Tel: 804.864.1100

Tel: 804.864.1100

Retail Electric Competition

Electric Utility Regulation Plain and Simple

As the 2018 General Assembly heats up, we expect energy issues to be front and center once again. That’s one of the reasons we just published Principles of Electric Utility Regulation in Virginia, a guidebook designed to provide a plain-English explanation of some of the state laws regulating Virginia’s two largest monopoly electric utilities.

Do you have questions about the role of the State Corporation Commission in setting rates? Wonder why you’re not getting a refund from your electric utility this year? Curious about whether energy companies are incentivized to invest in clean energy? This booklet answers these questions and provides a starting place for exploring Virginia’s complex regulatory system.

We hope this document will be a useful tool for legislators and their staff, the media, and all citizens who want to gain a better understanding of energy policy in Virginia. The link at the top will get you the electronic version immediately. If you would prefer your copy be a printed one, just contact any of our Virginia energy lawyers.

Delaware Adopts New Consumer Protection Rules for Electricity Sales

The Delaware Public Service Commission has approved new Electric Supplier Rules for final publication in the April 1, 2017 edition of the Delaware Register. The rules will become canstockphoto17677884effective April 11, 2017.

The new rules replace Delaware’s existing Electric Supplier Rules and introduce numerous provisions that affect virtually everything that retail suppliers do – including not only obtaining a license but also marketing electricity and enrolling new customers.  In fashioning the new rules, the stakeholders looked primarily to Maryland’s and Pennsylvania’s recently-revised rules, and then tailored them to Delaware.  Retail suppliers will be required to make additional upfront disclosures in marketing and contract documents, and provide specific training for their agents. The rules directly address telemarketing and door-to-door sales and add requirements that do not exist today. As an example, for door-to-door sales, a supplier will be required to obtain a wet or electronic signature and also to perform a third-party verification. The rules also have a new definition and requirements for third-party verifications.

Our firm was very involved in negotiating the new rules and arguing non-consensus items before the Commission. If you’re a retail supplier eyeing Delaware as a new service territory, or if you’re already serving in Delaware, please feel free to call our energy lawyers with any questions.

 

Delaware Arguments Are Covered at EnergyChoiceMatters.com

We’re grateful for the coverage EnergyChoiceMatters.com put out yesterday about the staff-suggested changes to proposed Delaware rules that the Retail Energy Suppliers Association and the Division of Public Advocate (DPA) worked out earlier this year. We think are these changes in the proposed rules are market killers because of their supplier and consumer requirements. You can read their complete coverage here. The Delaware Commission posted pictures of the meeting here.

If you have any questions or concerns about the Delaware rules or any energy regulation matter in the mid-Atlantic, simply contact one of our energy lawyers.

Will Virginia’s “Rate Freeze Law” Stand? The $280 million (Per Year) Question.

The Supreme Court of Virginia Building, adjace...

The Supreme Court of Virginia Building, adjacent to Capitol Square in Richmond, Virginia (Photo credit: Wikipedia)

A group of industrial customers of Dominion Virginia Power (“Dominion”) recently asked the Supreme Court of Virginia to strike a controversial portion of the Virginia Electric Utility Regulation Act (“Regulation Act”). The group, the Virginia Committee for Fair Utility Rates (“Committee”), is challenging a 2015 amendment to the Regulation Act, Senate Bill 1349, which limits the state’s ability to regulate the electric rates of monopoly public utilities. The so-called “rate freeze law” prevents the State Corporation Commission (“SCC” or “Commission”) from reviewing or reducing the base rates of Dominion and Appalachian Power Company through at least 2022. If the Supreme Court strikes the law, it could mean a significant rate reduction for Dominion’s customers – to the tune of approximately $280 million per year. See our previous information about this topic here.

The rate freeze law is controversial because it prevents the Commission from reducing Dominion’s rates, even though the SCC has previously found that the monopoly utility’s rates are too high and are producing excess profits for Dominion’s shareholders. In its 2013 review of Dominion’s rates, the Commission found that Dominion’s current base rates are set at a level that will produce excess profits of approximately $280 million each year. The Committee’s appeal seeks to overturn the rate freeze law, which would presumably allow the SCC to lower Dominion’s rates substantially. The Committee has argued that if Dominion’s rates remain unchanged through 2022, Dominion’s shareholders will reap excess profits of “well over a billion dollars.”

