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PSC Clarifies Grandfathering Of Existing Retail Supplier Contracts To Energy Assistance Households, Given New Price Cap & Rules

Final Rules For Service To Energy Assistance Households Adopted


May 31, 2023

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Maryland PSC adopted final regulations to implement a 2021 law [Chapter 637; amending the annotated code Section 4-308] that prohibits retail electric and gas supplier service to energy assistance customers outside of a PSC-approved plan whose price is less than SOS

The PSC adopted substantially similar rules for electricity and gas (with minor differences reflecting terminology and other provisions unique to each industry); this story quotes only the electric rules for brevity

In adopting the final rules, the PSC affirmed that contracts entered into prior to July 1, 2023, will not be abrogated.

The PSC had previously issued such guidance from the bench in April (and such guidance was reflected in previously reported customer communication plans), as the Commission held that suppliers may continue to serve energy assistance customers who are on existing fixed term contracts that extend beyond July 1, 2023 under such existing contracts, but suppliers may not renew or re-enroll such customers upon the contract's term expiration, to the extent the customer remains an energy assistance customer (the supplier, if it has a PSC-approved contract, may seek to continue service to the customer, but under a new contract, not a re-enrollment)

However, the Retail Energy Supply Association and NRG raised a new concern after the PSC's Consumer Affairs Division (CAD) issued a memo containing an "interpretative position" concerning existing contracts

CAD's memo notably stated, "Section 4-308 and its associated regulations shall also apply to contracts where the customer has a unilateral right to terminate the contract (i.e., variable rate contracts) without penalty (including, but not limited to, early termination fee and the return of incentives), as if that right were exercised on the earliest date on or after July 1, 2023, when the customer could terminate the contract without penalty. For example, a contract that is terminable without penalty by the customer upon certain notice conditions shall terminate as if the customer provided notice on July 1, 2023. A contract that is terminable with an early-termination penalty is not immediately terminated, but if that penalty ceases to apply on some future date, the notice shall be treated to have been given as of the earliest date it could be given without incurring any early-termination penalty."

As summarized by RESA and NRG, the CAD position would abrogate retail supply contracts with longer terms (i.e., not month-to-month) unless the supplier imposes an early termination fee (ETF).

During a rulemaking session today, PSC Chairman Jason Stanek reiterated the PSC's prior guidance affirming the broader grandfathering provision provided from the bench at an April meeting.

Stanek further said CAD would be issuing a revised interpretative memo, which Stanek said would likely ameliorate suppliers' concerns

In adopting the final rules, the PSC did not address the question of whether energy assistance customers served under an opt-out aggregation, in cases where the aggregation's supply service is provided by a retail supplier, would be subject to the new energy assistance household rules and the product and price limits. This question may be addressed in a separate rulemaking for CCAs (with a rulemaking session set for tomorrow) or a future rulemaking concerning the energy assistance rules

Turning to the final rules, as previously reported, Section 4-308(b)(1) of the Public Utilities Article states that, beginning on July 1, 2023, unless the Commission has approved a supply offer from the supplier, a third-party retail supplier may not offer to:

• provide electricity or gas to households in the State that have received energy assistance during the previous fiscal year;

• renew a contract to provide electricity or gas to households in the State that are enrolled in an energy assistance program; or

• charge a termination fee to households in the State that have received energy assistance during the previous fiscal year.

Section 4-308(b)(2) also requires that, "[a]n approved supply offer from a third-party retail supplier shall include a commitment, for the entirety of the term of the supply offer, to charging at or below the standard offer service rate or gas commodity rate for customers receiving energy assistance."

The adopted rules to implement the statute provide that, "For contracts signed on or after July 1, 2023, an electricity supplier may not serve a customer in an energy assistance household except pursuant to a Commission-approved contract for energy assistance households."

