PUC Increases Fine (To $122,000) On Retail Supplier From Lower Amount In Settlement With Staff -- EnergyChoiceMatters.com

PUC Increases Fine (To $122,000) On Retail Supplier From Lower Amount In Settlement With Staff

PUC Cites "Particularly Troubling" Alleged Practice Of What PUC Alleged Were, "Unconscionably High Variable Rates" Not Based On Market Conditions

PUC Also Imposes Product Limits, Orders Re-rates

August 23, 2023

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Reporting by Paul Ring • ring@energychoicematters.com

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The PUC of Ohio has modified a settlement between SmartEnergy Holdings, LLC (SmartEnergy or the "Company") and PUCO Staff under which SmartEnergy had agreed to a forfeiture of $85,000

The PUC ordered that the forfeiture shall instead be $122,000, and the PUC also imposed limits on SmartEnergy's product offerings (discussed further below)

The settlement, which had been exclusively first reported by EnergyChoiceMatters.com, had addressed alleged violations related to a SmartEnergy mailer promoting a $100 rebate offer, as well as other allegations related to SmartEnergy's general marketing and business.

Among other things, Staff had also alleged that, "SmartEnergy charged customers variable rates that were unconscionably high, some as much as $0.299/kW."

Staff had alleged, "During review, Staff could find no evidence that these rate increases were based on any actual market conditions. In addition, the contract does not include 'A clear and understandable explanation of the factors that will cause the price to vary,' as is required under Ohio Adm.Code 4901:1-21-12(B)(7)(c) and Ohio Adm.Code 4901:1-29-11(J)(2)."

SmartEnergy provided the following statement concerning the matter:

"We acknowledge the concerns raised by the Public Utilities Commission of Ohio (PUCO). Our primary commitment has always been to serve our valued customers transparently, responsibly, and ethically.
"The fundamental principle of energy choice is to offer consumers an alternative to their public utility. The nature of energy choice is that we can sometimes provide a better price than the utility and other times where their price may be better. When commodity prices fall, retailers like us can price favorably compared to the local public utility. Conversely, when commodity prices rise, it becomes challenging for retailers to provide competitive rates.
"The global energy market experienced unprecedented disruptions due to geopolitical events during the period in question. These global disruptions resulted in an unforeseen and significant escalation in electricity costs. As an industry, we faced financial constraints, and the rates we charged as a company, albeit briefly, were in alignment with our contractual terms. These unprecedented external factors drove the cost of electricity well above the then current Price-to-Compare in Ohio and were what necessitated our rates.
"We value the guidance and oversight of the PUCO. We will remain focused on providing our customers with reliable, transparent, and fairly priced energy options."
--- Statement from SmartEnergy

See background on the allegations and the terms of the original stipulation in our two stories linked below:

May 31, 2023 Story

June 2, 2023 story

In an order on the stipulation, PUCO said, "After reviewing the Stipulation, as well as other filings in this proceeding, we are not persuaded that the Stipulation, as currently presented, provides a just and reasonable resolution of the issues raised."

In the order, PUCO stated, "Particularly troubling of the various practices identified in the PNC [notice of probably non-compliance] was SmartEnergy’s offering of unconscionably high variable rates that Staff claims were not 'based on any actual market conditions' and were included in contracts lacking a 'clear and understandable explanation of the factors that will cause the price to vary,' as required by Ohio Adm.Code 4901:1-21-12(B) and 4901:1-29-11(J)(2)."

PUCO further said, "As recently noted by Commissioner [Lawrence] Friedeman, '[h]ealthy and effective competition should allow for profit potential but should also introduce price discipline into the market. We can expect competitors’ prices to differ, but the price points among the supplier prices should fall within some reasonable range and should not include excessive or outlier prices. If a competitive supplier’s commodity price manifests a lack of self-discipline in regard to price determination, then I believe this Commission could appropriately consider whether it is appropriate, within its discretion to discipline the competitive supplier’s market behavior.'"

"As such, the Commission accepts in part and modifies in part the Stipulation under its consideration," PUCO said

PUCO ordered that SmartEnergy shall pay a $122,000 forfeiture, which is the amount originally proposed by Staff prior to entering into the stipulation

Further, PUCO ordered that SmartEnergy shall be limited to solely offering fixed-rate contracts for a period of 24 months, unless otherwise ordered by this Commission

In addition, the Commission ordered that any fixed-rate contract renewed during this 24-month period, even if renewed on a month-to-month basis, must comply with the notice requirements set forth in Ohio Adm.Code 4901:1-21-11(F)(2).

PUCO also ordered SmartEnergy to re-rate, to then-applicable price to compare, all customers who were charged the $0.299 per kWh rate noted in Staff's allegations, adjusted for any prior rebates provided by SmartEnergy to re-rated customers pursuant to the provisions of the stipulation

As PUCO modified the stipulation, the stipulation provides that parties may elect to apply for rehearing of PUCO's order

Case 23-601-EL-UNC / 23-0601-EL-UNC

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