Retail Supplier Returning Customers To Default Service, Cites Force Majeure Provision In Contracts

Regulator's Staff Says Force Majeure Does Not Apply, Seeks To Require Supplier To Provide Any Price Benefit (Versus SOS) To Affected Customers For Contract's Duration

January 6, 2023

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

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Mega Energy of New England, LLC ("Mega" or the "Company") is returning all of its Connecticut electric customers to default service.

Mega Energy of New England, LLC said in a regulatory filing that, "Mega Energy of New England, LLC ('Company') is no longer in a position to serve customers in Connecticut because, after December 31, 2022, it will no longer have a supply agreement. The Company’s current supplier decided not to renew the Company’s Preferred Supply Agreement ('PSA') due to: (i) the aftermath of Winter Storm Uri; (ii) commodity price increases resulting from Russia’s invasion of Ukraine; and (iii) the supplier’s focus and investment in asset-backed business lines. When the Company went into the market to find an alternative supplier, it learned that the aftermath of Winter Storm Uri and commodity price increases resulting from the war in the Ukraine also tightened the market for alternative PSA providers."

"In March/April 2022, the Company received notice of its current supplier’s decision not to renew the PSA. Immediately thereafter, the Company made contact with seven other potential suppliers. Three of those suppliers were not interested due to the negative financial impacts of Storm Uri. One of the suppliers had paused all non-core origination efforts in North America due to the financial distress caused by the Ukraine invasion. One supplier was unable to assist because they had not yet entered the ISO New England market and did not expect to do so until mid to late 2023. Despite numerous attempts to agree upon reasonable terms, the Company was unable to reach agreement with either of the two remaining suppliers," Mega Energy of New England, LLC said in a regulatory filing

"Being unable to arrange for an alternative PSA, the Company then engaged an investment bank to gauge market interest in the Company’s book of customers. The Company received only one viable offer. Unfortunately, the buyer was not interested in acquiring the Company’s Connecticut customers," Mega Energy of New England, LLC said in a regulatory filing

"Because the Company’s supply agreement will expire at the end of this year, the Company is no longer in a position to continue to serve its Connecticut customers," Mega Energy of New England, LLC said in a regulatory filing

Specifically, Mega Energy of New England provided notice to 338 Connecticut customers that it would return such customers to default service. All of the customers are non-residential. Mega Energy of New England does not serve residential customers in Connecticut

Mega Energy of New England noted that some of the customers were being served under a term agreement, while others, as a result of a renewal process, were being provided service on a monthly basis

Mega Energy of New England, LLC said in a regulatory filing that, "The Company’s Terms of Service include a Force Majeure provision that specifically indicates that events outside of the Company’s control may result in interruptions in service."

In response to Mega Energy of New England, LLC's filing, the Office of Education, Outreach and Enforcement (EOE) of the Connecticut PURA alleged that, "EOE has reason to believe Mega is violating the terms of its contract and the 'Force Majeure' provision does not apply in these circumstances."

EOE directed that, "Mega shall provide proof that it either is continuing to fulfill the contracts or that it agrees to refund all customers who were being served at a rate less than the standard service rate the difference between what the customer actually pays and what they would have paid with Mega for the full term of the contract had Mega not terminated the contract."

Docket No. 13-03-09

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