Proposed Decision Would Require All Hardship Customers To Be Dropped To Default Service, Including Those On Existing Retail Supplier Contracts
Draft Order Would Prohibit Retail Suppliers From Serving Hardship Customers
December 3, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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The Connecticut PURA issued a proposed decision which would require that all hardship customers be dropped to Standard Service (default service) by March 1, 2020, with suppliers prohibited from serving hardship customers
The proposed decision states, "The Public Utilities Regulatory Authority finds that customers defined as hardship pursuant to Sections 16-245o(m) and 16-262c of the General Statutes of Connecticut receiving electric supply from third-party suppliers have paid more for electric service than they would have receiving standard service supply from the electric distribution companies and they have not received commensurate value for this overpayment. This overpayment affects not only the hardship customers, but all Connecticut ratepayers contributing to the hardship payments. As a result, all hardship customers shall be transferred to standard service immediately upon the electric distribution companies’ completion of system programming necessary to prevent hardship customers from contracting with third-party electric suppliers."
Subsection(b) of Conn. Gen. Stat. § 16-262c defines a hardship customer as: (i) A customer receiving local, state or federal public assistance; (ii) a customer whose sole source of financial support is Social Security, Veterans’ Administration or unemployment compensation benefits; (iii) a customer who is head of the household and is unemployed, and the household income is less than three hundred per cent of the poverty level determined by the federal government; (iv) a customer who is seriously ill or who has a household member who is seriously ill; (v) a customer whose income falls below one hundred twenty-five per cent of the poverty level determined by the federal government; and (vi) a customer whose circumstances threaten a deprivation of food and the necessities of life for himself or dependent children if payment of a delinquent bill is required.
The proposed decision states, "OCC presented compelling evidence based on analysis of two years’ of billing data that hardship customers purchasing electricity from third-party suppliers from October 2016 through September 2018 paid $7.2 million more during that time period than they would have if they had purchased electricity through standard service. Baldwin PFT, p.4. Furthermore, OCC presented evidence that seventy-eight percent (78%) of hardship customers receiving service from an electric supplier paid more than they would have on standard service. Id. at p. 26. RESA did not contest the accuracy of this evidence. See RESA Pre-filed Testimony, p. 10 ('I do not dispute that for this time period it appears that most hardship customers pay more with their competitive suppliers than they would have paid if they remained with standard service.').
The proposed decision states, "The Authority finds reducing the rate for 78% of hardship customers and saving $7.2 million to be a substantial benefit. While this savings reflects a point in time from 2016 through 2018, the Authority has reason to believe it is indicative of the amount of continued savings that could be recognized in the future if hardship customers were returned to standard service. The two years examined by OCC do not appear to be anomalies in circumstances or prices offered. The Authority rejects RESA’s arguments regarding differing results of OCC’s study had the timeframe been prior to 2015. Prior to October 2015 variable rates existed for residential customers. As a result, comparison to years prior to 2016 is not useful.
The proposed decision states, "The Authority finds that whether or not suppliers offered rates that were lower than standard service during the time period in question, hardship customers contracting with suppliers paid more during the examined time period than they would have paid on standard service. This indicates to the Authority that OCC’s data is accurate regarding hardship customers faring worse with third-party suppliers; better offers might have been available, but hardship customers did not receive them."
The proposed decision states, "Theoretical savings are unconvincing when compared with the reality of hardship customers paying more than $7 million too much. Even more so, theoretical savings in the future are unconvincing when compared to actual past costs. As stated by DEEP, '[T]he Authority is performing this review pursuant to 16-245o(m) after nearly two decades of deregulation. At this point in time, the potential benefits that hardship customers could receive from purchasing electricity from third-party suppliers is significantly less informative than what hardship customers have actually experienced.' DEEP Brief, p. 7 (emphasis added). The evidence indicates that what hardship customers have actually experienced is higher prices."
The proposed decision states, "The Authority is concerned by the evidence that the supplier market harms hardship customers in particular. OCC presented uncontroverted evidence that during the time period in question hardship customers contracting with a supplier paid sixty-nine percent (69%) more than non-hardship customers contracting with a supplier.1 Baldwin PFT, p. 33-34, Table SMB-11."
