Draft Order Would Fine Retail Supplier $121,000, Require Compensation To Utilities, Over Alleged "Back-Billing"

A proposed Connecticut PURA decision would impose a $121,000 civil penalty on Liberty Power Holdings, LLC (Liberty), and place Liberty Power Holdings, LLC on a probationary period, for what the proposed order would conclude constituted impermissible "back-billing" by the company.

The proposed decision is not final and Liberty may file exceptions to the proposal. Liberty told EnergyChoiceMatters.com that PURA, "continues to err in its recitation of facts and legal interpretations," and that the company will challenge the proposed decision (full statement below).

As stated in the proposed decision, "In February 2014, Liberty discovered that its commercial customers whose fixed term contracts had expired at various times during 2013 had continued to be billed at their expired contracts’ fixed price instead of a variable price pursuant to their contract terms and conditions of service (Default Variable Price). Pursuant to the contracts, during calendar year 2013 and January 2014, electric service with Liberty would migrate to a Default Variable Price unless the customer cancelled or renewed service at a different price. According to Liberty, internal technical problems caused transmission failure of price changes and dates to Eversource. As a result, all of these commercial customers continued to be billed, incorrectly, at fixed prices beyond the expiration date of their fixed rate contract."

The proposed decision further states, "Liberty discovered these problems in February 2014, and took steps to back-bill some customers. Liberty calculated the difference between the fixed rates actually billed and the correct variable, monthly rates, multiplied that by the customer’s monthly usage and added necessary taxes to determine the amount each customer owed to Liberty, resulting in the total back charges to collect for each customer. Liberty then estimated each customer’s March 2014 usage and divided the total amount owed from each customer by the customer’s forecasted March usage. Liberty then added the calculated back-bill amount per kWh to the actual variable rate per kWh for the billing cycle in March 2014 to arrive at the total rate per kWh that it needed to collect the correct back-billing charges."

According to the proposed decision, Liberty limited the corrections to a three-month period, December 13, 2013 through March 14, 2014, though for some customers the incorrect rates had been in effect for a longer period.

The proposed decision states that, "On March 28, 2014, Liberty submitted the back-billing rates to Eversource through the Electronic Data Interchange (EDI) system for 294 commercial accounts."

The proposed decision states that while CL&P communicated concerns about the rates to Liberty, "It was not until the [PURA} draft Decision [concerning this issue] was issued that Liberty decided to terminate the back-billing plan."

"On April 4, 2014, several electronic correspondences were sent between Eversource and Liberty’s legal representatives. After consideration, Liberty instructed Eversource to cancel any bills that had already been issued," the proposed order states

According to the proposed decision, a total of 121 customer bills were actually generated and issued to Liberty customers with the rates which sought to correct the prior erroneous rates. However, no payment was collected from any of these customers as a result of the cancellation of the bills.

The proposed decision cites Conn. Gen. Stat. §16-259a as providing in pertinent parts:

(a) No ... electric supplier, which inaccurately bills a retail customer for service may bill or otherwise hold the customer financially liable for more than one year after the customer receives such service, unless the customer, either alone or with an individual other than an employee of the company, by an affirmative act, is responsible for the inaccurate billing or fails to provide for reasonable access to the premises where the company’s meter is located by an employee of the company during business hours for the purpose of reading the meter ...

(d) Any ... electric supplier ... that holds a customer financially liable under subsection (a), (b) or (c) of this section shall establish a payment plan which prorates all arrearages for service the customer owes over a period of time that is no shorter than the period for which the customer is being held financially liable by such … electric supplier ... The payment plan shall provide that no payment charged to a customer under such plan shall exceed fifty percent of the average amount that the company charged such customer for each billing period over the previous twelve-month period for services received during that period ...

