Fixed Means Fixed

newsletterarticlefixedmeansfixedheader

 

In March 2014, the Public Utility Commission of Ohio (PUCO) became aware that electric suppliers have been including pass-through clauses in their supply agreements. Such clauses allow the supplier to pass through to the customer cost changes for certain events. A prime example was FirstEnergy’s RTO charges that were passed-through, even on fixed price contracts.
As a result, there were concerns that permitting pass-through clauses in a fixed rate contract confuses customers. This contract language made it difficult for consumers to compare other fixed rate offers that didn’t contain such clauses.
As we have advised customers forever, lowest price should not be your sole deciding factor. One needs to know what the contract language is telling you.
Remember the BIG print giveth and the SMALL print taketh.

After hearing all the supporting arguments to include or exclude pass-through language, the PUCO has come to the conclusion that all electric supplier contracts, whether residential, commercial or industrial, “fixed” should mean “fixed”. As such, supplier contracts going forward, may not include a pass-through clause in a contract labeled as “FIXED RATE”.

This does not eliminate suppliers from continuing to offer products that contain pass-through provisions, it just means they must alter the contract label to “variable or introductory rates”

The PUCO recognizes that regulatory out clauses are included in supplier contracts as a means to pass-through charges that they have no control over. The PUCO believes these clauses should be available in very limited circumstances and clearly spelled out in plain language.

Moving forward under the new fixed means fixed guidelines, if the supplier wants to revise its pricing, they must inform the customer by proposing a new contract price. If the customer agrees to the revised pricing, the contract remains in place under the current contracted terms.

However, if the customer would “reject” the revised agreement, the customer would be permitted to pursue default service or other supply offerings without being subject to penalties.

These changes are intended for any new contracts and the PUCO noted that this order makes no ruling with respect to existing contracts.

 

The implementation for the PUCO finding, suppliers shall have until January 1, 2016 to bring all contracts into compliance with the “fixed means fixed” guidelines.

 

Fixed Means Fixed