The proposed decision states, "OCC’s data showed that all customers contracting with a supplier during the time period in question paid a premium, but hardship customers paid a premium of $0.0171 per kWh, whereas non-hardship customers paid a premium of only $0.0097 per kWh."
The proposed decision states, "This overpayment by hardship customers harms not only the customers, but also other Connecticut ratepayers funding the state and federal programs in which the hardship customers participate. Pursuant to Conn. Gen. Stat. § 16-262c(b)(4), hardship customers can participate in the Matching Payments Program (MPP), which matches a hardship customer’s payments and Connecticut Energy Assistance Payments (CEAP). See LFE-1, p. 11. If hardship customers are overpaying suppliers for their electricity, it becomes unnecessarily difficult for those customers to pay down their arrearages. Furthermore, because MPP and CEAP are publicly funded, to the extent hardship customers are overpaying suppliers, all other electricity ratepayers are funding this overpayment. This overpayment results in a transfer of valuable financial aid to hardship customers, the MPP and CEAP funds, from the intended beneficiaries to third-party suppliers. Hardship customers receiving supply from third-party suppliers during the period studied on average paid $143 more than they would have paid for standard service during that period. See Baldwin PFT, p. 4. With CEAP benefits averaging only $340 to $725 per year, the premium hardship customers pay to suppliers consumes a significant portion of each hardship customer’s allotted CEAP benefits. See LFE-1, Exhibit A, p. 8. If hardship customers only pay for the lowest cost supply option available rather than more costly supply options, the Authority finds that the social service programs will save millions of dollars each year that may then be used to provide greater assistance to hardship customers and that these savings may also reduce the charges to all other electricity ratepayers who subsidize these assistance programs for hardship customers as well as the costs of uncollectible accounts through their electricity rates."
The proposed decision states, "The Authority finds that a long-term fixed price does not convey a substantial enough benefit to offset the overpayment by hardship customers. Moreover, RESA incorrectly refers to standard service as volatile. RESA Brief at p. 14. There are only two standard service rates in one year and these rates are published in advance. With few changes in rates and advance notification, customers can budget using standard service rates. Furthermore, RESA’s arguments miss the point – a long-term fixed rate from a supplier that requires a customer to pay more than they would pay with standard service benefits no one other than the supplier."
The proposed decision states, "The Authority finds the 'value-added products' offered by suppliers convey no demonstrable overall benefit based on the (lack of) record evidence. RESA offered no evidence regarding how many hardship customers actually receive 'value-added products,' nor did it offer evidence regarding the actual value of these products or the specific products, such as how many hardship customers receive energy-efficient thermostats, install such thermostats, or even that the hardship customers own the property in which they live and are able to install such thermostats. Furthermore, while gift cards and rebates might benefit the recipient, they do not benefit all Connecticut ratepayers that are contributing to the hardship payments and there is no evidence they offset the customer’s overpayment."
The proposed decision states, "The Authority finds that it is both feasible and not cost prohibitive to place all hardship customers on standard service. Eversource offered evidence that for a one-time cost of less than $400,000, it can both return existing hardship customers to standard service and program its system to prevent hardship customers from contracting with a supplier. See Response to Interrogatory OCC-41, LFE-4. UI offered evidence that for a one-time cost of approximately $120,000 it can do the same. See id. When balanced with the ongoing savings that could be achieved by returning hardship customers to standard service, the Authority finds these one-time costs are not excessive."
The proposed decision states, "RESA proffers many logistical hurdles, but the record indicates that all of these can be overcome. The EDCs can implement both the ability to identify a hardship customer according to the statutory definition and the ability to notify the supplier of a rejection code of 'other.'"
The proposed decision states, "As a result of requirements in Docket No. 14-07-19RE05, suppliers must notify customers of the reason of their rejected enrollment. This will require the EDCs to submit to the suppliers a code or reason for the rejection. The EDCs could have a code for 'other,' encompassing reasons not implicating a failure on the part of the supplier to submit the supply summary information with the enrollment and such code could indicate the enrollment should not be resubmitted."
