PUC Opens Investigation Of Retail Supplier After Staff Alleges Supplier Has Charged, "Unconscionably High Rates"
Staff Seeking Up To $10 Million Forfeiture
March 11, 2020 Email This Story Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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The Public Utilities Commission of Ohio has opened a second investigation of PALMco Energy OH, LLC d/b/a Indra Energy and PALMco Power OH, LLC d/b/a Indra Energy.
The new investigation is to address behavior alleged to have occurred since the allegations addressed in a prior May 2019 Staff report. As previously reported, PUCO Staff and PALMco had entered into a settlement concerning the allegations contained in the May 2019 Staff report, and PUCO recently approved such settlement.
As noted in our separate story today, under such settlement, PALMco agreed to not renew its Ohio certificates to provide electric or gas service in the state. Both certificates have now expired, with PALMco confirming that customers were returned to default service, if they had not chosen another supplier, after PALMco was not successful in attempting to sell the Ohio book as part of its market exit.
As previously reported, Staff had in December 2019 alleged that PALMco had continued to engage in misleading and deceptive behavior after May 2019, with Staff, in a new December 2019 notice of probable non-compliance, seeking a forfeiture of up to $10.2 million.
PUCO today issued an order noting that Staff’s December 16, 2019 notice had alleged a pattern of high customer charges (discussed further below), "that may be unconscionable and in violation of the Commission’s regulations."
"As such, the Commission finds it appropriate to open a second investigation
into PALMco. We direct the attorney examiner to issue a procedural schedule in this matter," PUCO ordered
Palmco's leadership said in a statement that, "We are shocked and dismayed by the PUCO’s decision yesterday to launch a second investigation into Palmco without legal reason or any new allegations of wrongdoing." Palmco's full statement concerning the matter is provided below
In the December 2019 notice of probable non-compliance, Staff had alleged, "between August 1, 2019 and December 10, 2019, the Commission’s call center received 25 contacts regarding PALMco’s gas rates and 26 contacts regarding PALMco’s electric rates. During Staff’s investigation of those customer contacts, Staff found that customers were concerned about issues related to the high bills that they received due to PALMco’s very high rates. Based on Staff’s investigations and a review of other available rates for CRES and CRNGS service, Staff believes that PALMco is charging unconscionably high rates."
In the December 2019 notice of probable non-compliance, Staff had alleged that, "Staff requested additional data from PALMco regarding the variable rates that it has charged since August 2019, the number of customers on variable rates, and the reason for the increase in rates. After reviewing PALMco’s responses, Staff believes that PALMco is charging variable rates that are unconscionably higher than the utilities’ standard offer and other variable rates available to customers. In addition, Staff reviewed the market prices for 2019 and found that market prices fluctuated very little during this calendar year."
In the December 2019 notice of probable non-compliance, Staff had alleged that, "As an example of an unconscionable electric rate, in one complaint received by the PUCO Call Center, a PALMco customer was on the variable rate for May, June, July and August 2019. From July to August, the rate being charged by PALMco for CRES went from $0.08924 per kwh to $0.15552, which is a 74% increase. In August, the utilities’ standard service offer was $0.05124 per kwh. According to the Energy Information Administration (EIA) electric retail pricing data, retail pricing was stagnate through August for this year. Therefore, Staff does not believe that market forces could reasonably account for PALMco’s rate increase."
In the December 2019 notice of probable non-compliance, Staff had alleged that, "Staff finds these facts, when taken as a whole, lead Staff to conclude that PALMco’s unconscionable behavior not only violates the Commission’s rules and statutes, but did so knowingly."
The following is a statement from Palmco's leadership concerning the matter:
"We are shocked and dismayed by the PUCO’s decision yesterday to launch a second investigation into Palmco without legal reason or any new allegations of wrongdoing. This comes less than 45 days after the PUCO unanimously approved the settlement stipulation worked on for months between Staff and Palmco, settling all issues in Docket No. 19-0957-GE-COI.
