State law requires utilities to refund 'recalculation fees'

Posted Thursday, August 20, 2015 4:18 am

PITTSFIELD — There's finally some relief for Berkshire County residents who were charged rate recalculation fees when they switched electric distribution companies in response to last winter's steep rate hikes.

A bipartisan budget amendment sponsored by state Sen. Benjamin B. Downing, D-Pittsfield, will require Eversource Energy and National Grid to send refunds or credits to consumers who found themselves in that situation when they switched companies between November and April.

Gov. Charlie Baker recently signed the measure into law. The Department of Public Utilities sent letters to Eversource and National Grid ordering them to issue the refunds or credits to consumers.

Those eligible for the refunds were charged rate recalculation fees between Nov. 1, 2014, and April 13 of this year. Both residential and small business customers are eligible.

Downing, who chairs the joint committee on telecommunications, utilities and energy, said Wednesday that he wasn't sure how many Berkshire residents are eligible for relief.

"At different times we were told it was between 2,000 and 5,000," he said. "It could be as high as $1 million of refunds at the most."

In April, MassLive reported state electric companies had billed nearly 200,000 customers $7.1 million in retroactive costs after customers switched electricity suppliers, and that most of those bills had come from Eversource, which was formerly known as the Western Massachusetts Electric Co.

Downing said he didn't know when Eversource and National Grid will be supplying the rebates to customers.

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"The DPU should be reaching out to people," Downing said. "I know they have a list of people who have reached out to them, and they're going to start reaching out to them as well. People should reach out to the DPU if they think they're eligible."

Eversource spokeswoman Priscilla Ress said the utility is still working with the DPU on the exact amount each rebate will cost and what mechanism is going to be utilized to send refunds back to the affected customers.

The utility is required to submit a plan to the DPU to resolve those issues by Sept. 14, Ress said.

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"At this point we don't have an exact number of customers eligible to receive the refund," she said in a statement. "We'll be following the newly enacted law by refunding customers affected by last winter's bill recalculations, just as we and other utilities followed existing law at the time we issued the recalculated bills."

State Rep. Tricia Farley Bouvier stressed that only Berkshire residents who were forced to pay retroactive fees for switching electric companies between the November to April time period are eligible for relief. Those who elected to stay with Eversource or National Grid and paid more for electricity because of last winter's 37 percent rate increase are not eligible for relief.

"If someone paid $700 for heat in February and stayed with Eversource, they're not in the category of people who are getting relief," the Pittsfield Democrat said. "It's a pretty finite group of people we're talking about."

The situation involving retroactive fees began when state and Berkshire residents began to switch electric distribution companies when the steep rate increase granted to state utilities for the winter of 2014-15 went into effect in November.

"People changed generally in response to solicitations from competitive suppliers," Downing said. "What hadn't been made abundantly clear was that under the existing law at that point they would not only be responsible for their new bill, but they would also be responsible for the energy that had been procured for them by the utility or competitive supplier that you're with.

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"You're leaving the utility bundle that you've been a part of and they're saying we paid X amount of energy for you for this six-month period, so you have to pay for the rest of that along with your existing bill," Downing said,

Downing said he believed the law that allowed utilities to charge customers retroactive fees for changing electric companies had been on the books since 1997, but had never been a major issue until last winter's steep rate hike went into effect.

"A hidden cost," Downing said, "yet under prior scenarios it generally wasn't large enough for people to notice or to feel the pain of ... Quite frankly, a lot of competitive suppliers saw that rate hike as an opportunity to poach customers, and they were not telling them about this. You had a confluence of events that led people to change midstream and be penalized without their knowledge.

"Theoretically, it doesn't sound like a horrible thing," Downing said, referring to the retroactive fees. "I can see a world where we didn't need the amendment if we had the upfront information provided to consumers so they knew."

Following negotiations with the Baker Administration, the DPU has eliminated rate calculation from occurring in the future.

"For a chunk of people who have been negatively severely impacted it's going to be a degree of relief," Downing said, referring to the rebate/credit program. "I also think we have the policy moving forward now to where people won't fall into this trap again."

Contact Tony Dobrowolski at 413-496-6224.