The Pennsylvania Public Utility Commission (PUC) has voted unanimously to order New York-based electric generation provider Hiko Energy LLC to pay customer refunds of $2 million and a $1.8 million civil penalty for deceptive marketing practices and overbilling during the brutally cold winter of 2013-2014.
It is the third settlement of its kind for Hiko this year, which was accused of similar practices in New York and New Jersey. The company has not commented about any of the settlements. It also provides natural gas services.
The sanctions come after two formal complaints that were filed by the Pennsylvania Attorney General's (AG) office and the PUC's Bureau of Investigation and Enforcement (I&E). The AG and I&E filed a joint complaint against Hiko last year. They alleged, among other things, that the company misled customers with deceptive promises of savings; engaged in unauthorized customer enrollment; mishandled customer complaints; charged different prices than listed in disclosures, and failed to comply with the state's Telemarketer Registration Act, the PUC said.
"The commission has and will continue to work diligently to foster a robust retail energy market in Pennsylvania," said Chairman Gladys Brown. "This mission requires the PUC not only to properly design the market, but also to effectively monitor and enforce the market. This outcome...serves as a reminder to the retail supply industry that the commission will not hesitate to take action against bad actors."
A refund pool of more than $2 million has been established, excluding $159,320 that Hiko has already voluntarily paid. The refunds would be based on consumers' usage, the price they were charged during the time period and their plan. The order also involves the I&E's claim that the company overbilled customers 14,689 times and requires Hiko to pay a more than $1.8 million civil penalty based on those occurrences.
Pennsylvania Attorney General Kathleen Kane received hundreds of calls and complaints from consumers regarding "unexpected and dramatic spikes in the cost of their electricity" over the winter, her office said in 2014. The AG ultimately filed legal action against IDT Energy Inc., Pennsylvania Gas & Electric (PaG&E), Blue Pilot Energy, Resolve Power and Hiko. Earlier this year, the AG's office said it had reached a $2.4 million settlement with IDT and a $2.3 million settlement with PaG&E, which both included civil penalties (see Daily GPI, Aug. 10; March 27). Those settlements must be approved by the PUC and others are still pending.
Winter 2013-2014 was one of the nation's coldest in decades. 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.
Earlier this year, Hiko said it would pay New Jersey $2.1 million to settle a lawsuit related to deceptive practices. A similar $1.25 million restitution program was established in New York for Hiko customers over the same claims.