"Energy assistance household" means that the Office of Home Energy Programs found that the service address or household associated with the utility account qualified for an electric assistance program during the current or previous fiscal year [or, for gas contracts, a gas assistance program]. For a utility that provides both gas and electric service, an energy assistance household means that the Office of Home Energy Programs found that the service address or household associated with the utility account qualified for an electric or gas assistance program during the current or previous fiscal year

"Energy assistance program" means the following programs administered by the Maryland Office of Home Energy Programs by which a customer receives financial assistance paying their gas utility bills, which includes but is not necessarily limited to: (a) The Maryland Energy Assistance Program; (b) The Utility Service Protection Program; and (c) The Arrearage Retirement Assistance Program.

A supplier may apply at the PSC for a PSC-approved contract. Among other things, the supplier's proposed PSC-approved contract must include, "A commitment for the entirety of the term of the supply contract to charge at or below the utility standard offer service rate."

In terms of pricing for a PSC-approved contract, the final rules provide as follows:

(1) A contract for energy assistance households shall guarantee service at rates at or below the utility’s SOS rate for the term of the contract.

(2) The retail supplier’s rate for comparison shall include all commodity charges, including fixed charges divided by the kWh consumed

(3) The retail supplier’s rate may not include a downward adjustment to reflect non-energy products or services that the supplier provides or offers to customers, including, but not limited to, gift cards, free or discounted warranties, and discounts for non-energy products.

(4) For billing periods which extend over more than one SOS rate, the rate for comparison shall be:

(a) If the customer does not have an AMI meter, the weighted average of the number of days on each SOS rate; or

(b) If the customer does have an AMI meter, the SOS rate applied to the usage on each rate.

Beginning July 1, 2023, a supplier may not renew an evergreen contract for an energy assistance household unless the renewal is onto a Commission-approved contract for energy assistance households.

The final rules address situations in which a customer is being served by a supplier and, during the middle of such service, the customer becomes an energy assistance customer, as follows:

For Contracts Signed on or After July 1, 2023 with a Customer Who Starts to Receive Energy Assistance While Receiving Service from an Electric Supplier.

(1) When a utility determines that a supplier’s existing customer is newly identified as an energy assistance household, the utility shall within 3 business days provide the supplier notice of that determination.

(2) Upon receipt of the notice required under §K(1) of this regulation, the retail supplier shall, within 5 business days:

(a) Terminate the contract and return the customer to SOS;

(b) If provided for under the existing contract, begin providing service under a Commission-approved contract for low-income customers; or

(c) Obtain the customer’s consent to receive service under a Commission-approved contract for low-income customers.

(3) The supplier shall charge the customer the supplier’s current contract rate or SOS rate, whichever is lower, for the time between the supplier’s receipt of the notice in §K(1) [section (1) above] of this regulation and the date the customer either is dropped to SOS or begins receiving service under a contract for energy assistance households

The final rules include requirements related to marketing or solicitation, as follows:

(3) All supplier marketing or solicitation information shall include either:

(a) If a supplier is marketing a Commission-approved contract for energy assistance households, a statement that customers enrolled in an energy assistance program cannot be charged more than the utility’s standard offer service rate; or

(b) If a supplier is marketing a product that is not approved for energy assistance households, a statement that a customer enrolled with an energy assistance program cannot enroll in this product.

The final rules address a supplier's obligation to "determine" a customer's energy assistance status more specifically than a prior draft.

A draft provision, omitted from the final rule, would have stated that a supplier, "must make reasonable efforts to determine whether a customer lives in an energy assistance household during solicitations."

The final rules instead provide that:

(2) Prior to submitting an enrollment, a supplier shall make reasonable efforts to ensure that energy assistance households are only enrolled on approved contracts, including, but not limited to:

(a) Customer inquiry;

(b) Disclosing to the customer that an unapproved offer is not available to energy assistance households;

(c) Checking the My OHEP Status Portal; or

(d) Acquiring pre-enrollment information as provided in COMAR 20.53.03.02A(8).

Supplier contracts must now include a statement that the supplier cannot charge a termination fee to energy assistance households

RM78

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