Does fixed mean fixed? The PUCO stays its fixed-means-fixed guidelines


On September 28, 2017, the Public Utilities Commission of Ohio (PUCO) stayed its “fixed-mean-fixed” guidelines, which have been a source of contention for some parties involved in the competitive retail electric service industry in Ohio. The PUCO determined that the issue of labeling retail electric service contracts “fixed,” “variable” or “introductory” should be addressed in the PUCO’s upcoming rulemaking cases. This presents yet another chapter in a story that originated as a “polar vortex charge” issue but eventually grew into a potentially significant revamping of how competitive retail electric service (CRES) providers market contracts to customers in Ohio.

Following the winter of 2014, the PUCO received complaints from customers that CRES providers were charging customers for costs related to the polar vortex despite the fact that these customers had fixed-rate contracts. Although other CRES providers may have attempted to pass through polar vortex charges to customers, the majority of the complaints related to FirstEnergy Solutions’ (FES) actions. Because of these complaints, the PUCO began to investigate whether CRES providers should be allowed to pass through similar charges in either fixed-rate contracts or variable-rate contracts that guarantee a certain percentage off of the standard service offer rate.

On November 18, 2015, the PUCO held that CRES providers cannot include pass-through clauses in contracts labeled as “fixed-rate” contracts. (See Finding and Order from November 18, 2015.)  The PUCO stated that CRES providers could continue to offer products containing pass-through provisions but held that contracts containing pass-through provisions must be labeled as “variable” or “introductory rate” contracts. The PUCO stated that fixed-rate contracts could contain “regulatory-out clauses,” which allow suppliers to revise the terms of fixed-rate contracts under a limited set of circumstances, such as a change in regulation. However, the PUCO held that regulatory-out clauses must be clearly and conspicuously stated in the contract and that the customer must affirmatively consent to the new terms and conditions before being subject to these changes.  

After various parties filed applications for rehearing regarding the November 18, 2015, Finding and Order, the PUCO clarified that its fixed-means-fixed guidelines did not apply to mercantile customers. Mercantile customers are commercial or industrial customers that consume more than 700,000 kilowatt hours per year or are part of a national account involving multiple facilities in one or more states. RC 4928.01(A)(19).

Some parties argued that the fixed-means-fixed guidelines should have been addressed within the context of a formal rulemaking proceeding rather than a PUCO-initiated investigation. Although the PUCO initially rejected these arguments, it eventually changed course. In its September 27, 2017, Fourth Entry on Rehearing, the PUCO concluded that addressing the fixed-means-fixed guidelines in a rulemaking proceeding would “reduce potential disruptions to the competitive retail electric service market.” Rather than taking a “piecemeal approach,” the PUCO decided to address the fixed-mean-fixed guidelines “during a complete review and reform of all CRES standards.” Therefore, the PUCO stayed its fixed-means-fixed guidelines.

The PUCO workshop regarding potential revisions to the CRES rules takes place on October 3, 2017. Involvement in this rulemaking proceeding will be important for CRES providers and customer groups that were closely involved in the fixed-means-fixed investigation. 

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