Regulator's Staff Says Required Rate Increase Notice Applies To All Contracts, Not Just Variable Rates -- EnergyChoiceMatters.com

Regulator's Staff Says Required Rate Increase Notice Applies To All Contracts, Not Just Variable Rates

Offers Guidance On Timing Of Notice

March 16, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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In response to an inquiry from a retail supplier, the Connecticut PURA's Office of Education, Outreach, and Enforcement (EOE) said that a required form ("Form 4") that suppliers must send notifying customers of a rate increase of at least 25% applies to all residential contracts, not just variable rate contracts.

Form 4 is the notice of a twenty-five percent increase in supply rates and is required by Conn. Gen. Stat. § 16-245o(g)(3), which states, "No electric supplier shall charge an electric generation service rate to a residential customer that is twenty-five per cent more than the original contract price of a contract entered into after June 6, 2014, without notifying such customer of the rate change fifteen days before it takes effect, provided such notice shall only be required for the first instance such rate is twenty-five per cent more than the original contract price. After such one-time notice, no electric supplier shall charge an electric generation service rate to a residential customer that is twenty-five per cent more than the most recent notice of the rate change without notifying such customer of the rate change fifteen days before it takes effect. Any notification described in this subdivision shall be provided pursuant to the method agreed to by the customer in the contract and may include written notice through United States mail, electronic mail, text message, an application on a cellular telephone, or third-party notification service approved by the authority."

The supplier had argued that legislative intent is that the form applies only to variable rates

In response, EOE said, "[T]he plain language of the statute is clear – a supplier must notify every residential customer of an increase of 25% of the original contract price and every subsequent 25% increase from the current price. The statute does not restrict the notice to variable rate customers, nor should the Authority."

"At the time Conn. Gen. Stat. § 16-245o(g)(3) was passed the General Assembly may have been primarily concerned with variable rates because customers were seeing significant price spikes in variable rate contracts. The General Assembly, however, did not limit the statute to only the concern it faced at that moment. It allowed the statute to address more general concerns about suppliers raising any customer’s price without sufficient notice," EOE said

"The reasoning behind notifying a variable rate customer of a significant price increase also applies to fixed rate customers. Although fixed rate customers can monitor upcoming prices through the next cycle rate displayed in the supply summary of their bills, many customers do not review their bills on a monthly basis, whether because they receive electronic bills or have established automatic payments. Receiving a notice directly from their supplier, however, alerts the customer to the significant price increase they are about to sustain and allows them sufficient time to act on it either to renegotiate their contract with the current supplier, obtain another supplier, or return to standard service. EOE acknowledges that a fixed rate customer will receive a notice of contract renewal, but it believes receiving a separate notice emphasizing that the contract is renewing at a 25% or greater rate benefits the customers. Customers need to understand their relationships with suppliers; they cannot receive too much information," EOE said

"EOE also notes that some suppliers offer tiered rates, which offer a lower rate for the first four billing cycles and then a higher rate for the remainder of the contract. A rate increase after the first tier, if greater than 25%, could warrant the 25% notice but would not trigger the automatic renewal notice. Therefore, these customers would receive only the one notice," EOE said

"EOE understands the concerns [supplier] expressed in its Motion regarding the timing of the 25% increase notice relative to other notices the customer must receive. EOE believes this concern can be overcome by sending the 25% increase notice with the automatic renewal notice. Section 16-245o(g)(3) states that the 25% increase notice must be sent fifteen days in advance. It does not state, like Section 16-245o(g)(1), that the notice must be sent between a certain number of days in advance. As a result, EOE reads Section 16-245o(g)(3) as requiring the notice to be sent at least fifteen days in advance, which would allow the 25% increase notice to be sent with the renewal notice," EOE said

"EOE understands [supplier's] concerns about customer confusion, but believes these concerns can be alleviated as noted above and that suppliers should err on the side of providing more, rather than less, information to customers. As a result, EOE requests that the Authority instruct suppliers that the notice in Section 16-245o(g)(3) applies to all residential customer contracts, whether fixed or variable rate," EOE said

Docket No. 13-07-18

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