Alternative energy provider must pay $9.50 to customers as penalty says NHPUC
The Public Utilities Commission has approved a settlement that will enable PNE Energy Supply to resume activity as an electric service provider, a little less than two months after the company's February default raised questions about protections for consumers in a competitive market for electricity.
The ruling comes with a warning to consumers that competition brings better pricing, but also poses certain risks.
PNE was providing electricity to about 8,500 customers signed up by broker Resident Power, when the price for natural gas briefly skyrocketed during the coldest days of January. Natural gas fuels most of the region's power plants, and the cost of energy on the wholesale market soared as well.
PNE could not meet its cash obligations to the Independent System Operator (ISO) of the New England power grid, and was suspended. The company was in the process of selling its customers to FairPoint Energy, but had only succeeded in getting 1,200 transferred to FairPoint before being suspended on Feb. 20.
Once PNE was suspended, the ISO had no choice but to transfer its customers to PSNH, the default provider.
That meant the remaining 7,300 customers, who thought they'd signed up with Resident Power, found themselves back with PSNH at rates about 2 cents higher per kilowatt hour because of the default of PNE, a company few of them had even heard of.
The PUC staff called for an investigation into the default and its impact on consumers. A hearing was scheduled for March 27, but the night before the PUC staff reached a settlement with PNE that was finally approved by the commission on April 15.
It calls for a one-time payment by PNE of $9.50 to all former customers placed on default service with PSNH, a penalty that will cost the company about $70,000. PNE has to establish a $100,000 escrow account, pending delivery of all the payments.
In addition, the company has to establish a $200,000 escrow account to protect against future default.
If consumers accept the $9.50, they would waive any claim against PNE or its broker, Resident Power, for damages resulting from the confusion over their electric supply.
The settlement was criticized by the commission's Office of Consumer Advocate and attorneys for PSNH, both of whom said consumers who were transferred to another provider without their knowledge or approval deserved more money. PSNH attorneys argued at the March 27 hearing that their company deserves compensation for costs it incurred dealing with the PNE default.
"We acknowledge that there is much work to be done in enhancing New Hampshire's new regulatory framework for competitive energy suppliers as the competitive retail electricity market continues to develop," the commissioners wrote in their ruling.
"That said, customers do bear a burden of due diligence in selecting a competitive supplier, with the understanding that such suppliers are subject to a much lighter regime of regulatory oversight and can, as recent events show, encounter financial difficulty."