"Subsection (d) of Conn. Gen. Stat. §16-259a requires any electric supplier 'that holds a customer financially liable' under subsection (a) to establish a payment plan which prorates all arrearages for service the customer owes," the proposed decision would conclude

The proposed order would conclude that, "Liberty was required to establish a payment plan that (1) shall prorate all arrearages over a period of time that is no shorter than the period for which the customer is being held financially liable, and (2) shall not exceed fifty percent of the average amount that Liberty had billed the customer over the previous twelve month period. Instead of establishing a payment plan for each customer, Liberty submitted rates that required the customers to pay the entire accumulated back charges in one billing statement."

The proposed decision would dismiss Liberty's argument that the payment plan requirements under subsection (d) of Conn. Gen. Stat. §16-259a were not triggered since the bills were cancelled before they became due or were paid

The proposed decision would conclude, "that Liberty Power Holdings, LLC violated Conn. Gen. Stat. §16-259a by back-billing customers without establishing a payment plan as required by that statute," and would assess a civil penalty in the amount of $1,000 for each of the 121 bills that were generated and issued to customers, for a total of $121,000.

"Additionally, Liberty is required to reimburse Eversource and UI for all expenses caused by, or related to, Liberty’s back-billing action. Reimbursements shall be calculated in accordance with Eversource’s and UI’s tariffs and/or Electric Supplier Services Agreement effective January 1, 2016," the proposed decision would provide

"Further, the Authority finds that, in addition to violating Conn. Gen. Stat. §16-259a, Liberty’s back-billing also violated the terms of its own contracts with the customers. By including the back-billing rates and necessary taxes in the rate to be billed, Liberty altered the definition of 'Rate' as stated in its contracts without the express consent of, or notice to, the customers, in violation of Conn. Gen. Stat. §16-245o(h)(8)," the proposed decision would provide

The proposed order quotes Liberty's contract as providing, "For the purposes of this Agreement, Rate means the energy price, including congestion, capacity, ancillary services, losses, Auction Revenue Rights ('ARR'), Renewable Portfolio Standards ('RPS') compliance costs, generation and any other miscellaneous charges (including, but not limited to, ISO/RTO or DPUC fees). The Price does not include taxes ..."

"The back-billed rates that Liberty charged 294 commercial accounts on March 28, 2014, contained components that were outside of the 'energy price, including congestion, capacity, ancillary services, losses, Auction Revenue Rights ('ARR'), Renewable Portfolio Standards ('RPS') compliance costs, generation and any other miscellaneous charges (including, but not limited to, ISO/RTO or DPUC fees)' as defined by the terms of its contracts," the proposed decision would conclude

The proposed decision would provide that, "Liberty’s act of issuing bills using Rates that contain arrearages is also deemed an unfair and deceptive trade practices in violation of CUTPA [Connecticut Unfair Trade Practices Act]. Pursuant to Conn. Gen. Stat. §16-245u, the Authority will transmit its findings to the office of the Attorney General and the Department of Consumer Protection."

The proposed decision would also provide that, "the Authority finds that Liberty’s violations of Conn. Gen. Stat. §§16-259a and 16-245o(h)(8) call into question its technical and managerial capabilities to operate as an electric supplier in Connecticut."

"Accordingly, the Authority places Liberty on a probationary period for one year from the date of this final Decision. Any violations of consumer protection laws within this probationary period will result in actions by the Authority to suspend or revoke Liberty’s electric supplier license," the proposed decision would provide

"Liberty will need to prove to the Authority that the Company is capable of operating within the laws and regulations necessary to retain its license privileges in Connecticut," the proposed decision would provide

Liberty Power provided the following statement to EnergyChoiceMatters.com:

"Liberty Power is very disappointed with the Proposed Final Decision issued by the Connecticut Public Utilities Regulatory Authority (PURA). Liberty Power believes that PURA continues to err in its recitation of facts and legal interpretations and that the proposed penalty and other actions against Liberty Power are completely inappropriate and disregard the realities of the case. Accordingly, Liberty Power plans to vigorously defend its actions and challenge the Proposed Decision."

Docket No. 06-12-07RE05