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New York PSC Permits Two ESCOs To Maintain Eligibility, Enroll Customers Conditioned On Cessation Of Use Of Specific Sales Agent

PSC: Use Of Authorization Letter Not Approved By Staff "Unlawful"

PSC Affirms ESCOs Responsible For Actions Of Sales Agents

March 14, 2017

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

In separate orders, the New York PSC ruled that Marathon Energy and ABC Energy, LLC shall continue to be eligible to operate as ESCOs and continue marketing to and enrolling residential and non-residential customers subject to certain commitments made by the ESCOs in responses to show cause orders, including the cessation of the use of sales agent Atlantis Business Consulting in marketing and enrollments.

In September, the PSC had issued separate show cause orders to Marathon Energy and ABC Energy, LLC, as Department of Public Service Staff alleged that both ESCOs were using the lure of an appointment to receive free LED lights to switch customers to ESCO service, allegedly without customers' knowledge and without certain customer protections which would normally be required, but which were allegedly not provided on the grounds that the sales were made as a result of pre-arranged appointments, and not subject to certain consumer protections.

Specifically, Staff had alleged that Marathon Energy Corporation and ABC Energy, LLC engaged a third-party firm, alleged by Staff to be Atlantis Business Consulting, that called customers to schedule the offering of a free LED lighting program. Staff had alleged that Atlantis Business Consulting is affiliated with ABC Energy, LLC

Staff had alleged that the third-party marketing rep would have customers sign a lease for free light bulbs, but that such agreement also provided that the customer's energy supply would be provided by Marathon Energy Corporation, ABC Energy, LLC, or a combination of the two ESCOs. Staff had alleged that the document also provides that the customer has, "sold its right," to their account, giving, as Staff alleged, "ABC" (which Staff used as an abbreviation for Atlantis Business Consulting) the authority to purchase energy on the customer's behalf, completely at the discretion of ABC, in exchange for energy efficiency products and services

As summarized by the PSC in its order, "In addition, the lease agreement grants Atlantis far-reaching authority to act, as Atlantis describes it to Staff, as a 'power of attorney' on behalf of customers, including granting Atlantis 'owner-level' access concerning communications and actions with the utility as well as any regulating bodies such as the Department of Public Service (Authorization Letter)."

Staff had alleged that the third-party marketing rep would not discuss with the customer that the agreement authorizes a change in the customer's energy supplier

Staff had alleged that no TPV was conducted for such sales, on the grounds that, as pre-arranged appointments, the sales were not subject to a TPV.

See more details on the show cause orders here

In various separate responses to the PSC's show cause orders, Marathon Energy and ABC Energy, LLC detailed their compliance programs and outlined various remedial measures they committed to undertake

See more details on the show cause order responses at these links:

• Marathon Energy

• ABC Energy

Marathon Energy

Notably, on March 1, 2017, Marathon filed a supplemental response to the show cause order. In this supplemental response, Marathon proposed to implement various additional business practices and process improvements that address the allegations contained in the show cause order. These improvements include: modifying Marathon’s existing sales agreement and, more broadly, a commitment to work closely with vendors (contractors) and DPS Staff to review and approve any marketing material and/or enrollment documentation for future enrollment related to any value added product. Marathon committed to provide Staff with a copy of Marathon’s updated marketing script for review and approval.

Finally, Marathon agreed, as of March 9, 2017, to voluntarily stop enrolling any new customers through Atlantis Business Consulting and to cease renewing any existing customers using Atlantis Business Consulting's authorization letter. Marathon stated it will not use Atlantis Business Consulting for marketing services until Marathon submits a petition and the Commission issues a determination on the petition.

"As long as Marathon maintains these commitments, its operations as an ESCO should remain in compliance with the requirements of the UBP. Accordingly, Marathon may continue to market to and enroll residential and non-residential customers," the PSC said.

A Marathon Energy company spokesperson provided the following statement to ECM: "Marathon has a strong commitment to providing the highest level of customer service across its business lines. As a demonstration of that commitment, the Company worked closely with the NYPSC to identify the root cause – a broker’s LED lighting program - that led to the initial order, and to swiftly implement updated processes and guidelines, including voluntarily ceasing all enrollments from the broker where the complaints originated from. As mentioned in the Order, Marathon will continue to closely monitor compliance and provide reporting to the NYPSC."

The PSC also made several findings of note in its order concerning Marathon's responses to show cause

Notably, the PSC said that, "Atlantis’ lease agreement and Authorization Letter that Marathon used in contracts were not approved by Staff. This alone makes them unlawful."

Additionally, in an initial response to the show cause order, the PSC said that Marathon claimed that it should not be held responsible for the actions of its marketer, Atlantis.

"Contrary to Marathon’s denial of responsibility for its contractors’ actions, every ESCO is ultimately responsible for the actions of their independent contractors and every ESCO will be held accountable for any UBP violations committed by those contractors. The Commission addressed this in its Order Taking Actions to Improve the Residential and Small Non-residential Retail Access Markets (issued February 25, 2014)," the PSC ruled.

ABC Energy

Among the specific remedial measures undertaken by ABC Energy are: continuing its suspension of the LED lighting campaign until ABC refiles its LED Lighting plans with the Department of Public Service, Department Staff reviews those plans and, in writing, approves the plan; modifying ABC’s appointment script to explain who ABC is, what services it provides, and what options the customer has if enrolled; and providing Department Staff copies of UBP-compliant ESCO scripts for review and approval. In addition, ABC will modify its sales agreement to be UBP - compliant and provide Staff copies of sales agreements for review and approval.

Effective March 9, 2017, ABC Energy will voluntarily stop using its sister company Atlantis Business Consulting as a broker for marketing and enrolling new customers and for renewing any existing customers using Atlantis’ Authorization Letter.

"As long as ABC continues to strictly adhere to its commitments described above, its operations as an ESCO should remain in compliance with the requirements of the UBP. Relatedly, ABC may continue to market to and enroll residential and non-residential customers as long as ABC discontinues its use of Atlantis Business Consulting as its broker. Further, when a TPV is not currently required as part of a scheduled appointment, we direct ABC to record all calls made to set up customer appointments and provide those recorded calls to the Department upon request," the PSC ruled

The PSC's order concerning ABC Energy confirms that a PSC order concerning authorization for ESCOs to act as a billing agent on behalf of customers (Opinion 99-3) does not confer to ESCOs the authority to act as the customer's agent in any other matters

"Opinion 99-3 explains that the customer’s right to have an agent represent them is for the sole purpose of performing bill-related duties with the marketer acting as a customer’s 'Billing Agency.' Opinion 99-3 further defined a Billing Agency as a legal arrangement between a customer and an ESCO/Marketer, limiting the 'Billing Agent' authorization to 'receive the customers’ bills from the utilities, consolidate them with the ESCOs/Marketers’ charges, rebill the entire amounts to the customers in one bill, receive payments from the customers, and then remit payments to the utilities for their services.' Opinion 99-3 does not in any way create far-reaching authority for any entity to act as a 'power of attorney' on behalf of customers," the PSC said

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