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Regulator's Staff Proposes Specific Contract Language Requiring That Retail Suppliers Continue Service To Hardship Customers Under Capped Rate
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The Office of Education, Outreach, and Enforcement (EOE) of the Connecticut PURA has developed draft language which would require that retail electric suppliers must continue to serve hardship customers, under a capped, lower rate, when the customer's original contract rate exceeds the default service rate, rather than the supplier dropping the relevant customers to default service to ensure compliance with a statutory rate cap
However, as further discussed below, EOE recommends that PURA defer adoption of the proposed language pending a broader examination of potential limits or requirements for all retail supplier customer contracts, not only hardship customer contracts
Under Connecticut statute, contracts for hardship customers shall be at or below the standard service rate, "for the duration of the contracts." Currently, retail suppliers generally comply with the rate cap for hardship customers by dropping the customer, mid-contract if necessary, to default service when the supplier rate exceeds the default service rate (either due to a default service rate change, or the customer gains hardship status mid-contract)
As previously reported, EOE has generally taken the position that, rather than dropping hardship customers to default service when the supplier's rate exceeds the default service rate, retail suppliers should instead be required to continue service to hardship customers under the customer's existing contract, with the rate capped at the default service rate, and the original contract rate resuming if the default service rate later exceeds the original contract rate
In support of this position, EOE cited the following statutes:
General Statutes § 16-254o(m) states in part, "[A]ll customer contracts with electric suppliers, for rates effective on and after January 1, 2024, shall be at or below the standard service rate for the duration of the contracts."
General Statutes § 16-245r states in part, "No electric supplier shall decline to provide electric generation services to a customer for the sole reason that... the customer qualifies for hardship status under section 16-262c."
See more discussion of 16-245r, and any obligation for suppliers to serve hardship customers, in our prior story here
EOE said that the goal of its recommended language to be included in retail suppliers’ contracts, "is to allow hardship customers to stay with their third-party electric supplier for the term of their contract and to ensure the rate charged to the customer never exceeds the Standard Service Rate."
Below is the sample contract language proposed by EOE. EOE said that the bracketed terms should be modified by suppliers to include the defined terms used by the individual suppliers. "EOE understands that each supplier may have different company policies requiring the modification of certain items or additional language to be consistent with the remainder of the supplier’s contract; however, any modifications made should not alter the original intent of the language to allow hardship customers to remain with suppliers for the entirety of their contract and be charged the lesser of the contracted supply rate or the Standard Service Rate," EOE said
EOE's proposed language to be included in all supplier contracts is as follows:
"If you are currently a Hardship Customer or become a Hardship Customer during the term of this contract or any renewal thereof, [Supplier] is hereby authorized to change the [Supply Rate] and charge per kWh the [Eversource/UI] Standard Service Rate so long as the Standard Service Rate is less than the [Supply Rate]. At such time that the Standard Service Rate is no longer less than the [Supply Rate] or you are no longer a Hardship Customer you will return to the [Supply Rate].
"EOE also recommends that 'Hardship Customer' should be defined within suppliers’ contracts to include the standard set in applicable statutes, regulations, and Authority decisions. Finally, EOE recommends that the sample language above and the 'Hardship Customer' definition be included in the terms and conditions sent to residential customers," EOE said
"It may also be appropriate to include some notification to customers when these price changes are made," due to the requirements proposed by EOE described above, EOE said
EOE noted that a working group has examined various mechanisms for compliance with EOE's sought policy reflected in the above-quoted language. Some of the suggested solutions have included suppliers providing customers a credit for any amount paid over the Standard Service rate, supplier adjustment transactions, and bill ready billing.
EOE said, "Out of the different methodologies and solutions discussed, EOE believes that the EDCs should continue providing hardship information to suppliers so that suppliers have notification of which of their customers cannot be charged a rate greater than Standard Service."
EOE proposed that, "At such time that a customer is identified as a hardship customer and their contracted supply rate is greater than Standard Service or if a Standard Service Rate change is below the contracted supply rate, suppliers would submit an EDI transaction to change that customer’s supply rate. When the Standard Service rate changes in January and July, suppliers would submit an EDI transaction as soon as practicable after the Standard Service Rate is approved by the Authority. Supply rate changes would begin at the beginning of the customer’s next billing cycle. For example, if a customer’s billing cycle was from June 15th to July 15th and their contracted supply rate was higher than the Standard Service Rate beginning July 1st, the supplier would submit the EDI transaction at the new Standard Service Rate to begin on July 16th. The inverse is also true, if on the following January 1st the Standard Service Rate is now higher than the contracted supply rate, the supplier would submit an EDI transaction to return to the contracted supply rate beginning January 15th. EOE stresses that more information and further analysis is still required and reserves the right to change its opinion based upon any new information received."
"EOE also notes that this methodology would require an exemption, modifications, or clarifications of the Next Cycle Rate and Variable Rates requirements," currently applicable in the state, EOE said
While EOE proposed the above-described language and mechanism, EOE proposed that PURA defer ruling on the proposal, in light of PURA's broader review of potential limitations for all retail supplier offers and service
As previously reported, in the current proceeding, Phase 2 has examined issues related to hardship customers, while Phase 3 has been created to, "determine the 'appropriate limitations' with which all customer contracts with electric suppliers," must comply, under General Statutes § 16-245o(m).
As noted, General Statutes § 16-245o(m) states that, "all customer contracts with electric suppliers, for rates effective on and after January 1, 2024, shall be at or below the standard service rate for the duration of the contracts," and that, "The authority may initiate a docket to order all customer contracts with electric suppliers, entered into on and after a determined date, to comply with appropriate limitations the authority deems necessary."
However, as reported previously, stakeholders are not in agreement, due to the context of where the statutory provision in which the above-quoted language appears, on whether this language applies to all supplier contracts, or only contracts with hardship customers.
Given the potential for Phase 3 to require further changes in the retail electric market, including potentially EDC system changes, EOE proposed that PURA not adopt any changes under Phase 2, including deferring consideration of EOE's proposed language described above, which was filed in compliance with a recommendation deadline
EOE said, "EOE recommends that no changes be ordered or approved here due to the number of technical and decisional changes required to support General Statutes § 16-245o(m) and the sample contract language provided in this motion."
"Instead, EOE recommends the Authority defer ordering the recommended contract language changes until Phase 3 is complete. Any determinations made by the Authority at the end of Phase 3 may result in additional contract, IT, or billing changes that would likely alter how the changes discussed in this motion be implemented," EOE said
Docket 18-06-02RE02
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June 17, 2025
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Reporting by Paul Ring • ring@energychoicematters.com
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