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Retail Supplier to Provide $3 Million in Refunds Under Settlement

August 28, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Respond Power is to provide $3 million in refunds under a settlement with the Pennsylvania PUC Bureau of Investigation and Enforcement (I&E) to resolve an investigation into its trade practices.

The settlement would resolve I&E's investigation opened during the fall of 2013 into allegations concerning slamming, and the case later was expanded, in the wake of customer complaints during the polar vortex, to include allegations of misleading and Deceptive claims of affiliation with electric distribution companies, and misleading and deceptive promises of savings, among other allegations.

The case is separate from a complaint filed by the Pennsylvania attorney general and consumer advocate, which remains pending.

Under the settlement with I&E, Respond Power specifically denies any wrongdoing or liability in the I&E proceeding. The settlement states that the refunds, penalties and injunctive measures prescribed by the settlement are not and should not be considered to be or construed as admissions of liability or wrongdoing on the part of Respond Power.

The settlement provided that Respond Power agrees to issue refunds in the total amount of $3 million to customers served by Respond Power during January, February and March 2014.

This total amount of refunds includes $971,000 in voluntary reductions of charges through rebillings performed by Respond Power in February 2014, and also includes voluntary refunds that were previously provided by Respond to customers in the amount of $249,000.

Of the remaining $1.8 million allocated for refunds, $313,000 will be refunded to former or existing Respond Power customers who filed an informal complaint with the Commission against Respond Power from February 1, 2014 to June 30, 2014

The balance of the refund pool shall be made available for refunds to all other customers served by Respond Power during January, February and March 2014. Customers must make a claim in response to a letter concerning the refund pool to receive a refund.

No customer shall be paid any funds from the Refund Pool without executing a "Release of Claims" pursuant to which the customer agrees, in exchange for payment of the funds, to release, acquit, and forever discharge the Respond Power and all of its current and former officers, shareholders, and employees from any and all claims arising from or related to the conduct alleged in the Formal Complaint

Additionally, Respond Power agrees to pay a civil penalty in the amount of $125,000 to resolve all allegations in I&E's complaint

As part of the settlement, I&E will actively promote full license retention for Respond Power in the separate complaint proceeding initiated by the Office of Attorney General and the Office of Consumer Advocate at Docket No. C-2014-2427659.

Respond Power also agreed to a series of remedial measures under the settlement.

Among other things, Respond Power will offer only fixed price contracts in Pennsylvania for a period of two years beginning September 1, 2015. This restriction will not apply to Respond Power's contracts with existing customers.

Per the settlement, Respond Power, its agents, employees and representatives shall not make representations, either directly or by implication, about savings that consumers may realize by switching to Respond Power except when referencing an explicit, affirmative guaranteed savings program.

Respond Power, its agents, employees and representatives shall refrain from using terms in their marketing campaigns, whether for fixed or variable products, such as "risk free," "competitive," "guaranteed," or any other terminology that represents, explicitly or by implication, that the price offered will be lower than the electric distribution company's (EDC's) PTC except when referencing an explicit, affirmative guaranteed savings program.

Respond Power its agents, employees and representatives shall refrain from using terms in their variable rate marketing campaigns, such as "trial period" or "introductory rate," without a clear and conspicuous disclosure of the material terms and conditions thereof, including and without limitation to, a full description of the price that will be charged after the expiration of that introductory or trial period, the circumstances under which the consumer can cancel, and the consequences of cancellation.

Respond Power, its agents, employees and representatives shall not make representations, either directly or by implication, about "special programs" for which a Pennsylvania consumer qualifies, unless Respond Power provides documentation to the consumer explaining in detail the "special program," including but not limited to the parameters of the program, term of the program and eligibility requirements for acceptance into the program.

Respond Power, its agents, employees and representatives shall not make representations, either directly or by implication, about PTC increasing or the PTC being a variable rate. Further, Respond Power, its agents, employees and representatives shall not make any representations whatsoever about how a consumer's utility purchases electricity. However, nothing shall prohibit Respond Power, its agents, employees and representatives from making truthful statements about the current level of the electric distribution company's PTC or future PTC if that information is publicly available, and how frequently it changes or when it will next change.

Every communication by a Respond Power representative with a potential customer shall begin with the sales representative stating: "My name is [Sales Representative's Name]. I am calling on behalf of Respond Power, LLC. Respond Power can provide you with your electricity. I do not work for or represent your electric utility."

If Respond Power later offers variable rates, sales agents must state, "After __ month(s) [if Introductory Price period is applicable], the price you pay under this variable rate contract can change every month. This is not a fixed rate contract. Variable means the price can go up or down. There is no limit on how high the price can go."

In all advertising to consumers, Respond Power shall include a clear and conspicuous display of Respond Power's brand identification information and clear and conspicuous notice that Respond Power is independent of the consumer's electric utility, but not formally name the electric utility. Further, Respond Power shall include clear and conspicuous language that the consumer is not required to switch to an alternate EGS, but if the consumer chooses to switch, he or she will continue to receive one bill from his or her electric utility and the bill will reflect Respond Power's generation charges.

Respond Power shall not state or represent to customers in the company's variable rate programs that the price Respond Power will charge will be "market-based" or set on "market conditions" unless the company also includes either:

a. the calculation that will be used to set monthly rates under the contract, where each element of that calculation shall be based on a fixed constant, a cost to Respond Power, or a value ascertainable from publicly available information such that the customer can calculate the price and any applicable charges in terms of dollars and cents or cents per kWh; or

b. information to the customer that he or she may view upcoming variable rates on the Respond Power website at least 30 days in advance of when the rates will take effect or call the Respond Power customer service telephone number to obtain the information.

Respond Power was unavailable for comment

The settlement remains subject to PUC approval

C-2014-2438640

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