Legislature Passes Bill To Make Existing Variable Rate Contracts "Null And Void"

Bill Conditions Retail Suppliers' Participation In Market On "Proof" That Supplier's Products Are Not, "Overpriced Or Harmful"

Bill Bans Early Termination Fees; Adds New Supplier Notice Requirements

June 18, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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The Connecticut general assembly recently passed HB 6526 which, among other things, makes existing residential variable rate contracts null and void

HB 6526 awaits action from the governor

HB 6526 provides that, "Notwithstanding any provision of title 16, on and after July 1, 2022, no electric supplier shall charge a residential customer a variable rate for electric generation services. On and after July 1, 2022, any contract between an electric supplier and a residential customer that provides for the use of such variable rates shall be deemed null and void."

HB 6526 modifies the current 25% rate increase notice requirement such that the notice must be provided for any such increase (not only the first instance), and must be provided 30 days before the increase (rather than 15).

Additionally, the bill requires that such rate increase notice shall apply to all contracts. Currently, the notice requirement applies only to contracts entered into after June 6, 2014

HB 6526 provides the Connecticut PURA with the ability to condition a supplier's ongoing licensure and access to EDC systems on a demonstration that the supplier's products are just and reasonable, and are not overpriced or harmful to residential customers.

Specifically, HB 6526 provides that, "The Public Utilities Regulatory Authority shall have the authority to condition an electric supplier's license and access to the systems and billing of the electric distribution companies on terms the authority determines to be just and reasonable, including, but not limited to, proof that the electric supplier's products are not overpriced or harmful to residential customers."

The bill bans early termination fees for residential customers

As an addition to the current contract expiration notice requirements for residential customers, HB 6526 provides that any new contract shall contain a cover page highlighting each change from the prior contract, in a format prescribed by the Public Utilities Regulatory Authority

HB 6526 modifies PURA's current authority which allows it to place all hardship and assistance customers on default service (which it has done) to alternatively also allow PURA to order that all contracts with such customers, entered into on and after a determined date, to be at or below the standard service rate, or order that all contracts with such customers, entered into on and after a determined date, to comply with appropriate limitations the Authority deems necessary

The bill provides that no electric supplier license may be transferred, and no customer may be assigned or transferred, without the prior approval of PURA

The bill further clarifies existing statute concerning third parties being defined as legal agents of suppliers by stating, "Any third-party who contracts with or is otherwise compensated by an electric supplier to sell electric generation services, or contracts with or is compensated by a third-party marketer of the electric supplier to sell electric generation services for the electric supplier, shall be a legal agent of the electric supplier. No third-party may sell electric generation services on behalf of an electric supplier such third party has received appropriate training directly from such electric supplier."

If the bill becomes law, the provisions (other than the variable rate ban) would take effect July 1.

Several retail suppliers asked PURA to provide an October 1 compliance deadline due to the time needed to implement the changes and/or use templates that haven't been created yet by PURA (such as the new renewal notice cover page). The suppliers said that they would not charge any early termination fee to residential customers after July 1, but due to the lead time in issuing bills, customers may still see a notice of an ETF on their bill

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