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Following complaints from several Viridian Energy customers who said they were hit unfairly with fees last year after low-rate introductory contracts were automatically renewed at higher rates, Connecticut regulators ruled the company made “good faith efforts” to alert its account holders, but will write new rules to ward off any repeat scenario.
Viridian and parent company Crius Energy have their main offices in Stamford, with Crius subsidiaries also including Public Power, Citra Solar and Comcast Energy Rewards, which it offers in partnership with Philadelphia-based, not dissimilar to a program it briefly offered with Norwalk-based, Frontier Communications.
- The Crius Energy headquarters building at 1055 Washington Blvd. in Stamford. In August 2015, the Connecticut Public Utilities Regulatory Authority said the company made “good faith” efforts to alert Connecticut customers of pending hikes to the introductory rates those households received in signing up for electricity service. Photos by Alexander Soule, Hearst Connecticut Media
In all, Crius operates in 20 states and the District of Columbia. Crius “membership” units trade on the Toronto Stock Exchange under the “KWH.UN” ticker symbol.
The State Public Utilities Regulatory Authority launched an investigation of Viridian earlier this year, after some customers said the company hit them with early termination fees following their attempts to switch providers when contracts automatically renewed at higher rates. Using independent agents, Viridian had been offering low, introductory “teaser” rates that then escalated sharply after a six-month period, incurring complaints and in a few instances litigation from plaintiffs in Connecticut and elsewhere who claimed to be blindsided.
Viridian supplied the state with examples of the letters it mailed customers, which clearly state the company”™s intent to auto-renew contracts and which cite the new rates, though not providing a comparison to the rates customers had been paying. The notice also states prominently the $50 early termination fee that kicks in when customers attempt to drop Viridian after a grace period.
A database of some 7,900 accounts Viridian provided the state showed last year”™s introductory rates escalating anywhere from 10 percent to 73 percent, in many instances between 40 percent and 65 percent. Between May and July last year, customers of Eversource Energy ”” then Connecticut Light & Power ”” saw an 8 percent increase in their base electric rates.
According to PURA, Viridian began enrolling Connecticut residents last year in auto-renew contracts that began expiring in October 2014. PURA said Viridian assessed early termination fees in about 500 cases, and ordered Viridian to refund customers the cost of any early termination fees collected in cases where the company was unable to pinpoint the date a customer took action to cancel the contract within a statutorily mandated cancellation period.
Viridian is no longer assessing early termination fees under its auto-renew contracts. In an August conference call with investment analysts, CEO Michael Fallquist said the company is cutting back on its reliance on introductory rates, in part to reduce the customer attrition those contracts can spur.
In the second quarter, Crius added 88,000 new customers and saw 79,000 customers drop service, leaving it with a net addition of about 9,000 accounts, down from 12,000 net new customers in the first quarter of 2015.
“Obviously fixed-price contracts, whether it”™s commercial or residential, [have] a materially lower in-contract attrition rate than you have with a shorter-term product,” Fallquist said. “That was very deliberate on our part. ”¦ The customer attrition rate ”” we expect it to continue to decline over the next 12 to 24 months.”
Crius Energy Trust reported $166 million in revenue in the second quarter, up 24 percent from a year earlier, in part due to the acquisition of TriEagle Energy, a Houston-based energy retailer with some 200,000 customers in Texas, New Jersey and Pennsylvania.
- Two Viridian notices; one with the original rates, the other showing the higher numbers of the automatic renewal.
Crius losses totaled $30.7 million in the second quarter, down from $43.8 million in the second quarter of 2015. The company”™s cash reserves totaled $20.6 million as of June, with the company boosting that amount by $10 million in July following financial transactions.
Fallquist said Crius hopes to add TriEagle”™s expertise in commercial account sales to its varying markets, presumably to include Connecticut. For now, Crius is awaiting new rules on its home turf as the result of complaints by a few of its own customers.
“We ”¦ agree this proceeding highlighted an important inconsistency that makes it ”˜difficult for all licensed electric suppliers to uniformly apply”™ state guidelines,” Crius spokeswoman Melanie Rener said in an email quoting language used in the PURA decision.
Hearst Connecticut Media includes four daily newspapers: Connecticut Post, Greenwich Time, The Advocate (Stamford) and The News-Times (Danbury). See ctpost.com for more from this reporter.