The challenge was triggered by an SCC order late last year that applied the rate freeze law for the first time. In its Final Order in Dominion’s 2015 Biennial Review rate case, SCC Case No. PUE-2015-00027, a 2-1 majority of the Commission applied SB 1349 as written and declined to adjust Dominion’s base rates or set a new rate of return on equity for the company. Commissioner Dimitri, however, filed a dissenting opinion, stating that the rate freeze law violates Article IX of the Constitution of Virginia because it limits the SCC’s authority to regulate monopoly electric utilities such as Dominion.

The legal arguments advanced by the Committee are also based on Article IX of the Constitution of Virginia, which establishes the powers and duties of the SCC. Article IX, Section 2 provides that “Subject to such criteria and other requirements as may be prescribed by law, the Commission shall have the power and be charged with the duty of regulating the rates, charges, and services … of electric companies.” According to the Committee, therefore, the Commission’s authority to regulate electric rates is subject only to “criteria” and “other requirements” that may established by the General Assembly. By taking the authority to regulate electric rates away from the SCC, the Committee has argued, the rate freeze law runs afoul of Article IX.

Opening briefs in this case (Supreme Court Record No. 160453) are due June 3, and oral arguments are likely to be held during the Supreme Court’s fall term.

If you have any questions about any of the legal aspects of this case or its potential to affect the electric rates paid by Dominion’s customers, do not hesitate to contact one of GreeneHurlocker’s Virginia energy and regulatory attorneys.

MA Legislators Pass Compromise on Net-Metering, Reimbursement Rates

The Massachusetts State-house in Boston, Massa...

The Massachusetts State-house in Boston, Massachusetts (Photo credit: Wikipedia)

This week, the Massachusetts legislature reached an end to the solar impasse that existed in the Commonwealth, when the Massachusetts House of Representatives and Senate struck a deal regarding the net metering cap and reimbursement rates.  Specifically, the legislation will:

  • Lift the cap on solar net metering by three percent (3%) for both public and private solar projects; and
  • Decrease the reimbursement rate paid by utilities to most solar energy producers by 40%.  (This decrease in rates, however, does not apply to government and municipality owned projects, residential and small commercial projects – which will all still receive the full retail rate.)

The legislation also authorizes distribution companies to submit to the Massachusetts Department of Energy Resources (“DOER”) proposals for a “monthly minimum reliability contribution” to be included on electric bills for solar-producing customers.  DOER then has the authority to approve a monthly minimum reliability contribution that meets certain enumerated factors.  The bill explains that any such contributions “shall ensure that all distribution company customers contribute to the fixed costs of ensuring the reliability, proper maintenance and safety of the electric distribution system.”  DOER is prohibited, however, from approving a proposal for a monthly minimum reliability contribution, until after the aggregate nameplate capacity of installed solar generating facilities in Massachusetts is equal to or greater than 1,600 MW.  DOER was given the authority by the legislature to exempt or modify any such contributions for low-income ratepayers.

While the legislation serves as a temporary solution to the net metering problem in Massachusetts, stakeholders, however, predict the cap will likely be reached by the end of 2016.

The attorneys at GreeneHurlocker will continue to monitor the legislative landscape in Massachusetts as many of our clients are currently pursuing solar projects in the Commonwealth of Massachusetts.If you have any questions about this legislation or other isses related to renewable energy and regulation, contact any of our solar energy lawyers.

Revised Consumer Protection Rules Advancing in Maryland

In early October, 2015, the Maryland Public Service Commission approved for publication in the Maryland Register revised consumer protection rules applicable to the marketing and sale of electricity and natural gas by licensed retail suppliers. The Commission’s approval comes after more than a year of stakeholder working group meetings as well as legislative-style hearings that occurred in February, September, and October 2015.  GreeneHurlocker’s lawyers have been involved in these proceedings since day one, and we have previously blogged about them here and here.

