Penalty sought for gas supplier

Operators Energy could lose a license

Contracts halted with little notice

State People's Counsel seeks customer refunds

March 22, 2003|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

The Maryland Office of People's Counsel asked state utility regulators yesterday to revoke the license of Maryland Natural Gas & Electric/Operators Energy Services and penalize the Hampden energy company after it terminated long-term contracts of its residential natural gas customers last month with little or no notice.

The company, better known as Operators Energy, failed to provide regulators 60 days' written notice of its intention to cease providing supplier services to its natural gas customers in Baltimore Gas and Electric Co. and Washington Gas Light Co.'s service territories, according to the complaint filed with the Maryland Public Service Commission.

By abruptly terminating those fixed-price contracts, Operators Energy forced its customers back to their local gas utilities for service as gas commodity prices hit to an all-time high of $19.38 per thousand cubic feet, the OPC complaint said.

FOR THE RECORD - An article in Saturday's Business section reversed the natural gas commodity prices for two companies. Baltimore Gas & Electric Co.'s price for this month is 73.56 cents per therm, and Washington Gas Light Co.'s price is 97.28 cents per therm.
The Sun regrets the errors.

"Operators Energy breached its contracts with residential customers by terminating such contracts with little or no notice and for no reason permitted under the terms of the contract," the filing stated, adding a request for a PSC investigation, civil penalties against the company and customer refunds.

The People's Counsel, the state advocate for residential customers in utility matters, wants the PSC to revoke Operators Energy's electricity and natural gas licenses pending a review. Utility companies cannot engage in business in the state without a license, according to Maryland law.

It was unclear yesterday how many Operators Energy customers were affected, although the OPC filing stated that the PSC's Office of External Relations had received nine customer complaints as of Tuesday.

Efforts to reach the owner of Operators Energy, J. Hollis B. Alpert III, were unsuccessful yesterday.

The Web site for Operators Energy, which opened as Operators Coal Co. in 1925, posted a message to its natural gas customers that stated: "Effective March 1, 2003, Maryland Natural Gas T/A Operators Energy Services will no longer be offering natural gas service. All existing customers will be returned to their local utility."

According to the OPC filing, Operators Energy was granted a license by the PSC to operate as a gas supplier in Maryland in June 2001. In June last year, the company was also granted a license to provide electricity broker and billing services.

But late last month, the filing stated, Operators Energy sent notices dated Feb. 24 to all of its customers that the company would no longer provide natural gas supply service to them after Feb. 28.

Richard Lelonek was one of those whose service was abruptly canceled, the filing stated. Lelonek entered into a contract with Operators Energy in June 2001 and renewed the agreement with the company twice. His most recent renewal included a fixed price of 54.4 cents per therm for Nov. 1, 2002 through Oct. 31, 2003.

BGE's commodity price for this month is 97.28 cents per therm and that of Washington Gas is 73.56 cents per therm, the filing stated.

The OPC accused Operators Energy of unfair business practices because it honored the contracts when customers were obligated to pay fixed prices that were higher than commodity prices, but the company broke the agreements when customers' fixed prices allowed them to pay less than the commodity price.

"Upon information and belief, residential customers who entered into contracts with Operators Energy paid fixed prices higher than the gas commodity costs of the regulated companies for portions of the fixed term of their contracts," the filing stated.

"Operators Energy terminated the contracts of these residential customers at the time the gas commodity costs of the regulated gas companies exceeded the fixed prices, causing the residential customers to lose the benefit of their one-year contract with Operators Energy."

PSC officials, who were not available for comment, have directed Operators Energy in a letter dated Wednesday to respond to the charges.

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