The proposed decision states, "A hardship code associated with a customer’s name in the EDCs’ billing system can be removed when the customer no longer meets the statutory definition, thus allowing that customer to reengage with third-party suppliers if he or she chooses. Furthermore, the EDCs can contact existing hardship customers via their preferred method of communication to notify them of the change in policy."
The proposed decision states, "As part of LFE-4, the EDCs submitted estimates for: a. switching current supplier hardship customers to standard service; b. coding to ensure new hardship customers cannot contract with a supplier; c. sending monthly texts and/or emails to supplier hardship customers with rates greater than standard service; d. texting and/or emailing hardship customers when they are prevented from enrolling with a supplier; e. educating social agency staff; and f. educating customer service representatives. Both EDCs indicated costs associated with LFE-4 e and f were de minimis. The Authority finds costs associated with LFE-4 c and d to be unnecessary. If hardship customers are on standard service, RESA’s proposal to text or email the customers monthly who are paying greater than standard service is no longer needed. As noted previously, Docket No. 14-07-19RE05 already requires suppliers to notify customers if their enrollment is rejected; it would be redundant for the EDCs to provide the same notification to customers."
The proposed decision states, "RESA did not demonstrate that returning hardship customers to standard service impacts the state’s clean energy goals. The evidence in this docket did not indicate that hardship customers contract with a supplier to purchase clean energy. In fact, the evidence did not even indicate that hardship customers with suppliers are purchasing more clean energy than if they were on standard service. Achieving clean energy goals is laudable, but the Authority finds the state can achieve its clean energy goals without forcing Connecticut customers to subsidize inflated supplier rates."
The proposed decision states, "RESA argues the statute does not require the Authority to return hardship customers with existing contracts to standard service, but that is exactly what the statute envisions. The statute instructs the Authority to evaluate placing on standard service all hardship customers of all electric suppliers. The statute does not draw a distinction between future and existing customers, and it would be counterproductive to draw such a distinction. Allowing any hardship customers to remain with a third-party supplier not only would defeat the purpose of the statute, but it would significantly reduce the benefits of returning hardship customers to standard service and would produce an unworkable result for application."
The proposed decision states, "The Authority rejects RESA’s argument that there are Constitutional impediments to requiring hardship customers to receive supply from standard service. Citing to the Contracts Clause in Article I, Section 10 of the U.S. Constitution, RESA argues Conn. Gen. Stat. § 16-245o(m) impermissibly infringes on contract rights because it substantially impairs contract rights. RESA Brief, p. 5-6. To begin, the statute has been in effect since June 3, 2014. Suppliers have known for five years that there was a possibility hardship customers could be returned to standard service, yet they voluntarily continued contracting with hardship customers and in doing so received a premium for those contracts. Suppliers cannot now feign surprise at a contingency they were aware of and could have planned for."
The proposed decision states, "Moreover, as RESA concedes, even a substantial impairment of contractual rights may be permissible if the law has a significant and legitimate public purpose. Id. at p. 7. The Authority finds that returning hardship customers to standard service and precluding their contracting with a supplier serves a significant and legitimate public purpose. Returning hardship customers to standard service not only saves Connecticut ratepayers the extra costs illustrated in this docket and allows for a greater amount of public funds to become available to directly benefit the hardship customers for whom the funds are established, it also saves the majority of hardship customers the extra money they are paying to third-party suppliers."
The proposed decision states, "The Authority further rejects RESA’s argument made in its pre-field [sic] testimony that there are other alternatives available under the statute. The Authority specifically requested that the parties brief the topic of whether the statute permits options other than allowing hardship customers to remain with suppliers or requiring they return to standard service. In two paragraphs, RESA conceded the statute’s constraints and offered only that the Authority could try to inform hardship customers about supplier offers below standard service. Id. at p. 23-24. The Authority agrees with the OCC that 'the alternatives that RESA proposes [in its pre-filed testimony] are plainly beyond the Authority’s mandate under General Statute § 16-245o(m), which presupposes the relief that the Authority may order and does not provide the Authority with broad discretion to select any possible remedy from the universe of potential alternatives.' OCC Brief, p. 15. As written, the plain and unambiguous language of the statute allows the Authority only two options: allowing hardship customers to remain with suppliers or placing all hardship customers on standard service. The Authority finds that this plain language interpretation, providing two binary implementation options, accomplished precisely what the General Assembly intended and does not yield absurd or unworkable results."
