NY Assemblyman Targets Retail Gas Marketer
New York Assemblyman Robin L. Schimminger is trying to convince
the state to open an investigation into the bankruptcy of Iroquois
Energy Management LLC, which left approximately 19,000 residential
natural gas customers with an estimated $1.8 million out-of-pocket
loss due to non-refunded pre-payments.
"It appears as though many of these individuals made their
payments in August, approximately 60 days before Iroquois Energy
filed its bankruptcy request," said Assemblyman Schimminger in his
letter to State Attorney General Elliot Spitzer last week.
In October, National Fuel Gas Distribution Corp., the host of
the choice program which serves eight counties in Western New York,
announced it would take over serving Iroquois Energy Management's
residential customers after the marketer reported that it would no
longer serve them on the National Fuel System. Iroquois, at the
time said it would continue to serve its commercial and industrial
customers. On Oct. 23, National Fuel was forced to cut Iroquois
from its choice program after the company had gone three days
without fulfilling its commercial and industrial customers' gas
supply needs. Then on Oct. 31, Hamburg, NY-based Iroquois filed for
"Iroquois had structured a contractual arrangement where
customers might achieve a greater level of savings if they were
willing to enter into a contract where they were pre-paying on a
quarterly, semiannually, and in some cases on an annual basis,"
said Julie Coppola Cox, spokeswoman for National Fuel Gas. "So when
the accounts were finalized, there were customers that had prepaid
into the time frame after they [Iroquois] had filed for bankruptcy.
There are monies that are now part of this bankruptcy that are owed
to customers. Strong indications now are that they probably won't
see their refunds."
Schimminger said, "Newspaper accounts indicate that the company
[Iroquois] has essentially ceased operations and does not have
enough assets that can be converted into the cash needed to pay off
more than a small portion of its debts." To add insult to injury,
Schimminger said these customers, which had prepaid Iroquois, still
have to find a way to pay their current heating costs with their
The assemblyman asked Spitzer to look into the timeline of
Iroquois' decline. Specifically, When did Iroquois know it was in
financial trouble? Was it appropriate to accept prepayments in
August? And why were prepaid monies not held in escrow?
Coppola Cox said that National Fuel Distribution had 67,637
residential customers participating in its choice program as of
Oct. 1. On Nov. 1, after the Iroquois default, there were 49,931
participants, which represents a good bit of the 19,000 customers
shifting back to the utility. She said numbers are already coming
back up. "In December we saw a bit of an increase; we are back up
to 50,354," she said.
The spokeswoman said their choice program performed as expected.
"We were able to move these customers from the marketer to the
utility without interruption in service, and give the customers the
opportunity to determine what their next move would be without the
concern of having gas available to them," said Coppola Cox.
"Customers, without having to do anything, were notified that their
gas service was still intact, and going forward they had the
opportunity to choose from any other approved marketer."