Retail Supplier Opposes PUC Staff Recommendation That Supplier Be Required To Re-rate All Variable Rate Customers Charged Since August, Based On Default Service Rates

January 2, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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PALMco Power OH and PALMco Energy Ohio (collectively, "PALMco") filed a response to a second notice of probable non-compliance recently issued by Staff of the Public Utilities Commission of Ohio, under which PUCO Staff, among other things, recommended that PALMco should immediately re-rate, to the level of the default service rate, all customers that were charged a variable rate, from August 1, 2019 to present

See more background on the Staff notice of probable non-compliance here.

As previously reported, Staff and PALMco previously entered into a stipulation to resolve an earlier notice of probable non-compliance, which is pending before the Commission, and under which, among other things, PALMco would sell its customer book in Ohio. See more details on the prior notice and settlement here

In its response to the latest notice of probable non-compliance from PUCO Staff, PALMco stated, "Although PALMco is not in a position to dispute or confirm Staff’s factual assertions, these assertions, even if correct, do not constitute violations of the Ohio Administrative Code. No corrective action is warranted."

In its response filed with PUCO, PALMco stated, "As you know, PALMco has not enrolled any new customers in Ohio since April 2019. The Stipulation in Case No. 19-0957-GE-COI allows PALMco to continue serving customers who enrolled prior to April. PALMco will exit the Ohio market when its supplier certificates expire in February and March 2020 for gas and electricity, respectively. It is not clear what Staff hopes to accomplish with a second investigation."

In its response filed with PUCO, PALMco stated, "Nor is there any basis for a second investigation. Staff claims that 'PALMco failed to inform its customers of how it would be calculating its variable rates,' but that is incorrect. PALMco’s contracts provide for variable rates and disclose the factors that may cause rates to fluctuate. The contracts expressly disclaim any guarantee of savings relative to the applicable utility’s rates. Staff reviewed the form of PALMco’s contracts in 2018. At no time since has Staff suggested that PALMco’s contracts lack any required disclosures or otherwise violate the Ohio Administrative Code."

In its response filed with PUCO, PALMco stated, "Staff seems to be trying to accomplish indirectly what the Commission is forbidden from doing directly -- regulating supplier rates that Staff believes are 'too high.' Staff’s concerns are not grounds for an enforcement action. The Ohio Revised Code expressly prohibits the Commission from regulating competitive supplier rates. See R.C. 4928.05(A)('a competitive retail electric service supplied by an [] electric services company shall not be subject to supervision and regulation by []the public utilities commission under Chapters 4901. to 4909., 4933., 4935., and 4963. of the Revised Code [.]') The statute authorizing rules to prevent unfair or deceptive conduct makes clear that these rules should not regulate rates. Instead, 'service quality, safety, and reliability requirements for electric generation service shall be determined primarily through market expectations and contractual relationships.' R.C. 4928.10(E)" [emphasis by PALMco].

In its response filed with PUCO, PALMco stated, "Staff’s proposed corrective actions are both unwarranted and contrary to the Stipulation in Case No. 19-957. The first corrective action ('immediately cease charging customers variable rates in excess of the default service offer in Ohio') is directly contrary to the terms of the contracts and, as mentioned, PALMco is allowed to serve customers under existing contracts. Moreover, following Staff’s recommendation would likely subject PALMco and Staff to complaints from other suppliers who charge rates in excess of utility default rates. PALMco’s customers have always been free to cancel their contracts without penalty; customers who wish to receive the utility default rate remain free to do so."

In its response filed with PUCO, PALMco stated, "Staff’s second corrective action is to 'immediately re-rate all customers that were charged a variable rate from August 1, 2019 to present.' The Stipulation in Case No. 19-957 permits any customer who enrolled at any time to request a re-rate. For all PALMco knows, the customers alluded to in the PNC [notice of probable non-compliance] may have already received a re-rate. If they have not, PALMco will re-rate them. But PALMco will not agree to re-rate every customer charged a variable rate since August 1, 2019. Nor will PALMco agree to the third corrective action ('send a written notice to all customers on a variable rate contract that they will be re-rated and why.')."

In its response filed with PUCO, PALMco stated, "The Stipulation in Case No. 19-957 is a significant step forward in resolving Staff’s concerns. Litigating a second investigation would be a significant step backwards. We hope that Staff will reconsider its position and allow PALMco to exit the Ohio market in an orderly, nonconfrontational manner."

Case 19-2153-GE-COI

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