Regulator Opens Investigation Of Company To Determine If Supplier Or Aggregation Services Provided Without License -- EnergyChoiceMatters.com

Regulator Opens Investigation Of Company To Determine If Supplier Or Aggregation Services Provided Without License

Capricious: Company Being Investigated (In Part) For Not Having A License -- After Applying For One & Told By Regulator License Wasn't Needed For Its Business Model

March 22, 2024

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Reporting by Paul Ring • ring@energychoicematters.com

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The Connecticut PURA has opened an investigation of Arcadia Power, Inc. to, among other things, "review the operation of Arcadia, including its possible (1) operation as an electric supplier without a license, (2) operation as an aggregator without a certificate, (3) marketing to customers in a deceptive and misleading manner regarding the services it offered, (4) entering contracts with customers in a deceptive and misleading manner regarding the services it offered, and (4) failure to provide customers with services for which it charged."

PURA's Office of Education, Outreach, and Enforcement (EOE) had previously issued several letters to Arcadia seeking information about its operations in the state

EOE alleged, "Based on Arcadia’s replies, EOE has reason to believe that, at minimum, Arcadia sold a REC-only product to customers without the required electric supplier license. See General Statutes §§ 16-244c, 16-245, 16-245o."

EOE further alleged, "EOE has further reason to be concerned that Arcadia charged customers a monthly fee and either failed to provide a service for that fee or operated as an aggregator without a certificate."

EOE had said in one of its letters to Arcadia as follows: "The Office of Education, Outreach, and Enforcement (EOE) of the Connecticut Public Utilities Regulatory Authority (Authority) received an inquiry from a customer regarding services Arcadia Power was providing to him. It appears from the contract with Arcadia provided to EOE by the customer that Arcadia might be acting as an aggregator (representing the customer in securing supplier services), or as a clean energy options provider (procuring renewable energy credits (RECs) based on a customer’s electricity usage), or both. In 2022 [sic, ed. note: it is believed the referenced ruling was issued in 2023], the Authority issued a clarifying motion ruling in Docket No. 14- 07-20RE01 indicating that any entity representing a customer in securing electric supply is an aggregator and must register with the state of Connecticut. See Docket No. 14-07- 20RE01, Ruling on Motion No. 14 [sic]."

Relegated to only a mention in a footnote in one of EOE's letters, EOE did note that, "EOE is aware that in 2017 Arcadia applied to the Authority for an aggregator certificate and that docket (Docket No. 17-12-42) was closed based on Arcadia’s responses on its application."

Putting aside any potential obligation to register as a supplier to sell RECs, with regards to alleged violations based on potential operations as an "aggregator", the 2017 application of Arcadia referenced by EOE in fact shows the absurdity of PURA's recent re-definition of the long-standing statutory term aggregator.

In 2017, PURA informed Arcadia, in a directive closing Arcadia's application for an aggregator certificate without granting such sought certificate, of the following: "Pursuant to the General Statutes of Connecticut (Conn. Gen. Stat.) §16-1(a)(25), electric aggregator is defined as a person that 'gathers together electric customers for the purpose of negotiating the purchase of electric generation services from an electric supplier . . . provided such person . . . is not engaged in the purchase or resale of electric generation services, and provided further such customers contract for electric generation services directly with an electric supplier.' The Authority finds that the Company stated that it intends to operate as an energy broker/marketer and not as an aggregator as defined by the law. Application, Exhibit B-4. Specifically, the Company seeks to act as a broker, (i.e., an agent of the customers), monitoring electric supplier prices and switching customers to contracts with the lowest-priced supplier. Id. This activity does not meet the definition of an electric aggregator which is a person that 'gathers together electric customers for the purpose of negotiating the purchase of electric generation services from an electric supplier.' Conn. Gen. Stat. §16-1(a)(25). Therefore, the Company is not required to obtain an electric aggregator’s license." [emphasis added]

While the 2023 ruling expanding the definition of an aggregator has been stylized as a, "clarification", PURA's 2017 directive quoted above could not have been more clear on the issue, and the 2023 ruling is simply a re-definition of the term (which occurred in a motion ruling and not through a rulemaking or similar robust process), not a clarification

Note that, as it did similarly in several prior instances, not only does PURA's 2017 directive to Arcadia explicitly state that a concierge switching service does not meet the definition of aggregator, but it also implies that PURA acknowledged the existence of brokers as a distinct and acceptable entity in the marketplace, and specifically that brokers can act on behalf of customers (and not automatically be defined as agents of suppliers), given that PURA did not see fit to opine that Arcadia's proposed service -- "seeks to act as a broker, (i.e., an agent of the customers)" -- is inconsistent with Connecticut law or the state's marketplace

The 2017 directive to Arcadia was from PURA itself -- via its executive secretary in a signed document described as "Docket Closing Action Other Than Decision" -- and was not merely a Staff opinion without the force of law.

As previously reported, PURA has now taken the position that "brokers" do not exist in the Connecticut market due to the statute only defining suppliers and aggregators, and thus every entity interacting with the customer concerning a retail energy purchase must be licensed either as an aggregator (who may only act on the customer's behalf and may not be compensated by suppliers) or licensed as a retail supplier (or must be acting as the legal agent of one of those two entities).

Among other responses to EOE's initial letters, Arcadia has previously stated as follows:

Arcadia does not currently represent Connecticut customers in securing electric supply and/or contracts with electric suppliers.
Arcadia has not assisted customers in securing electric supply plans from licensed electric suppliers in Connecticut since April 2019, and the latest expiration date on any of those prior contracts was in 2021.
Arcadia does not currently act as an agent for suppliers in Connecticut.

Docket 24-03-04

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