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Retail Suppliers Seek Clarification On Treatment Of Variable Rate Customers Whose Contracts Do Not Include Contract End Dates, & Incidental Residential Accounts, As Price Cap Effective Date Looms
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With the effective date for retail energy price caps in Maryland less than 6 weeks away, retail energy suppliers have sought clarification from the Maryland PSC on two issues which are not currently subject to a specific review by the PSC in various SB 1 implementation proceedings
Among other things, SB1 caps non-green residential retail energy rates at the trailing 12–month default service rate, for contracts newly signed or renewed after Dec. 31, 2024
SB 1 provides that, "a presently existing obligation or contract right may not be impaired in any way by this Act."
A group of retail supplier parties -- consisting of the Retail Energy Supply Association, NRG Energy, and CleanChoice Energy (the Supplier Coalition) -- asked the PSC to clarify how the rate cap provision will be applied to variable rate customers whose contracts do not have a specific end date, in light of SB1's clause that the bill's relevant provisions shall not "impair" an existing "obligation or contract".
The retail suppliers said that the relevant variable rate contracts, while containing a rate which may change monthly, are not "month to month" contracts -- the agreements do not expire at the end of the month, nor is there any specific end date under which a supplier's obligation to serve the customer is terminated
As there is no contract end date, continued service by suppliers to customers under these variable rate agreements are not renewals, suppliers argued, who sought PSC confirmation of such
However, to the extent the PSC were to find that such contracts are renewed on a monthly basis, and thus subject to the price cap, the suppliers sought confirmation that the customer's rate going forward must be one of SB1's allowable rates -- either the capped rate described above, or a green product rate which may exceed the SOS rate under a variety of limits and PSC approvals as previously reported at length by ECM.
If the variable rate contracts must be changed, the suppliers asked that suppliers be allowed to use the renewal notice required under statute at § 7-510(d)(2)(iii) and § 7-604.2(b)(2(ii), which would allow the suppliers, upon the prescribed notice to the customer, to modify the products without obtaining the customer’s affirmative consent to the change
The Supplier Coalition also asked that the PSC confirm that accounts generally known as incidental residential accounts will be treated as non-residential accounts, and will not be subject to SB1's residential provisions, such as the rate cap
The suppliers said of these incidental residential accounts: "The utility has coded these accounts as residential, but they are served under a commercial customer name, on a commercial contract, and support the business of the commercial customer. These are clearly commercial accounts, and it has always been accepted that these accounts, which are essentially miscoded as residential, could be included in commercial account pricing."
Suppliers cited examples of IRAs as including schools, colleges, churches, mental health facilities, cemeteries, resorts, landscaping companies, marinas, yacht clubs, real estate companies, and lumber companies.
The suppliers said that SB1 was stated by its sponsors to not impact the commercial market. Applying the SB1 rate caps and other residential provisions to incidental residential accounts would be contrary to this stated intent, the suppliers said
The Supplier Coalition noted in its November 20 letter to the PSC that suppliers still do not know how they will be able to bill residential customers starting January 1, 2025, as this "threshold" question remains outstanding (the issue largely being: how a continuation of POR would be implemented for grandfathered POR customers while implementing SB1's ban on POR for new & renewed residential customers; and would any mandatory dual billing be required as a result, see background here)
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November 20, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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