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NY PSC Issues Show Cause Order To Large ESCO After Complaints of Slamming, "Deceptive" Marketing

ESCO Must Show Cause Why Ability To Enroll Customers, Eligibility Should Not Be Revoked

January 26, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The New York PSC issued an order to show cause to Spark Energy, LLC and Spark Energy Gas, LLC, operated jointly as Spark Energy, Inc., stating the customer complaints have alleged that Spark, "has moved customers to the ESCO from another service provider without customer authorization (slamming) and has used deceptive marketing practices when signing up new customers, which is prohibited by the Commission-adopted Uniform Business Practices (UBP)."

Under the order, Spark must show cause within seven (7) days why it should not be precluded from enrolling new customers. Further, Spark was ordered to show cause within 30 days why its eligibility to act as an ESCO in New York State should not be revoked or, alternatively, why other consequences as set forth in the Commission’s UBP should not be imposed.

The PSC said that on April 11, 2016, the Department of Public Service (DPS issued a Notice of Apparent Failure (NOAF) to Spark informing the ESCO that DPS Staff was commencing an investigation into the ESCO’s marketing practices.

"The Department’s investigation and review of the documentation Spark provided in its NOAF response revealed Spark’s non-compliance with several of the marketing requirements in the UBP," the PSC said in its order

"Subsequent to issuing the April 2016 NOAF, the Department received 66 additional complaints against Spark for the period of late February 2016 through December 2016. Of the 66 newer complaints, 35 alleged slamming and 11 others alleged deceptive marketing," the PSC said

The PSC in its order represented that, "Spark confirmed 17 of the 35 additional slamming complaints were, in fact, invalid enrollments."

In response to the NOAF, DPS Staff sought documentation from Spark related to 21 customer complaints.

In its order, the PSC represented that, "Spark provided TPV recordings for only 9 of those complaints. In five of the 9 TPV recordings, Staff believes that the customers did not understand the terms of the sale nor to whom they were speaking. That is, many of the customers asked questions regarding the specific terms of service during the TPV. Once it was apparent the customer did not understand what they were being told, Spark should have terminated the call and ended the enrollment process. Moreover, the TPV recordings that Spark provided do not meet the UBP requirements for telephonic authorizations because the TPV did not include an affirmative response to all the questions contained in UBP Section 5, Attachment 1."

Spark’s NOAF response included two recorded sales calls along with the related TPVs.

The PSC in its order said that, "Upon review of Spark’s sales calls, Staff concluded that Spark used misleading marketing tactics when soliciting to customers. Specifically, the marketer stated 'My name is . . . and I am calling in regards to your National Grid bill from Spark Energy. Your account has been qualified to receive a discount, so from the next billing cycle you’ll find a discount on the gas bill, OK. The discount is up to 10 percent for 2 months on the supply portion of your bill from Spark Energy.'"

"At no time did the marketer clearly state that they were representing an ESCO; nor did the ESCO marketer state that, as a condition of receiving the discount offered, the customer would be switching to Spark from the utility for their energy supply service," the PSC said in its order

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