Connecticut Department Of Energy & Environmental Protection Recommends Placing All Hardship Customers On Default Service, Adoption Of Prohibition On Shopping

September 17, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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Connecticut's Department of Energy and Environmental Protection, Bureau of Energy and Technology Policy (Bureau) said in a brief that the Connecticut PURA should, "exercise its discretion and order hardship customers to be placed on standard service."

"The evidentiary record demonstrates that doing so is feasible and the benefits significantly outweigh the costs," the Bureau said

The Bureau's recommendation is significant as it had not previously taken a position in the case, and had not filed testimony. The Department of Energy and Environmental Protection is the state's executive branch agency dealing with various energy issues.

As first exclusively reported by EnergyChoiceMatters.com, the Connecticut PURA opened a Docket 18-06-02 for a review of the feasibility, costs, and benefits of placing certain customers on standard service pursuant to Conn. Gen. Stat. § 16-245o(m). The General Statutes of Connecticut §16-245o(m) permits the Public Utilities Regulatory Authority (Authority) to initiate a docket to review the feasibility, costs and benefits of placing on standard service all customers of all electric suppliers (1) who are hardship cases for purpose of subdivision (3) of subsection (b) of section 16-262c, (2) having moneys due and owing deducted from such customer bills by the electric distribution company pursuant to subdivision (4) of subsection (b) of section 16-262c, (3) receiving other financial assistance from an electric distribution company, or (4) who are otherwise protected by law from shutoff of electricity services. The statute permits the Authority in a final decision to order all such customers to be placed on standard service

In a post-hearing brief, the Bureau said, citing OCC testimony, that, "[T]he retail electric supply market has not, on average, made electricity more affordable for Connecticut’s hardship customers. For the 24 month time period from October 2016 through September 2018, hardship customers purchasing electricity from third-party suppliers paid more than $7.2 million more than if they had purchased electricity directly from the EDCs through standard service. This translates to an annual average net loss of $143 per hardship household. The record also indicates that hardship customers are disproportionately harmed by third-party suppliers and incur a greater amount of harm than non-hardship customers. The record does not contain any evidence that these third-party supplier customers, as a class, actually received commensurate benefits for paying the above-market premium. The Bureau therefore requests that the Authority exercise its discretion and order hardship customers to be placed on standard service."

"This $7.2 million dollar overpayment has a significant and adverse impact on utility, state and federal programs designed to defray the costs of electricity for hardship customers," the Bureau said

"If hardship customers enrolled in the MPP are overpaying, it becomes harder for customers to reduce their arrearages and gain greater control over their energy costs, undermining the social policy purpose of section 16-262c(b)(4). Additionally, ratepayer and CEAP dollars designed to assist low income households are effectively transferred from ratepayers and social service programs to third-party suppliers with no demonstrated social welfare gain," the Bureau said

The Bureau said testimony provided by RESA cited only potential savings to hardship customers from choice. "Unfortunately, a retrospective look at rates actually paid by hardship customers indicates that, as a whole, hardship customers do not actually realize the potential savings identified by Mr. Hudson. There is also no evidence that such customers actually receive ancillary benefits. Finally, there is no evidence that demonstrates that hardship customers are intentionally paying higher rates as a hedge against volatility," the Bureau said

Cornering arguments that choice should be afforded to hardship customers so they can partake in various value-added services, the Bureau said, "The record does not support that third-party suppliers are providing bundled energy-related products and services that are demonstrated to actually lower customers’ usage and, therefore, their bills."

However, the Bureau said, "The Bureau would support further exploration of a program that offers guaranteed savings to hardship customers and also includes robust and enforceable consumer protections."

The Bureau noted that, "Section 245o(m) requires the Authority to reopen this docket not less than every two years if it exercises its discretion to place hardship customers on standard service."

