Retail Supplier Suggests That State Should "Standardize" Certain Terms of Service in Contracts

Champion Energy Services, LLC has suggested to the Public Utilities Commission of Ohio that PUCO should consider, "standardiz[ing] certain terms of service in CRES contracts for the residential and small commercial customer class," in order to avoid misleading and deceptive practices concerning pass-through clauses.

Champion said that the current Minimum Service Requirements for Competitive Service at Chapters 4901:1-21 and 4901:1-24 of the Ohio Administrative Code adequately address concerns over required disclosures.

"However, if the Commission deems it necessary to provide more specificity to ensure consumers are provided with adequate, accurate and understandable pricing terms and conditions of service; Champion would support uniformity and consistency as long as the complexities of the market are adequately examined before specific terms in CRES contracts are required," Champion said.

Champion noted that, "[i]n many well functioning energy markets, specific standardized contract terms are accepted and or required. Even within the wholesale electricity and natural gas markets many counterparties utilize standardized agreements; such as the International Swaps and Derivatives Association, otherwise referred to as an ISDA, along with the North American Energy Standards Board, or NAESB agreement. These standardized agreements allow for counterparties to easily transact in the energy market."

"The retail electric and natural gas market should not be any different. We see this today in the Texas retail electricity market where residential and Small non-residential customer terms of service are standardized. (Small non-residential customer is defined as a retail customer who had a peak demand in the previous 12-month period of less than 50 kW). As an example, the Public Utility Commission of Texas' Substantive Rule § 25.475, General Retail Electric Provider Requirements and Information Disclosures to Residential and Small Commercial Customers, requires retail suppliers to define many aspects of contract disclosures; including but not limited to, product definition with pre-approved and transparent verbiage by the Commission and rules surrounding changes in contract/price with necessary notifications. Champion believes standardization of contracts not only promotes clear terms but also creates a level playing field for all suppliers that allow identifiable and measured risks associated with serving retail load," Champion said.

"For this investigation, the Commission inquired whether fixed-rate CRES contracts with 'pass through' clauses are unfair, deceptive, misleading and/or unconscionable. Furthermore, whether those contracts have an adverse effect on the retail market, Champion believes the actions of some suppliers did have an adverse effect on the retail market; however, this is not to say 'pass through' clauses should be removed from CRES contracts. Champion believes the best approach to eliminate these misleading and deceptive practices from recurring in the future is to standardize certain terms of service in CRES contracts for the residential and small commercial customer class. Champion supports the use of 'pass through' clauses as a necessary risk mitigating component of the marketplace; as long as, these clauses occur due to a change of law that is clearly defined in the contract with standardized language. Therefore, Champion supports any attempt for the Public Utility Commission of Ohio to standardize residential and small customer contracts and or terms of service," Champion said.