Dave Solomon's Gettin' Down to Business: Electricity market is a mess
A lawsuit triggered by the December default of People's Power and Gas offers an inside look at the machinations of the competitive market for selling electricity in New Hampshire, and it isn't a pretty picture.
The unregulated market, in which various suppliers compete for commercial and residential business, has been a fact of life in New Hampshire for nearly two years now.
The most recent "customer migration" report provided by Public Service of New Hampshire shows that 96,323 of the utility's 425,829 residential customers now buy energy from an unregulated energy supply company.
Those customers purchase power from someone other than PSNH, even though it still has to be delivered along PSNH power lines and the bill still comes from PSNH. About half of a consumer's electric bill is for power supply, the other half for delivery, taxes and surcharges.
It's taken a while for New Hampshire consumers to understand the complexities of purchasing such a vital commodity on the open market, and many still don't quite grasp that there are very few, if any, protections beyond a guarantee that electric service will never be disrupted.
If a supplier goes out of business or gets kicked out of the wholesale energy market for failing to pay its bills with the grid operators, its customers will get transferred immediately to the regulated utility for energy supply.
It's happened twice already in 2013, the first full year of aggressive competition for residential customers.
Power New England, based in New Hampshire, defaulted in February. People's Power and Gas, based in Florida, defaulted in December. Both crashed under the weight of soaring natural gas prices in the dead of winter.
State regulators were quite active in the PNE default, ordering hearings, freezing the company's security bond, threatening to revoke its license, and even coming up with payments PNE had to make to customers for the disruption. PNE eventually made good with the grid operator, ISO-New England; paid more than $50,000 to customers affected by the default; and is back in the energy market.
People's Power and Gas disappeared in December, but before doing so, hit some of its 5,200 customers in the state with power charges that were at least double and in some cases three times what PSNH and other regulated utilities were charging. Those customers on average paid anywhere from $300 to $700 more in electricity over a two- or three-month period than they needed to, and there's little chance that they'll see any compensation.
The PUC is not going after People's Power and Gas with the same vigor it pursued Power New England. PPG is still listed as a supplier on the PUC website even though the company notified regulators by letter on March 7 that it is abandoning the New Hampshire market.
Resident Power, the Manchester-based broker that delivered 5,200 customers to People's Power and Gas, has sued the company and obtained a court order freezing customer payments held by PSNH and a bond held by ISO-NE.
Bart Fromuth, president of Resident Power, said he hasn't heard from PPG in months, despite repeated attempts and the lawsuit, filed on Feb. 4, seeking $70,000 for commissions owed and other damages.
"We have yet to be contacted by anyone representing People's Power since filing this suit and attaching their accounts," Fromuth said. "There is a potential this could result in a default judgment."
But what about the customers?
Fromuth said his company does not have legal standing to go to court on behalf of electricity consumers. That, he says, is the PUC's domain.
"We filed complaints with the PUC twice," he said, "and the PUC refuses to intervene in the matter." The complaints accuse PPG of price gouging and violation of several PUC rules or regulations.
"PPG offered guaranteed introductory rates to our customers and never followed through," Fromuth said. "We're still battling to get refunds to our customers, and have been successful in some instance, but without any help from the PUC."
In a letter to Fromuth on Feb. 25, PUC Executive Director Debra Howland wrote that circumstances were very different in the two defaults, and "cannot form the basis of any comparison."
The PNE default, and suspension occurred while the company was in the middle of attempting to transfer its customers to another supplier, at a particular rate and within a particular time-frame, which did not happen, she wrote.
"Resident Power has not marshaled its facts to demonstrate that PPG violated any particular commission rule," the letter states.
Howland notes that the commission is explicitly prohibited by state law from regulating prices charged by unregulated suppliers.
With each turn of events, consumers are learning more about how to navigate the competitive market for electricity. One of the key lessons is this: Venture out of the regulated market and you are on your own.
You could end up with a reputable company that offers a good fixed rate and lets you know well ahead of time when your contract is going to expire and what your options are. Or you could end up with a company like PPG.
The PUC might intervene on your behalf, and then again, it might not.
Dave Solomon's column is published each Thursday. Write to him at firstname.lastname@example.org.