Press Release

PUC Finalizes Penalties for HIKO Energy Over Deceptive Marketing and Billing Practices

Published on 12/3/2015

Filed under: Electric

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today voted to order HIKO Energy LLC (HIKO) to issue $2 million in customer refunds, pay a $1.8 million civil penalty, contribute $25,000 to electric distribution companies’ (EDCs’) Hardship Funds and modify its marketing practices due to deceptive actions following the “Polar Vortex” in the winter of 2013-14.

The sanctions relate to two formal complaint cases: one filed by the Office of the Attorney General (OAG) and the Office of Consumer Advocate (OCA), and the other by the PUC’s independent Bureau of Investigation and Enforcement (I&E). The cases were not consolidated but were decided concurrently, according to the Initial Decisions.

“The Commission has and will continue to work diligently to foster a robust retail energy market in Pennsylvania. This mission requires the PUC not only to properly design the market, but also to effectively monitor and enforce the market,” said Chairman Gladys M. Brown in a statement. “This outcome today serves as a reminder to the retail supply industry that the Commission will not hesitate to take action against bad actors. More importantly, I hope these proceedings provide some consolation to all utility customers that the Commission will always work tirelessly for their protection.”

The Commission voted 5-0 to accept an Initial Decision approving a Joint Petition for Settlement between HIKO, OAG and OCA. OAG and OCA filed a joint formal complaint against HIKO on June 20, 2014, which alleged, among other things, that the company misled customers with deceptive promises of savings; engaged in “slamming,” or the unauthorized enrollment of a customer; mishandled customer complaints; failed to provide rate information and accurate pricing information; charged different prices than listed in customer disclosure statements; and failed to comply with the Telemarketer Registration Act.

The settlement directs the following actions by the company:

• Provide refunds to customers enrolled in HIKO’s 1- to 7-percent guaranteed savings plan during January, February and March 2014, based on a 3.5 percent savings from their respective EDC’s price to compare (PTC) rates during that time period;
• Provide refunds to customers who were on variable-rate plans during January, February and March 2014, distributed based on customer usage;
• Contribute $25,000 to EDCs’ Hardship Funds; and
• Make numerous modifications to its business practices related to product offerings, third-party verifications, disclosure statements, training, compliance monitoring, reporting and customer service. 

The total refund pool amounts to $2,025,383.85, which excludes $159,320.15 that the company previously and voluntarily paid in cash refunds. HIKO customers who were on variable-rate plans in January, February or March of 2014 will be contacted directly by a third-party settlement administrator if they qualify for a refund. The refunds will be based on consumers’ usage, the price they were charged during that time period and their plan. Refunds already received will be a factor in any additional refunds. Consumers with questions about the HIKO settlement may contact the Bureau of Consumer Protection at 1-800-441-2555.

The Commission also voted 5-0 to approve an Initial Decision resolving the formal complaint filed by I&E against HIKO on July 11, 2014. The complaint alleged that during January through April 2014, the company billed customers variable rates in excess of the discounted introductory rate, which was guaranteed at the time of enrollment to provide customers savings of 1 to 7 percent over the EDC’s PTC for the first six months.

The Order directs HIKO to pay a civil penalty of $1,836,125, a $125 penalty for each of 14,689 occurrences of overbilling.

I&E is the independent enforcement arm of the PUC. To satisfy due process of law under the Pennsylvania Constitution, separation is required between staff involved in investigatory and prosecutory functions and the Commissioners involved in decision making. As a result, the Commissioners can examine each case with an unbiased perspective.

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities; ensures safe and reliable utility service at reasonable rates; protects the public interest; educates consumers to make independent and informed utility choices; furthers economic development; and fosters new technologies and competitive markets in an environmentally sound manner.

For recent news releases and video of select Commission proceedings or more information about the PUC, visit our website at www.puc.pa.gov. Follow the PUC on Twitter – @PA_PUC for all things utility. “Like” Pennsylvania Public Utility Commission on Facebook for easy access to information on utility issues.

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Docket Nos. C-2014-2427652, C-2014-2431410

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