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Regulator's Staff Suggests Review Of Whether Incidental Residential Account Designation Should Be Terminated
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The Office of Education, Outreach, and Enforcement (EOE) of the Connecticut PURA has urged PURA to review whether the continued use of the Incidental Residential Account (IRA) designation is appropriate, as EOE also reiterated its prior positions concerning limitations which should be placed on retail supply
As previously reported, the Connecticut PURA recently invited further comments on any limitations which should be placed on service from retail suppliers to hardship customers
Statute allows PURA to impose "appropriate limitations", including price caps, on retail electric supplier service, though there is unresolved debate as to whether statutory language grants this authority with respect to retail supplier service to all customers, or only to hardship customers. See a discussion of the statutory language empowering PURA to impose "appropriate limitations" here
While the broader applicability of the statute remains an open question, Phase 2 of PURA's proceeding, addressing any appropriate limitations, is limited to addressing only hardship and similarly situated customers (generally including those qualifying for various utility assistance or similar programs)
In November, PURA invited supplemental comments by December 18, 2024, with reply comments due on January 9, 2025. No party filed substantive supplemental comments by December 18, 2024 (parties had filed various comments earlier in the proceeding). A deadline of January 9, 2025 was also established for "briefs".
EOE, in what it termed a brief, said that it may now be appropriate to reconsider the continued availability of the Incidental Residential Account designation, given the experience of IRAs.
Connecticut's specific definition of an IRA, per a PURA order, is, "an account that is assigned to an EDC residential
tariff but that is comingled among other accounts receiving generation supply from a licensed supplier under a business
contract."
EOE noted that utilities have reported IRA accounts which have been granted, by the EDCs, hardship status, which is reserved for residential customers
EOE said that, based on October 2024 data, IRA accounts served by retail suppliers were charged higher rates than the default service rate for 77% of the bills reported.
EOE said that "one" potential solution for ending IRAs could be requiring that any accounts with a residential service class, currently treated as an IRA, must be excluded from any non-residential contract, and must be separately contracted as a residential customer
In separate comments, the Connecticut Office of Consumer Counsel also supported ending the availability of IRA status
OCC countered the typical narrative that IRAs are "deans' houses" belonging to non-residential colleges, and the like. OCC cited discovery responses from suppliers which, in response to an interrogatory asking why specific accounts were designated as IRAs, suppliers responded that the customer selected a commercial rate or enrolled in a commercial product (with the suppliers not specifically further describing the nature of service or premise)
"The responses ... show that, contrary to that
narrative, IRAs are not deans’ houses. In fact, it appears that some suppliers do not even know
what an IRA is at all ... IRAs appear to simply be a residential account that
someone, possibly on purpose, possibly by accident, designated as a commercial account with
nothing to support the designation," OCC alleged
Turning to the question of service to hardship customers, EOE reiterated its position that was more fully discussed in our October 2023 story (full details here)
In brief, EOE argued that:
(1) Suppliers may not refuse service to hardship customers
(2) Suppliers may not drop hardship customers to default service if the supplier's contracted rate exceeds the default service rate (which may occur due to an SOS rate change OR because a supplier's customer newly receives hardship status after enrollment)
(3) If a hardship customer's rate exceeds the default service rate, the supplier must serve the customer at the lower default service rate, and, if the contracted rate later becomes cheaper than default service, the supplier must resume charging the customer the original contract rate
With regard to EOE's claim that retail suppliers are obligated to serve hardship customers, EOE again cites Conn. Gen. Stat. § 16-245r, as previously reported.
Conn. Gen. Stat. § 16-245r provides, "No electric supplier shall decline to provide electric generation services to a customer for the sole reason that the customer is located in an economically distressed geographic area or the customer qualifies for hardship status under section 16-262c." [emphasis added]
As previously observed by ECM (and later noted by suppliers themselves in filings), were a supplier to refuse service to a hardship customer due to EOE's proposal that the supplier shall serve the customer at a potentially money-losing rate (rather than dropping the customer to default service), it would appear reasonable to conclude that the supplier is not "solely" refusing service to the hardship customer due to the customer's hardship status, but rather due to a pricing limit ordered by statute and PURA
EOE's proposal could result in hardship customers being charged varying rates (the original contract rate, then potentially a lower capped rate equal to default service)
EOE claimed that such an outcome would not violate the statutory prohibition on variable rates
Among other things, EOE noted that PURA order, not statute, defines a fixed rate as a rate lasting at least 4 months, and that this definition could be changed to accommodate EOE's proposal on hardship pricing
During the proceeding, it was also determined that REC-only marketers are continuing to serve hardship customers under the state's Clean Energy Options (CEO) REC add-on program, which is billed through the EDCs
EOE and OCC, in separate comments, both cited a prior PURA decision which defined the CEO REC marketers as electric suppliers. Both EOE and OCC argued that CEO REC marketers may not serve hardship customers if the customer's total cost for generation (including CEO RECs) will exceed the cost under default service
Notably, the specific hardship statute only provides that PURA may, for hardship customers, "order all customer contracts with electric suppliers, entered into on and after a determined date, to be at or below the standard service rate." [emphasis added]. In contrast, statute does not provide that hardship customers shall not, for example, "be billed, for generation service, more than the standard service rate," or, "pay more than standard service."