"The Bureau believes that this reopening requirement is an indication that the legislature supports at least testing whether state polices are furthered by placing hardship customers onto standard service. The most effective review of a policy is actual experience. If experience does not prove to be beneficial, the policy can be corrected," the Bureau said

The Connecticut Attorney General also recommended that PURA should order all hardship customers be placed on standard service

The AG further said, "if PURA finds that the evidence in this proceeding warrants the remedy of placing hardship customers on standard service, competitive third-party electric suppliers should bear the costs of the implementing the consumer protection remedy." [e.g. EDC system changes]

OCC made similar recommendations to that of the AG, reiterating findings from its previously filed testimony (see details here)

OCC also said that alternatives suggested by retail suppliers to a prohibition on hardship customer shopping -- an aggregation or customer referral program (see details here) -- are not authorized by the statute at issue which only addressed placing all hardship customers on standard service. OCC further said that such alternatives were undeveloped.

In a brief, the Retail Energy Supply Association said, "the Authority should permit Hardship Customers to continue to maintain their right to choose an electric supplier and decline to place such customers on Standard Service because: (i) doing so is not feasible; (ii) doing so would impose significant costs on Hardship Customers, electric suppliers, and Connecticut ratepayers; and (iii) any benefits of placing Hardship Customers on Standard Service are substantially offset by the harms that doing so would produce."

"Further, doing so would ensure that Hardship Customers maintain the same rights, privileges, and dignity enjoyed by all other customers," RESA said

RESA said that, "the statewide available savings to Hardship Customers for the three-month period of April, May, and June 2019 was $2.8 million. In this period, the available savings per month for Eversource Hardship Customers are $17.11 and for UI Hardship Customers are $23.76. Price savings have been historically available to customers for years. As a consequence, any view that Standard Service is somehow the 'best' or 'lowest priced' option is simply wrong; proactive customers -- including Hardship Customers -- can easily avail themselves of savings opportunities from competitive supply."

RESA said that between 47.3 percent and 58.0 percent of the supplier billed prices for UI hardship customers were lower than the January to June 2019 standard service rate. In addition, between 38 percent and 43 percent of the supplier billed prices for Eversource hardship customers were lower than the January to June 2019 standard service rate.

"Even the OCC’s own testimony demonstrates the savings received by Hardship Customers from the competitive electric supply market," RESA said, citing OCC testimony which said that 22% of bills issued to Hardship Customers during the period studied resulted in customer savings

"Thus, prohibiting Hardship Customers from choosing competitive supply offers will have a substantial cost," RESA said

Direct Energy Business, LLC and Direct Energy Services, LLC also opposed placing all hardship customers on standard service.

In a brief, Direct Energy Business, LLC and Direct Energy Services, LLC said, "OCC unfairly attempts to discount any opportunity for savings offered through competitive suppliers. Contrary to OCC’s assertions, suppliers can and do offer savings compared to EDC Standard Service. For example, in May 2019, Eversource reported that the average rate charged to Hardship Customers was ‎‎$0.0983, compared to Standard Service at $0.10143.‎ At the same time, UI stated that the average rate charged to Hardship Customers was $0.1159, compared to Standard Service at $0.112263. These figures only represent average pricing – when in fact, in this same month, Hardship Customers in both service territories were billed at prices dramatically lower than Standard Service. The aggregate data upon which OCC relies simply does not reflect an individual customer’s experience with the competitive supplier market over time. Connecticut Hardship Customers can and should be allowed to seek out these savings should they wish to participate in the competitive market."

"OCC also attempts to tie increasing uncollectible volumes to competitive suppliers. However, OCC’s data fails to show that shopping Hardship Customers have higher rates of non-payment compared to standard service Hardship Customers. In fact, from 2011-2017, the percentage of uncollectible accounts were significantly lower for Hardship Customers served by suppliers and only reached parity with non-hardship accounts in 2018. If the Authority seeks to address increasing volumes of EDC uncollectibles, OCC’s proposal does not work as a means to achieve that goal. Direct Energy submits that a more robust investigation of methods to reduce utility uncollectible balances should be considered, as part of this or a related Authority proceeding," Direct Energy said

Docket No. 18-06-02

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