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License revocation unwarranted, electricity supplier says

Hiko Energy denies violating laws or regulations.

By: Paul Muschick |

An electricity supplier in the crosshairs of Pennsylvania authorities over complaints about high prices says revoking its license would be heavy-handed under the circumstances because it is making amends by refunding customers.

Hiko Energy, of Monsey, N.Y., is the subject of two administrative complaints pending before the state Public Utility Commission.

The PUC’s investigative arm, the Bureau of Investigation and Enforcement, asked the commission last month to revoke Hiko’s license and order it to reimburse customers, many of them in the PPL service area, it says were overcharged. That complaint followed one filed in June by the state attorney general’s office and Office of Consumer Advocate. They sought similar penalties, alleging Hiko misled customers about how much they would pay.

I wrote recently about those complaints and told you that because Hiko couldn’t muster up the energy to return my calls, I’d have to wait for the supplier to file legal documents telling its side of the story.

Those documents were filed last week.

Hiko said in the paperwork that to the extent its prices didn’t follow its terms “for a limited period,” any non-conformance was due to “unforeseen and anomalous causes” beyond its control, including last winter’s polar vortex.

Hiko said it has reimbursed “a substantial number of customers” and is in the process of reimbursing others.

The Bureau of Investigation and Enforcement alleges Hiko overcharged customers 14,780 times between January and April. More than half of those overcharges, 8,059, were in the PPL service area. Another 1,637 were in the Met-Ed area and 1,598 in the PECO area.

The bureau contends Hiko broke a guarantee it made to those customers that they would pay less for electricity than if they had stayed customers of those geographic utility companies. Hiko advertised that for the first six months, rates would be at least 1 percent less than the utility’s rate, and as much as 7 percent less.

The bureau proposed a fine of $1,000 for each instance that a customer was overcharged, a total of $14.78 million. It’s the first time the bureau has sought to revoke an electricity supplier’s license due to customer-related issues.

That’s an oppressive request under the circumstances, Hiko said in the legal papers filed last week in which it denied violating any state law or utility commission regulations.

Even if it is determined that violations occurred, the requested penalties are “grossly disproportionate to said violation(s),” company attorney Ginene Lewis wrote.

Overall, she said, Hiko’s participation in Pennsylvania’s deregulated electricity market has benefited the public.

“Except for the limited time period caused by the difficulties of this past winter, Hiko has afforded savings to Pennsylvania customers,” she wrote.

Many homeowners lost faith in the deregulated market, where companies like Hiko compete with utility companies, after their variable rates doubled, tripled or quadrupled in just a month without warning last winter.

People got bills that were hundreds of dollars more than anticipated.

One point that Hiko and consumer protection authorities agree on is why that happened: power use rose dramatically as people cranked up the heat during the unbearable cold snap known as the “polar vortex.” The increasing demand drove up wholesale energy prices, which in turn forced companies like Hiko to pay more for power and then increase the higher variable rates they charged their customers.

Lewis said in the legal filings that because Hiko is refunding customers, the Public Utility Commission has no reason to order it to pay restitution, and doesn’t even have the authority to do so.

Hiko says the Bureau of Investigation and Enforcement’s complaint should be dismissed because it is duplicative of the complaint filed earlier by the attorney general and Office of Consumer Advocate.

“Allowing both actions to continue will waste resources of the commission and all parties involved, require needless duplication of effort and only serve to harass Hiko by forcing it to defend multiple lawsuits on the same cause of action at the same time,” Lewis wrote.

At the least, Hiko says, the cases should be consolidated.

That argument makes sense and I’m curious what an administrative law judge has to say about it.

Even more intriguing is Hiko’s argument that the Bureau of Investigation and Enforcement can’t allege Hiko’s customer disclosure statement violated PUC requirements because the commission had reviewed and approved the statement.

That sure seems like a valid point. If there was a problem with the statement, I would hope the commission wouldn’t have approved it.