"Palmco worked transparently, cooperatively, and in good faith during the entire settlement process. We judged it to best serve the interests of Ohio consumers, the retail market, and Palmco’ s business to settle the matter in a controlled fashion. We thought the PUCO believed the same, especially since Palmco had numerous due process rights we could have asserted and Staff and PUCO attorneys faced a heavy burden of proof to prove their case.
"Yesterday’s decision is puzzling, unfounded, and a contradictory reversal of that understanding, especially considering that mere months ago PUCO Staff submitted two legal briefs urging the Commission to adopt the settlement stipulation. The proposed settlement met numerous legal tests establishing it was in the best interest of Ohio consumers. Additionally, all five Commissioners agreed with Staff’s briefs and assertions that the settlement stipulation should be adopted and then did adopt it unanimously on January 29, 2020.
"Nothing has materially changed since that adoption, and certainly no new facts or allegations of any kind have been discovered or alleged by PUCO Staff or relayed to Palmco to address. Palmco has continued to rerate customers as agreed to and cooperatively wind down its Ohio business. We have abided by the agreement to not renew our licenses and to exit the Ohio market for five years. Palmco has not marketed or enrolled new customers since April 2019. Any customer that wanted to leave our service could do so with no questions asked and no fee of any kind. Palmco has never charged an Early Termination Fee in Ohio since it began serving customers in Ohio in 2010. Indeed, until recently, we operated with an unblemished record of customer satisfaction in the state.
"Toward the end of 2018, we submitted revised marketing materials to PUCO Staff in anticipation of an upcoming marketing campaign. Staff approved the materials. Yet only a few months later, Staff requested an investigation -- on grounds that the very materials it had reviewed and approved only months earlier were false and misleading. Despite our track record and legal rights, we agreed to settle the matter, as approved by the PUCO on January 29, 2020.
"We know of no other instance in which an adopted settlement has been almost immediately undermined by a regulator, without any material change in facts and no wrongdoing by the supplier. This is a dangerous precedent for the entire retail energy industry and Palmco will be mounting a vigorous defense, including seeking determination whether a second investigation is legally allowed within 45 days of a settlement’s adoption without any new claim of specific wrongdoing.
"Since the beginning of the investigation last year, we have been cooperative, transparent, and conscientiously focused on our customers. We re-rated hundreds of customers without question, despite in many instances knowing these customers were with Palmco for many years, had valid third-party verifications on record, saw our name and rate on their utility bill every month for years, and had the option to cancel service at any time with no termination fees.
"We have abided by all the terms of the settlement approved by the PUCO on January 29, 2020. We have spent the days since the stipulation was adopted helping our customers with the transition, to ensure they had chosen another supplier or returned to default service by the expiration dates of our licenses. We have refunded Ohio consumers hundreds of thousands of dollars. We coordinated effectively with Ohio utilities during the orderly wind-down of our business. Our CRES and CRNGS licenses have now expired, and we will not re-enter the Ohio market for at least five years.
"In short, we have not solicited new business in almost one year, we have honored every aspect of the stipulation in spirit and to the letter of the agreement, and we are no longer doing business in Ohio.
"In terms of the new investigation, we remain in the dark about what Ohio statute or PUCO regulation we are accused of violating. As we have stated throughout this process, the PUCO is expressly prohibited from regulating competitive supplier rates under Ohio law. If that were not manifestly true, the PUCO would be able to cite the statute that grants it power to regulate supplier commodity pricing and start regulating all supplier rates. Further, we know of applicable federal law that expressly indicates that supplier pricing is a contractual issue and is not controlled by state regulatory agencies.
"If the only basis of the PUCO’s order yesterday is Staff’s vague assertion that variable rates under valid contracts were 'too high,' we see no reasonable legal grounds for this proceeding to continue. While we will continue to cooperate with Staff in this and all matters before the PUCO, we also intend to mount a vigorous defense in this proceeding and protect our name and reputation. We remain committed to the best interests of all our customers in all our markets around the country."