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Public Advocate Advisory

Attorney General's Office Successfully Advocates for Enstar Customer Refunds

February 20, 2009

(Anchorage, AK) -The Alaska Attorney General's office, under the direction of Acting Attorney General Richard Svobodny who serves as the Public Advocate for regulatory matters, successfully opposed Enstar Natural Gas Company's (Enstar) claim that it didn't have to pay customer refunds dating back to 2003. The Regulatory Commission of Alaska (RCA) ordered Enstar to refund all qualifying customers the difference between small commercial rates and residential rates in effect since May 2003.

Under state law, customers who qualify for utility service under two different rate schedules should always receive the more advantageous rate. (Alaska Statute 42.05.371) In 2003, the RCA approved rate design changes requested by Enstar. As a result, customers who qualified for service under two different rate schedules would thereafter always receive lower billings if they were placed on the Schedule A residential rate, as opposed to the Schedule B small commercial rate. Enstar took no action to modify its tariff so that customers would not qualify for more than one rate.

In 2007, Enstar refunded approximately $700,000 for past overcharges to customers at nearly 1,000 locations who asked to transfer service to the lower residential rate within a two week window in October 2007. The RCA ordered Enstar to refund all customers the amount that they had been overcharged since 2003, regardless of whether they asked to transfer service during the two week window. Enstar disputed whether it had a duty to identify and transfer additional customers to the lower residential rate and to make refunds for all the overcharges. At Enstar's request, the RCA opened Docket No. U-08-25 to hear the case.

At hearing, the Attorney General's Regulatory Affairs & Public Advocacy (RAPA) section argued that Enstar did not take the initiative required by law to make sure that all of its customers received service at the best applicable rate. On February 13, 2009, the RCA agreed with RAPA and issued an Order affirming its earlier decision. Now Enstar must take all steps necessary to identify any of its customers who qualified for the lower residential rate and transfer them to it for future billing purposes, and provide refunds for past overcharges.

The refund will generally go to qualifying residential customers who use gas to heat their homes or apartments or for other domestic needs, not to commercial customers like office buildings, gas stations or other businesses. During the proceeding, Enstar estimated the additional refunds may be in excess of $1.3 million. Some customers may be due refunds in excess of $1,000.

For further information, please contact Daniel Patrick O'Tierney, Chief Assistant Attorney General for Regulatory Affairs & Public Advocacy (RAPA) at (907) 269-5100.

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