Among the many new provisions, the revised Rules require utilities to process a customer’s request to switch electricity providers within three business days, and they require retail suppliers to make additional up-front pricing disclosures in the contracts they offer to prospective customers. The revised Rules also include entire new sections relating to retail suppliers’ relationships with their agents who solicit customers on their behalf.

It is anticipated that the revised Rules will be published in the Maryland Register by the end of 2015 although there is no definite timetable.  Once published, interested persons will have 30 days to submit comments to the Commission. After that, the Commission will hold a hearing to vote on whether the revised Rules should be approved and, if approved, they will appear in the Maryland Register as final.  The Commission stated at its October 2015 meeting that the revised Rules will become effective once they are final, and any utility or retail supplier that cannot comply will be expected to seek a waiver from the Commission.

Our firm is participating in these Maryland proceedings, representing the Retail Energy Supply Association.

New Consumer Protection Regulations Progress

A few months ago we blogged about the Maryland Public Service Commission’s review of proposed revisions to the Maryland consumer protection regulations. These regulations govern the interplay between retail electricity and natural gas suppliers and potential and current customers. The Commission had set a hearing in June. After the filing of a new set of revised regulations, the Commission postponed the hearing until September 10-11. The “new and improved” revised regulations address, among many other issues, how and when a supplier must notify their customers of price changes, how quickly a customer may switch service between their utility and/or suppliers, and various issues impacting marketing and enrollments.

The District of Columbia Public Service Commission is reviewing its consumer protection regulations, called the Consumer Bill of Rights (CBORs). Recently, the Commission took comments on proposed revisions, and hosted a “technical conference” to discuss the stakeholders’ proposals. Stakeholders have been encouraged to discuss various issues going forward and try to reach consensus. It is anticipated that there will be a stakeholder filing in September, and the Commission at that point can issue another set of revised rules for comment or, if it so chooses, adopt the version currently before it.

Our firm is participating in both the Maryland and DC proceedings, representing the Retail Energy Supply Association.

Virginia Commission Schedules Dominion Solar Facility Application

English: Virginia State Corporation Commission...

On Friday February 20th, the Virginia State Corporation Commission (SCC) issued a procedural schedule to review Dominion Virginia Power’s application seeking SCC approval to construct a 20 MW solar electric generating facility in Fauquier County, Virginia.  In addition to seeking approval to construct the facility, Dominion is also seeking approval of a rider to recover the costs of the solar facility, including the distribution facilities necessary to interconnect the facility to the Dominion electric system.

The SCC has set a hearing for this matter on July 16, 2015.  Any parties interested in participating in this proceeding must file a notice of participation with the SCC on or before May 4, 2015.

Our firm has been following this matter since its announcement, and if you have any questions or would like to discuss, please contact any of our renewable energy or utility regulation lawyers.

 

 

Energy Regulators Reviewing Consumer Protection Rules

In restructured energy markets,consumer protection regulations are being hotly contested. Many of these markets are in the northeast, and suppliers and customers in them are subject to key rules under which suppliers must operate  when marketing their products and enrolling customers. Public service commissions in Maryland, Delaware and the District of Columbia are reviewing their respective rules and have allowed stakeholders to submit comments.

We’re watching these debates on rules with interest for our clients in the energy industry. The salient issues are outlined in this post at LinkedIn:  https://lnkd.in/dvDTWCn.

If you have questions or concerns about this process or about energy market regulation in the Mid-Atlantic, please contact one of our utility regulation lawyers.

Retail Suppliers Beware! Seven Lessons Learned from Starion Energy’s Record-Setting Fine in Maryland, Part 1

This is the first in a two-part series highlighting “Lessons Learned” from the Maryland Public Service Commission’s recent ruling penalizing Starion Energy PA, Inc. for violating various consumer protection laws in Maryland  While these lessons may seem elementary to most retail electricity suppliers, bad actors exist and are finding themselves in trouble with the law.  When that happens, the reputations of fine retail suppliers in the energy market, and the restructured industry in general, are damaged.  As lawyers representing retail providers , we recognize the vast majority of retail electricity suppliers do their best to adhere to applicable laws.  We hope that this series will assist retail  electricity and, for that matter, natural gas, sellers in Maryland  to comply with  state laws and allow them to better serve Maryland customers.

