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Pennsylvania AG Settles With Electric Supplier For $2.3M

Pennsylvania Attorney General (AG) Kathleen Kane has announced a proposed $2.3 million settlement with the retail and wholesale electric generation supplier Pennsylvania Gas & Electric (PaG&E) to resolve consumer complaints that the company deceptively marketed its variable electric rates during the brutal cold of winter 2013-2014.

If approved by administrative law judges and the state Public Utility Commission, the settlement would come in addition to $4.5 million that the company -- also known as Energy Services Providers Inc. -- has already paid to consumers eligible for refunds.

Winter 2013-2014 was one of the nation's coldest in decades, and it sent demand for natural gas to record-setting heights and forced price spikes that left power generators scrambling for gas and found grid operators left to fill any voids and direct electricity as they could. The winter also prompted concerns about adequate infrastructure in some parts of the country and stoked FERC to issue a proposal that would, among other things, shake-up the gas day by starting it earlier to allow power generators in four time zones an opportunity to enter the morning demand period with fresh gas nominations (see Daily GPI, March 20, 2014).

Kane, who announced the settlement with the state's independent Office of Consumer Advocate, which represents customers in utility matters, had said last year that her office had received "hundreds of calls and complaints from consumers regarding unexpected and dramatic spikes in the cost of their electricity." At the time, such consumers were urged to submit complaints as quickly as possible so the AG could act.

PaG&E has not commented on the settlement, which would also require a civil penalty of $25,000 and a $100,000 contribution to an electric distribution hardship fund.

The settlement came after a legal action filed by the AG's consumer protection bureau and the Office of Consumer Advocate. It would impose an 18-month moratorium on PaG&E's selling of variable rates, which allow consumer bills to change month to month based on fluctuations in the market. The company would be required to offer fixed-rate plans for terms longer than six months.

The deal is the first to resolve similar complaints against four other electric generation suppliers that are still be considered, including those against IDT Energy, Respond Power, Hiko Energy and Blue Pilot Energy.

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