New York Assemblyman Robin L. Schimminger is trying to convincethe state to open an investigation into the bankruptcy of IroquoisEnergy Management LLC, which left approximately 19,000 residentialnatural gas customers with an estimated $1.8 million out-of-pocketloss due to non-refunded pre-payments.

“It appears as though many of these individuals made theirpayments in August, approximately 60 days before Iroquois Energyfiled its bankruptcy request,” said Assemblyman Schimminger in hisletter to State Attorney General Elliot Spitzer last week.

In October, National Fuel Gas Distribution Corp., the host ofthe choice program which serves eight counties in Western New York,announced it would take over serving Iroquois Energy Management’sresidential customers after the marketer reported that it would nolonger serve them on the National Fuel System. Iroquois, at thetime said it would continue to serve its commercial and industrialcustomers. On Oct. 23, National Fuel was forced to cut Iroquoisfrom its choice program after the company had gone three dayswithout fulfilling its commercial and industrial customers’ gassupply needs. Then on Oct. 31, Hamburg, NY-based Iroquois filed forbankruptcy.

“Iroquois had structured a contractual arrangement wherecustomers might achieve a greater level of savings if they werewilling to enter into a contract where they were pre-paying on aquarterly, semiannually, and in some cases on an annual basis,”said Julie Coppola Cox, spokeswoman for National Fuel Gas. “So whenthe accounts were finalized, there were customers that had prepaidinto the time frame after they [Iroquois] had filed for bankruptcy.There are monies that are now part of this bankruptcy that are owedto customers. Strong indications now are that they probably won’tsee their refunds.”

Schimminger said, “Newspaper accounts indicate that the company[Iroquois] has essentially ceased operations and does not haveenough assets that can be converted into the cash needed to pay offmore than a small portion of its debts.” To add insult to injury,Schimminger said these customers, which had prepaid Iroquois, stillhave to find a way to pay their current heating costs with theirnew supplier.

The assemblyman asked Spitzer to look into the timeline ofIroquois’ decline. Specifically, When did Iroquois know it was infinancial trouble? Was it appropriate to accept prepayments inAugust? And why were prepaid monies not held in escrow?

Coppola Cox said that National Fuel Distribution had 67,637residential customers participating in its choice program as ofOct. 1. On Nov. 1, after the Iroquois default, there were 49,931participants, which represents a good bit of the 19,000 customersshifting back to the utility. She said numbers are already comingback up. “In December we saw a bit of an increase; we are back upto 50,354,” she said.

The spokeswoman said their choice program performed as expected.”We were able to move these customers from the marketer to theutility without interruption in service, and give the customers theopportunity to determine what their next move would be without theconcern of having gas available to them,” said Coppola Cox.”Customers, without having to do anything, were notified that theirgas service was still intact, and going forward they had theopportunity to choose from any other approved marketer.”

Alex Steis

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