The Pennsylvania Public Utility Commission (PUC) voted on December 3 to order Monsey, New York-based retail supplier HIKO Energy to issue $2 million in customer refunds, pay a $1.8 million civil penalty, contribute $25,000 to electric distribution companies’ (EDCs’) Hardship Funds, and modify its marketing practices as a result of its deceptive actions following the Polar Vortex in the winter of 2013-2014.
The sanctions relate to two formal complaint cases – one filed by the Office of the Attorney General (Docket No. C-2014-2427652) and the Office of the Consumer Advocate; and the other by the PUC’s independent Bureau of Investigation and Enforcement (Docket No. C-2014-2431410). The cases were not consolidated, but were decided concurrently, in compliance with the Initial Decisions.
In their complaint, the Offices of the Attorney General (OAG) and of the Consumer Advocate (OCA), “averred numerous counts against HIKO, including … misleading and deceptive promises of savings, lack of good faith handling of complaints, and [failure] to provide accurate pricing information. Likewise, the Bureau of Investigation and Enforcement alleged that “HIKO billed customers a rate in excess of the discounted introductory rate that was guaranteed at the time of enrollment. [We] calculated that HIKO issued 14,689 invoices that did not conform to the company’s promise of guaranteed savings.”
“The commission has and will continue to work diligently to foster a robust retail energy market in Pennsylvania. This mission requires the PUC not only to properly design the market, but also to effectively monitor and enforce the market,” said Chairman Gladys M. Brown, adding, “This outcome today serves as a reminder to the retail supply industry that the commission will not hesitate to take action against bad actors. More importantly, I hope these proceedings provide some consolation to all utility customers that the commission will always work tirelessly for their protection.”
OAG, OCA Case Settlement
The commission voted 5-0 to accept an Initial Decision approving a Joint Petition for Settlement between HIKO, OAG and OCA. OAG and OCA filed a joint formal complaint against HIKO on June 20, 2014, which alleged, among other things, that the company misled customers with deceptive promises of savings; engaged in “slamming,” or the unauthorized enrollment of a customer; mishandled customer complaints; failed to provide rate information and accurate pricing information; charged different prices than listed in customer disclosure statements; and failed to comply with the Telemarketer Registration Act.
The settlement directs the following actions by the company:
- Provide refunds to customers enrolled in HIKO’s 1-percent to 7-percent guaranteed savings plan during January, February, and March 2014;
- Provide refunds to customers who were on variable-rate plans during January, February, and March 2014, distributed based on customer usage;
- Contribute $25,000 to EDCs’ Hardship Funds; and
- Make numerous modifications to its business practices related to product offerings, third-party verifications, disclosure statements, training, compliance monitoring, reporting, and customer service.
The total refund pool amounts to $2,025,383.85 – which excludes the $159,320.15 that the company previously and voluntarily paid in cash refunds.
HIKO customers who were on variable-rate plans in January, February, or March 2014 will be contacted directly by a third-party settlement administrator, if they qualify for a refund. The refunds will be based on consumers’ usage, the price they were charged during that time period, and their plan. Refunds already received will be a factor in any additional refunds. Consumers with questions about the HIKO settlement may contact the Bureau of Consumer Protection at 1-800-441-2555.
I&E Case Settlement
The commission also voted 5-0 to approve an Initial Decision resolving the formal complaint filed by the Bureau of Investigation and Enforcement (I&E) against HIKO on July 11, 2014. The complaint alleged that during January through April 2014, the company billed customers variable rates in excess of the discounted introductory rate, which was guaranteed at the time of enrollment to provide customers savings of 1 to 7 percent over the EDC’s PTC for the first six months.
The order directs HIKO to pay a civil penalty of $1,836,125 – a $125 penalty for each of 14,689 occurrences of overbilling.
I&E is the independent enforcement arm of the PUC. To satisfy due process of law under the Pennsylvania Constitution, separation is required between staff involved in investigatory and prosecutory functions and the commissioners involved in decision making. As a result, the commissioners can examine each case with an unbiased perspective.
HIKO has been the focus of similar complaints in New Jersey and New York.