The Maryland Public Service Commission recently imposed its harshest penalty to date on a retail supplier.  In Order No. 86211, the Commission found that Starion Energy, PA, Inc. had committed hundreds of violations of applicable statutes and regulations.  For instance, Starion (1) violated the Maryland Door-to-Door Sales Act by not providing customers with contracts that contain the required language in that Act; (2) engaged in an ongoing pattern of regularly switching customers to Starion service without the customer’s permission, and of employing false and misleading statements to solicit new customers; and (3) actively marketed within Southern Maryland Electric Cooperative’s (SMECO’s) service territory and to Pepco’s commercial customers without a license for a period of approximately six months and continued to operate in SMECO’s territory on a passive basis despite being fully aware that it lacked the necessary license.  For all this (and more), the Commission fined Starion $350,000 and imposed other restrictions and compliance requirements.

The underlying thread connecting all of Starion’s violations was lack of oversight and control over its sales and marketing representatives during a time of what Starion termed as rapid and unexpected customer growth in the Maryland retail electricity market.  The Commission ruled that rapid growth does not mitigate a supplier’s obligations to comply with applicable regulations and found that Starion had committed more than a hundred customer protection violations.

Starion entered the Maryland electricity market in 2010, after receiving a $70,000 penalty from the Connecticut Department of Public Utilities for allegations that included slamming.  The Commission was aware of the Connecticut proceeding but issued the license based on an affidavit from Starion’s CEO that Starion would adhere to all applicable Maryland regulations.  Starion apparently hit the Maryland ground running, signing up more customers than its customer service personnel could handle.  Although the Order does not reveal Starion’s customer count, Starion relied heavily on door-to-door and telemarketing to solicit new customers.  Most of the violations occurred in the SMECO territory; in fact, SMECO contended that it began receiving complaints as soon as Starion and SMECO completed their EDI testing.

Lesson One:  Retail Suppliers Are Responsible for the Acts of Their Marketing Agents.

Starion contracted both directly with independent representatives and indirectly through vendors that contracted with other independent representatives on behalf of Starion. While this kind of marketing structure is not unique or impermissible in Maryland, such an attenuated sales force structure requires thoughtful and diligent compliance training and ongoing monitoring. As the Starion story shows, outsourcing door-to-door marketing, and telemarketing for that matter, does not insulate a supplier from the risks and penalties for failure to comply with applicable state and federal statutes and regulations.

Starion, like the retail suppliers in prior cases involving alleged consumer protection violations, did not dispute that it was responsible for the conduct of its marketing vendors and their contractors.  When marketing agents make false or misleading claims to customers, those claims are imputed to the retail supplier they represent. The Commission’s decision in Starion reiterated this view.

Lesson Two:  To Guard Against Slamming Allegations, Retail Suppliers Should Obtain the Customer’s Permission to Switch Before Requesting the Customer’s Utility Account Number.

The Commission found that its Office of External Relations (OER) had received 122 complaints relating to allegations of slamming by Starion.  The customers who complained to SMECO repeatedly stated that the Starion representative attempted to obtain their SMECO account number prior to the customer agreeing to switch service (or at times even before the customers fully understood the nature of the call).  While the Commission did not explicitly say so, it seems that the best practice would be for the retail supplier to have the customer affirmatively state that he or she desires to switch electricity service.  Only then should the retail supplier attempt to obtain the customer’s utility account number.

Lesson Three:  Retail Suppliers Should Fully Disclose Terms and Conditions of Service Regarding Variable Rates.

Starion offered a variable rate product in Maryland, probably similar to variable rates offered by other suppliers in Maryland and beyond. When Starion experienced rising costs in the northeast, it raised its prices throughout its footprint, including a “significant increase” for its Maryland customers even though the reason for the increase stemmed from areas beyond Maryland and PJM.  According to Starion, this price increase resulted in many customer lodging complaints with the Commission.  While the Commission did not find any consumer protection violation resulting from Starion’s spreading the cost over its entire footprint, it did express concern “that Maryland customers may not be fully informed that their variable rate may be calculated based upon market prices across such a wide geographic area. Starion has an obligation to clearly disclose the terms of its service to its Maryland customers.”

Check back soon for Part Two of this series.

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