One of five Pennsylvania electricity suppliers charged with deceptive practices after last year's round of wild winter price spikes has agreed to pay nearly $2 million in refunds and penalties.
HIKO Energy L.L.C., a New York state supplier, agreed to the payments in a settlement with Attorney General Kathleen G. Kane and acting Consumer Advocate Tanya J. McCloskey. HIKO also agreed to cease accepting any new Pennsylvania customers through June 30, 2016, and to change its marketing practices to fully disclose the risks of variable-rate electricity plans.
The settlement, all but $25,000 of which is devoted to customer refunds, is similar to one that HIKO made in January in New Jersey, where it agreed to pay $2.1 million, including $1.8 million in consumer restitution, to settle claims of deceptive practices.
HIKO's agreement is the second proposed settlement in Pennsylvania arising from last year's polar vortex, when wholesale electricity markets spiked because of temporary fuel shortages, causing some customers' monthly bills to soar by as much as 400 percent.
Energy Services Providers Inc., which does business as Pennsylvania Gas & Electric (PaG&E), agreed in March to refund $2.3 million.
The Pennsylvania Public Utility Commission must approve the settlements. Actions against three other suppliers - Blue Pilot Energy L.L.C., IDT Energy Inc., and Respond Power L.L.C. - remain in litigation.
The exact number of customers affected by the settlements was not disclosed. Kane spokesman Jeffrey A. Johnson called it "a substantial number of people who extend across the state." A third-party settlement administrator will contact customers directly if they qualify for a refund.
The torrent of outrage last winter over price spikes sparked legislative hearings in multiple states and tightening of regulatory oversight.
The torrent of bad publicity also stalled competitive electricity markets, which had grown steadily during the previous three years. In Pennsylvania, the number of customers enrolled by third-party suppliers has declined by 122,701, or 5.6 percent, in the last 12 months. About 2.1 million, or 36.3 percent of Pennsylvania customers, are signed up with suppliers, compared with 38.4 percent last year.
Peco, the Philadelphia utility, is among the few Pennsylvania electric utilities that reported a slight increase in customers last year, to 553,655 of its 1.6 million customers.
In states with electric choice, customers can pick a competitive supplier to generate power, often at a discount to the "default rate" provided by incumbent utilities. Regardless of the supplier, customers still must pay a distribution charge to their local utility to deliver the power over its wires.