Liberty Power Files Complaint Over Application of Minimum Stay at Pepco

Liberty Power Corporation has filed a complaint with the District of Columbia PSC regarding the application of the SOS minimum stay rule to a non-residential customer, as Liberty sought an order from the PSC directing Pepco to enroll the customer with Liberty, among other relief.

The complaint concerns the National Presbyterian Church, which Liberty won the right to serve via competitive bid on March 2, 2011. The contract called for Liberty to begin service on the meter read date of July 2011 or the next available meter read date occurring as soon as possible after it.

National Presbyterian Church had previously been supplied by Washington Gas Energy Services.

Liberty said that in a letter dated May 21, 2011, Pepco notified National Presbyterian Church that, effective June 30, 2011, WGES would no longer be National Presbyterian Church's electric supplier.

Although not noted by Liberty in its complaint, this is because WGES had submitted a drop request for the account.

In the May 24 letter, Pepco informed National Presbyterian Church that National Presbyterian Church would begin receiving Pepco SOS for 12 months unless National Presbyterian Church switched to another supplier by June 12, 2011, or registered for Pepco's Market Price Service by June 12, 2011.

Liberty said, "Neither NPC [National Presbyterian Church], nor Liberty received a copy of this letter notification."

On June 15, 2011, Liberty requested enrollment of National Presbyterian Church's two accounts beginning in July 2011.

On June 17, 2011, Pepco notified Liberty that the National Presbyterian Church accounts were not eligible for enrollment, providing no further explanation, according to Liberty.

On July 8, in response to Liberty inquiries, Pepco informed Liberty that National Presbyterian Church was required to have selected a supplier or selected Market Price Service by June 13, 2011 to avoid triggering the 12-month SOS minimum stay.

Pepco's enrollment timeline requires 17 days notice for a switch to be effective on the next meter read. The two meter read dates at issue were June 30, 2011 and July 1, 2011, for each of two National Presbyterian Church accounts, respectively. As the Liberty enrollment was submitted only 15 days before the meter read, the customer was required to return to SOS effective June 30 and July 1 for each account. Simply put, with WGES submitting a drop request for the account, and the new enrollment not meeting the enrollment deadline, there was no alternative but to place the customer on SOS for at least one month, which triggered the minimum stay.

To avoid such problems, Pepco's procedures for enrollments states that submission of an 814e-Enrollment Transaction to Pepco to reflect the customer's choice of supplier, "should be completed as soon as possible after," the supplier obtains consent to submit such an enrollment.

Liberty's argument hinges on an interpretation of Pepco's tariff regarding customer termination of a competitive electricity supplier and switch to another competitive electricity supplier.

Specifically, Liberty noted that this section of the tariff provides, "When transferring from one competitive electricity supplier to another competitive electricity supplier, if the Company receives notice of an enrollment transaction from a competitive electricity supplier no less than seventeen (17) days before the Customer's next regularly scheduled meter read date, the Company shall transfer the Customer on the Customer's next regularly scheduled meter read date. If the notice of a Customer's enrollment from a competitive electricity supplier provides less than seventeen (17) days notice before the Customer's next regularly scheduled meter read date, the transfer date shall be the second regularly scheduled meter read date after the date of the notice."

Liberty argues that the last sentence of this section, in cases where the enrollment notice misses the first available meter read, requires Pepco to complete the switch to the new competitive provider on the second regularly scheduled meter read date after the date of the notice, regardless of the status of the account.

However, such an interpretation hinges on categorizing the National Presbyterian Church as a switch from one competitive provider to another, rather than from SOS to a competitive provider. At the time Liberty's enrollment request was sent, National Presbyterian Church was served by a competitive provider; however, due to the drop by its previous supplier, and Liberty's failure to meet the 17-day enrollment window to execute the switch on the next available meter read coincident with such drop, by the time Liberty's enrollment request would be executed, National Presbyterian Church would no longer be served by a competitive supplier, and instead would be served under SOS.

The tariff clearly does not contemplate situations where an incumbent supplier drops the account and the newly selected supplier, due to the enrollment deadline, fails to enroll the customer coincident to that drop resulting in an unintended and undesired return to SOS, and the issue appears to be one of first impression.

Aside from arguing that Pepco's tariff required Pepco to switch the accounts to Liberty on the second regularly scheduled meter read date after the submission of the enrollments, Liberty alleged that, "by switching NPC to Pepco's SOS despite NPC's application of enrollment with Liberty, Pepco violated Section 107(c) of the Act, which provides that, 'unless the customer consents, a market participant may not change a customer's electricity supplier.'"

If Liberty's interpretation were upheld, it would set a dangerous precedent in the market that would require suppliers to indefinitely serve customers, even after expiration of a contract. "Pepco did not obtain NPC's consent to switch to Pepco's SOS," Liberty said, essentially arguing that Pepco could not rely on a WGES drop request to switch the customer to SOS [indeed, even apart from this fundamental need for suppliers to be able to cease service to customers at the end of a contract term, the customer may have, in any event, explicitly consented to a drop at WGES' election as part of the original WGES contract, in which case consent for the change to SOS was provided; Liberty offers no evidence that WGES lacked consent for the drop]

In any event, if Pepco were required to obtain customer consent to switch a customer to SOS, suppliers would be compelled to serve customers, even after the end of a customer agreement, until the customer affirmatively elected SOS or another supplier.

More helpful to its case is Liberty's argument that, "there is no legitimate policy reason to require NPC to return to Pepco's SOS, given that NPC's clear intent was (and continues to be) to take service from Liberty."

Although the minimum stay is designed to decrease volatility in SOS load for SOS providers, Liberty noted that the return of the customer to SOS resulted from an inadvertent timing mismatch in enrollment. Moreover, although not specifically addressed by Liberty, the return to SOS was not the result of gaming either, as it was not intended to occur.

Liberty said that the application of the minimum stay in this instance would be, "harmful to the development of a robust competitive market."

Aside from seeking an order directing Pepco to enroll the customer with Liberty, Liberty is also seeking compensation from Pepco.

Liberty said that for the months of July, August, September and part of October, National Presbyterian Church paid $78,000 for SOS. Under the Liberty contract, National Presbyterian Church would have paid Liberty approximately $26,000 less than what was paid under SOS. Liberty has reimbursed National Presbyterian Church for these costs in excess of Liberty's rates. Liberty is seeking a PSC order directing Pepco to compensate Liberty for such compensation paid to National Presbyterian Church.