Concerning testimony from suppliers about lower rates available to hardship customers in the retail market, the proposed decision states, "The Authority notes that RESA’s argument regarding supplier offers cites to rates posted on the EnergizeCT.com (Rate Board), yet there is no evidence that hardship customers contract with suppliers via the Rate Board. There is also no evidence in the record to suggest that door-to-door or telephone marketers offered hardship customers the best rate available on the Rate Board. To the contrary, the contract prices paid by hardship customers show that hardship customers are generally paying prices higher than standard service and other available lower price supplier offers that may be available via the Rate Board."
The proposed decision states, "RESA’s witness opined that hardship customers could have saved money had every hardship customer signed up for one rate posted by one supplier for a limited time on the Rate Board. See RESA Pre-filed testimony, p. 25-26. Not only is his calculation theoretical and based on the exceptionally unlikely probability that every hardship customer would sign up for the same rate with the same supplier, RESA’s witness offered no evidence that any hardship customer signed up for the exemplary rate."
The proposed decision states, "Based on the evidence acquired in this docket, the Authority finds the latter option to be most beneficial to Connecticut ratepayers. The Authority finds that returning all hardship customers to standard service offers significant benefits to Connecticut, it is feasible to accomplish, and the one-time costs to accomplish it are reasonable when compared with the long-term savings accomplished. As a result, the Authority orders all hardship customers be returned to standard service without early termination fees being imposed and orders the EDCs to implement system programming to prevent hardship customers from enrolling with an electric supplier. Pursuant to Conn. Gen. Stat. § 16-245o(m), the Authority will initiate a docket to reevaluate this requirement two years from the date of the final decision in this docket or, if appealed, two years from the conclusion of the appeal."
The proposed decision states, "The EDCs offered evidence that for a one-time cost of less than $520,000 combined they can program their computer systems to return existing hardship customers to standard service, prevent hardship customers from receiving supply from standard service in the future, and educate both social agencies and customer service representatives. See LFE-4 a, b, e, and f. The Authority finds that the only necessary costs are those detailed in LFE-4 a, b, e, and f, and instructs the EDCs to implement only those modifications. After concluding such modifications, the EDCs shall submit all prudently incurred costs to the Authority for recovery in the next rate case. If the EDCs find the costs exceed estimates by greater than ten percent, they shall report such increases to the Authority immediately."
The proposed decision states, "The Authority finds that hardship customers could have realized significant savings during the time period studied in this docket had they received electric supply through standard service rather than from an electric supplier. Hardship customers’ overpayments substantially reduced the amount of available energy bill assistance funds to the hardship customers and to the social programs that assist their electricity payments. The EDCs offered evidence that for a one-time cost of less than $520,000, they can program their computer systems to return existing hardship customers to standard service and prevent hardship customers from receiving supply from third-party suppliers in the future. The Authority finds that returning all hardship customers to standard service offers significant costs savings benefits to Connecticut, it is feasible to accomplish, and the costs to accomplish are not unreasonable when compared with the long-term savings accomplished. As a result, the Authority orders all hardship customers returned to standard service and orders the EDCs to implement system programming to prevent hardship customers from enrolling with an electric supplier."
The proposed decision would require that, no later than March 1, 2020, the Connecticut Light & Power Company d/b/a Eversource Energy and The United Illuminating Company shall modify their systems to return all hardship customers to standard service, prevent future hardship customers from contracting with electric suppliers, and educating social service agency staff and customer service representatives of the change.
The proposed decision would require that, no later than March 1, 2020, The Connecticut Light & Power Company d/b/a Eversource Energy and The United Illuminating Company shall return all hardship customers to standard service and shall prevent future hardship customers from enrolling with a third-party electric supplier.
The proposed decision would require that, no licensed electric supplier shall charge hardship customers transferred to standard service an early termination fee or any other type of charge other than a charge for electricity provided by the supplier up until the date the customer was transferred.