While a hardship customer on default service who selects a CEO REC marketer will always have a total generation-related bill which is more than the default service rate (as the CEO product is an add-on service), it is unlikely that the REC marketer's actual contract with the hardship customer, which only reflects the costs of RECs, will be above the standard service rate
EOE does not address this specific "contract" language of the statute, instead focusing on the total bill paid by hardship customers
EOE said that, "a hardship customer on standard service
with a REC-only contract would inherently exceed the standard service rate and therefore
the REC-only costs should be dropped," though, ECM observes that in such case, the REC "contract" is unlikely to exceed the standard service rate
OCC does attempt to address the statutory language citing a "contract" for hardship customers. However, the relevant statute, as can be seen in OCC's quote below, refers only to "contracts" with "electric suppliers". Although the term electric supplier is not defined in statute, the term can be read as excluding the EDCs, which are specifically not required to be licensed as a supplier in connection with "provid[ing] electric generation services" under standard service (additionally, EDCs do not "contract" with customers unless a tariff is interpreted as a contract). As such, even under OCC's cited language, there would not appear to be statutory grounds, with respect to the specific hardship statute (more on this later), to prohibit CEO REC contracts to hardship customers on default service, provided that the rate under the REC contract itself does not exceed the standard service rate
OCC states, "The statute does not state that each contract with an electric
supplier should be at or below the standard service rate, but that all contracts with electric suppliers
should be at or below the standard service rate. This means that the customer should not pay more
in total to electric suppliers, generation or generation plus REC-only, than the customer would pay
for standard service." [emphasis by OCC]
Putting aside this specific hardship statutory authority, OCC suggested prohibiting hardship customers from contracting with a CEO REC marketer under any circumstance (even if the generation rate plus the REC rate is below default service, which could be the case if the customer is served on a lower retail supplier rate). OCC said that, even if the CEO REC customer is paying a total bill less than standard service, the voluntary REC add-on is causing the bill to be higher than it otherwise would be, which exhausts hardship funds, paid for by other ratepayers, at a quicker rate. Even if hardship funds are not used to offset the customer's REC add-on charges, a hardship customer electing a voluntary product resulting in a higher total bill may be seen as receiving a subsidy for such voluntary choice, because the customer's default service bill will be lower as a result of hardship funding, but, as demonstrated by the customer's ability to purchase a voluntary REC product, the customer could instead, rather than paying for RECs, pay more of their default service bill, thereby decreasing the reliance on hardship funds for the default service bill, OCC observed
While statute grants PURA specific authority concerning "appropriate limitations" noted above, even if such language does not support a prohibition on CEO REC contracts for hardship customers (due to the use of the term "contract" in the clause), PURA more broadly has authority to condition an electric supplier's license and the supplier's access to EDC systems and billing, "on terms the authority [PURA] determines to be just and reasonable." Thus, limits or prohibitions on CEO REC contracts for hardship customers could be adopted under this broader authority (with CEO REC marketers having already been defined as electric suppliers under PURA precedent and thus within the scope of this "just and reasonable" clause)
As noted above, no party filed substantive supplemental comments in December under the opportunity afforded by PURA.
However, in December, OCC filed a statement that OCC would address, in its brief due January 9, "conditions necessary" regarding the following: "hardship customers' contracts with REC-only suppliers, hardship customers being
part of incidental residential accounts, electric distribution company costs, and the content of supplier contracts."
The NRG Energy retail suppliers, in reply comments and a brief, called OCC's December filing procedurally improper to the extent OCC proposes any new conditions in OCC's January 9 brief (which OCC did, largely relating to CEO RECs and IRAs, with OCC also reiterating OCC's previously filed prior positions on retail supplier contracts)
NRG said that OCC reserving any newly proposed conditions for OCC's January 9 brief, "flies in the face of the Authority’s specific request
that such conditions be set forth in comments to be filed by December 18, 2024."
NRG said that other parties will not have an opportunity to respond to any OCC proposals raised for the first time in OCC's January 9 brief, which NRG said is contrary to, "principles of
fundamental fairness."
"[T]he NRG Retail Companies request that the Authority reject
any potential conditions proposed by the OCC and refrain from imposing any further
conditions on electric supplier contracts with residential hardship customers," NRG said
Docket 18-06-02RE02
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Staff Again Seeks To Require Retail Suppliers To Serve Customers Below Cost, Says Suppliers Can't Refuse Service To Customers Now Subject To Price Cap
January 10, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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