Update: Identity Of Book Being Acquired By Spark Energy Brand Revealed

Regulator's Staff Says That Variable Rate Contracts Cannot Be Assigned Under Statute

May 28, 2021

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

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Starion Energy, Inc. and Major Energy Electric Services, LLC, a brand of Spark Energy, have filed a notice with the Connecticut PURA for the assignment of more than 18,000 Starion Energy electricity customers to Major Energy (as the customer count was stated in a PURA Staff filing)

As previously reported (see story here), Spark Energy, Inc announced earlier this week that it had executed four separate agreements to acquire a total of approximately 56,900 residential customer equivalents ("RCEs") for a total purchase price of $11.5 million, consisting of approximately 15,700 RCEs in Connecticut's Eversource territory, 4,700 RCEs in Connecticut's United Illuminated territory, 17,500 RCEs in Massachusetts, and 19,000 RCEs in the Mid-Atlantic and Midwest regions.

Major Energy said that it will honor the customers' current agreements with Starion, so that no changes would occur with their terms or conditions until the contract end date

The assignment includes legacy variable rate contracts with 24 customers

Staff of the PURA Office of Education, Outreach, and Enforcement (EOE) argued that statute does not allow the assignment of variable rate contracts, and said that PURA should require these contracts be transitioned to a fixed rate at the current or lower rate

"The Suppliers stated that Major 'will maintain all contractual terms and conditions' of the existing Starion customer contracts. Correspondence p. 2. Twenty-four of the customer contracts that are part of the assignment are variable rate contracts. Pursuant to Conn. Gen. Stat. § 16-245o(g)(4), after October 1, 2015 a supplier may not enter into a variable rate contract or cause a variable rate contract to be automatically renewed. EOE understands the statute to prevent a variable rate contract from being assigned. In passing Conn. Gen. Stat. § 16-245o(g)(4), the legislature limited variable rate contracts to the contracts that existed at that time between that supplier and that customer. An assignment of a variable rate contract violates the spirit and intention of Conn. Gen. Stat. § 16-245o(g)(4). As a result, EOE recommends that these twenty-four contracts be transitioned to a fixed rate contract at the current or lower rate (EOE notes that all of the variable rate contracts are for rates greater than standard service; ten for 12 cents and fourteen for 14 cents). Further, EOE recommends that the notice to these twenty-four customers state that they have been served by a variable rate contract since prior to October 2015 and as a result of the assignment they are being transitioned to a fixed rate contract, stating the rate and contract term, and stating the standard service rate as recommended above," EOE Staff said

EOE Staff proposed that the information concerning the assignment sent by the suppliers be modified as follows: "The Suppliers’ filing indicates that the contracts of the assigned customers allows for assignment, but that the Suppliers will send a notification of assignment to the affected customers that allows them to opt out of the assignment without penalty if they communicate such a preference. EOE requests that the Suppliers bold the sentence in the fourth paragraph that states, 'You may opt-out of the assignment or terminate your plan without any early termination fees by calling Starion at 1-800-600-3040.' Further, the next sentence in the same paragraph states, 'If you have a fixed rate plan with Starion, your service will continue with the same fixed rate and terms until the end of your contract or upon cancellation of service.' It is unclear from this sentence if Major will automatically renew the contracts. If Major intends to automatically renew the contracts as they expire, then the sentence above should be changed to read, 'If you have a fixed rate plan with Starion, your service will continue with the same fixed rate and terms until the end of your contract term, at which time you will receive information regarding an automatic renewal to new terms and conditions, or upon cancellation of service.'"

EOE Staff also "recommend[ed]" that the suppliers include the current default service rate in the customer notice of assignment

"The Marketing Standards issued in Docket No. 14-07-20RE01 placed a renewed focus on ensuring customers are provided the standard service rate at the same time they are being provided a supplier’s rate. As a result, EOE recommends that the notification sent to customers also include a sentence after the first sentence of the fourth paragraph stating, 'Eversource’s standard service rate applicable from July 1 through December 31, 2021 is $0.0700. UI’s standard service rate applicable from July 1 through December 31, 2021 is $0.0801,'" EOE Staff said

At this time, Starion Energy wishes to maintain its Connecticut competitive supplier license in order to preserve its ability to serve Connecticut customers in the future. Starion Energy will continue to satisfy its reporting obligations and comply with all applicable statutes and Authority regulations.

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