; thereby, creating a more significant financial loss for these suppliers," RESA said
RESA suggested that there are other reasonable means to address the issue without interfering with supplier contractual expectations.
"For example, the Authority could order UI to issue on-bill credits or checks to customers for the positive difference between the corrected Standard Service rate and the amount those customers are paying competitive suppliers. The Authority could also require UI to implement the Standard Service rates on July 1, 2019 as originally filed and to adjust its future Standard Service rates to account for any resulting over-collections. Either of these solutions would put the onus for the error on the party who caused it and avoid impairment of supplier contractual expectations that could violate the Contracts Clause of the United States Constitution," RESA said
RESA also objected to UI's intent to send the customer notice to customers who switched from one competitive supplier to another competitive supplier.
"[T]his assumes that the Standard Service rate has any bearing on a customer’s decision to switch from one supplier to another supplier. There is absolutely no factual support or even a rational basis for jumping to such a conclusion," RESA said
In addressing RESA's motion, PURA said, "Due to the immediate timing of the letter to which RESA objects, the Authority issues a temporary emergency stay and instructs The United Illuminating Company not to issue the customer letters as described in its June 5, 2019 compliance filing until the Authority has an opportunity to evaluate RESA’s Motion."
The Authority made no other ruling at this time regarding RESA’s request for participant status or the ultimate disposition of the motion.