Return of Polar Vortex and Regulatory Changes Remind Suppliers to Review Practices for Compliance
January 20, 2016
It has been two years since the Polar Vortex bore down upon much of the Northeast, sending energy prices skyrocketing. Since that time electric and gas suppliers have come under increasing scrutiny. Legislators and regulators in virtually all of the restructured states have either enacted or considered significant changes to the current supplier regulatory scheme. For example:
In New Jersey, the BPU entered an Order in September requiring suppliers to include a one page summary of key terms for residential contracts. At the beginning of January 2016, Governor Christie signed into law a package of three “consumer protection” bills that would require the BPU to provide direct links to electric and gas supplier pricing information; allow the BPU to establish shorter switching times between energy suppliers; and codify the BPU’s one page contract summary Order along with a few additional requirements (for example a Spanish language version).
In Ohio, the PUCO entered in November 2015, its “Fixed-Means-Fixed” Order, Case No. 14-568-EL-COI, banning pass-through charges in fixed-rate contracts. Specifically, the PUCO stated that, “in all CRES contracts, whether residential, commercial, or industrial, fixed should mean fixed.” Accordingly, the PUCO determined that, “on a going forward basis, CRES providers may not include a pass-through clause in a contract labeled as ‘fixed-rate.'” However, the PUCO will continue to permit narrowly defined “regulatory out” clauses in certain circumstances. The PUCO granted rehearing of the November 11 order for further consideration but did not stay its January 1, 2016 deadline “for all CRES providers to bring existing marketing materials into compliance with the Order.”
In Pennsylvania, the PUC responded to the Polar Vortex through regulations requiring EDCs to implement accelerated switching times of 3 business days for electric customers, and new supplier contract notice requirements to include key contractual terms. The PUC has since published press releases reminding customers of these changes and encouraging customers to evaluate electric and gas prices using its Power Switch website. In addition, complaints were filed by consumer advocates and the PA attorney general against some suppliers which, to date, have resulted in multi-million dollar settlements and civil penalties.
In Maryland, a final set of regulations addressing all aspects of consumer protection related to competitive energy supply will be issued and take effect in the near future. Final comments on the proposed rules were filed with the PSC on January 11, 2016 and a final hearing is set for February 10, 2016 at which time the PSC is expected to vote on the adoption of the new rules.
The Washington, D.C. PSC is also in the midst of a rulemaking as to competitive energy supply issues. While a workshop was held late in 2015, the rulemaking appears to be somewhat delayed in light of the DC PSC’s need to focus its attention on the pending request for approval of the merger between Exelon and Pepco.
Conditions and energy prices have significantly changed since the winter of 2014. The arrival of another Polar Vortex and frigid temperatures together with the changes outlined above, however, serve to remind suppliers to review their contracts, marketing, and advertising materials to ensure compliance with the laws and regulations in all of the states in which they operate.
As always, do not hesitate to reach out to any one of us for more information.
If you have any questions about the content of this post, please contact Grace Strom Power at gpower@eckertseamans.com or (609) 989-5008, or contact any of our Energy Group attorneys.