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PUC Approves Settlement Requiring Retail Supplier To Refund $4 Million

August 12, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Pennsylvania PUC approved as filed a settlement under which Respond Power LLC will issue $4.1 million in customer refunds to resolve a complaint filed by the Office of Consumer Advocate and Attorney General regarding Respond Power's marketing practices

The complaint largely stems from pricing charged in the wake of the polar vortex and whether such pricing conformed to prior disclosures.

At the time of the filing of the settlement in April (first reported by EnergyChoiceMatters.com), Respond Power had already issued cash refunds of approximately $250,000 to affected customers, with such refunds included in the $4.1 million total

The settlement noted that Respond Power had also already issued nearly $1 million in refunds (via rebilling) to affected customers; such rebilling does not count towards the refund pool.

The vast majority of the refund pool ($3.5 million) will be made available to Respond Power residential and small business customers who were served by Respond Power during the months of January, February, and March 2014. The AG and OCA shall determine the amount of refund to offer to any individual residential or small business customer based on the individual customer's usage, price charged and refund amounts already received. The remaining balance will be made available to customers who filed informal complaint with the PUC against Respond Power from February 1, 2014 to June 30, 2014

In order to receive a refund, the customer must execute a Release of Claims pursuant to which the customer agrees, in exchange for payment of the funds, to release, acquit, and forever discharge the company and all of its current and former officers, shareholders, and employees from any and all claims arising from or related to the conduct up to June 2014 that is alleged in the complaints.

The settlement also requires Respond Power to pay a civil penalty in the amount of $125,000 and to make a contribution of $50,000 to the EDCs' hardship funds

Respond Power also agrees under the settlement to make several changes in its practices, including, among other things:

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

• 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 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 the 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 herein shall prohibit Respond Power, its agents, employees and representatives from making truthful statements about the current level of the EDC's PTC or future PTC, if that information is publicly available. If a Respond Power agent, employee or representative identifies the current PTC or a published future PTC, the Respond Power agent employee or representative shall also provide the term that the referenced PTC will be in effect.

• If Respond Power offers variable rate products to consumers, Respond Power sales agents must state in all sales contacts that, "There is no limit on how high the price can go."

• For a variable rate product, Respond Power's TPV must include a question stating, "Do you understand that there is no limit on how high the price can go?"

• 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: 1) 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 2) 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 specifically denies any wrongdoing or liability under the settlement. The refunds, penalties, and other measures described are not and should not be considered to be or construed as admissions of liability or wrongdoing on the part of the company, the settlement states

In a statement of support accompanying the settlement, Respond Power had said in April that from the time Respond Power received its license in 2010 until January 2014 polar vortex, only two customers had filed formal complaints and both were quickly resolved through settlement agreements.

Docket C-2014-2438640

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