Attorney General, Consumer Protection Announce Possible Refunds To Thousands Of Heating Oil Consumers

June 17, 2009

Attorney General Richard Blumenthal and Department of Consumer Protection (DCP) Commissioner Jerry Farrell, Jr. today announced that Heating Oil Partners (HOP) -- one of the largest home heating oil providers in the state -- has agreed to partial refunds to consumers automatically enrolled in its capped pricing programs who paid substantially more than what variable rate consumers paid when oil prices drastically fell.

Blumenthal said, "As many as 20,000 consumers will be eligible for refunds -- collectively totaling at least tens of thousands of dollars, and perhaps more. I commend the company for its cooperation."

HOP offers various pricing methods, including a Pre-Purchase Program, Flexible Payment Plan and Capped Price Program. From March 2008 through February 2009, HOP automatically re-enrolled customers into its Capped Price program when their previous contracts expired.

From at least February 2008 through July 2008, home heating fuel retail prices increased dramatically, just as the wholesale cost increased and customers in the Capped Price Program paid less for oil than HOP customers who agreed to buy oil at market or "variable" rates. Between August 2008 and February 2009 when wholesale oil prices plummeted, Capped Price Program consumers paid higher prices than variable rate HOP consumers who by then were paying dramatically reduced market prices.

Blumenthal said, "Consumers overpaid -- deprived of diminished prices -- when they were automatically re-enrolled in a program they might have rejected with proper information.

"Under today's agreement, HOP will refund consumers enrolled without consent in a Capped Price Program and provide them the net savings they would have received over the entire heating season if they had been paying market prices for oil.

"This company's improved practices should raise the industry standard for better pricing policies, and clearer disclosure. Heating Oil Partners recognizes that these refunds are not only right, but smart in its relationship with its consumers.

"When market prices drastically dropped, consumers were understandably upset to pay more than others who paid substantially less for the same product. This voluntary agreement reflects good cooperation and good corporate citizenship. My office will continue to closely monitor this agreement to ensure that eligible consumers receive refunds, and that non-consenting reenrollment is stopped, through clearer disclosure."

Farrell said, "Consumers always need to be vigilant in their dealings in the marketplace. They should know and understand the terms of a written contract before they sign it. They need to be alert and monitor if a company is complying with the terms of the contract, as deliveries get made. The market for home heating oil has historically been volatile, so such alertness and vigilance are crucial when buying home heating oil."

Customers automatically enrolled in the capped price program between March 1, 2008 and the date HOP ceased auto-enrollment may qualify for refunds -- unless they voluntarily contacted HOP and affirmatively chose to remain in the program.

HOP will send a notice to all current affected customers that had been auto-enrolled in the capped price program explaining that they are not obligated to remain in the program and may be entitled to a partial refund of costs associated with the program, upon exercising one of the following options:

• Opt out of the existing capped price program and into another pricing program,

• Opt out of the existing capped price program and into a variable rate plan, or

• If the customer's capped price program has already expired the customer can submit a claim that they had been auto-enrolled without their consent.

This agreement involves no admission of wrongdoing by HOP.

Consumers who do not choose to stay in the existing Capped Program will have 45 days to respond to the claims process letter from HOP. Any customer who does not respond will be defaulted into a standard auto-delivery daily rate plan unless and until they contact HOP to enter into a different pricing plan. HOP expects that it will take four to six weeks to mail notice letters to all of the affected consumers.

Any refund disputes will be sent by HOP to the Office of the Attorney General for review. Under the agreement, Blumenthal's office and DCP may inspect any documents related to HOP's claims process.