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New York PSC Directs ESCO To Show Cause Why Eligibility Should Not Be Revoked

PSC Alleges Slamming, Coaching On TPVs

September 18, 2017

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Copyright 2010-17
Reporting by Paul Ring •

The New York PSC issued a show cause order to Flanders Energy LLC

"The Department of Public Service (Department or Staff) has received numerous complaints, many alleging slamming, against Flanders Energy LLC (Flanders or the Company), an energy services company (ESCO). Staff issued a Notice of Apparent Failure (NOAF) to Flanders on April 3, 2017, informing the Company that the Department was investigating the Company’s marketing practices. Flanders responded to the NOAF on June 2, 2017, and provided supplemental responses on June 9, 2017, June 15, 2017, June 30, 2017, and July 13, 2017," the PSC said in its order

"The Department’s investigation, which included an analysis of the documentation Flanders provided in its NOAF response, identified the following areas of non-compliance with the UBP: the use of non-compliant sales agreements used to enroll customers; the use of non-compliant third-party verifications of telephone sales; slamming; and non-compliant customer record retention practices," the PSC said in its order

"By this order, Flanders is directed to show cause: (1) within seven days why Flanders should not be precluded from enrolling new customers until the Commission orders otherwise; and, (2) within 30 days why its eligibility to operate as an ESCO in New York State should not be revoked or, alternatively, why other consequences as set forth in the UBP §2.D.6.b should not be imposed," the PSC said in its order

"Between October 1, 2016 and March 22, 2017 the Department received 77 complaints regarding Flanders, including allegations of slamming, through the Department’s customer complaint process," the PSC said in its order

"In response to the NOAF, Flanders claimed that the accounts associated with the customer complaints brought forth in the NOAF were enrolled through kiosk sales, and provided some, but not all of the associated sales agreements. The review of the documents provided in Flanders’ responses to the NOAF and Supplemental Requests, as well as its inability to provide certain necessary documentation, demonstrates that Flanders violated multiple sections of the UBP including: using non-compliant sales agreements to enroll customers; using non-compliant third-party verifications of telephone sales; enrolling customers without authorization; and failure to abide by the document retention requirements set forth in UBP §5 Attachment 3.b," the PSC said in its order

The PSC said in its order that, concerning sales agreements produce by Flanders in response to the NOAF, "None of the sales agreements complied with the requirements of UBP §5, nor did they match the sample sales agreement that Flanders had previously submitted to the Department. Specifically: (1) the customer disclosure statement does not meet the requirements of UBP §5.B.4.b and UBP §5 Attachment 4, and (2) the sales agreement does not include the complete terms and conditions, as required by UBP §5.B.4. and UBP §5 Attachment 3."

"In addition to enrolling customers using non-compliant sales agreements, several of the signatures provided on these sales agreements appeared to be similar to one another. Staff contacted a number of customers and requested that they provide copies of their signatures. Some of the signatures that customers provided directly to Staff differ greatly from the signatures on the sales agreements that Flanders provided to Staff. With this evidence, it appears that some of the customer’s signatures on sales agreements are not authentic. Along with copies of their signatures, some customers provided notes stating that the signature on the sales agreement that Flanders provided to Staff was not theirs, and again claiming that they were slammed by Flanders and never authorized an enrollment," the PSC said in its order

Flanders told the PSC that it terminated a third-party vendor used for marketing to which it attributed the at-issue enrollments

The PSC said in its order that, concerning 100 TPVs provided as a sample, "a review of all 100 TPVs supplied by Flanders demonstrates that all the TPVs were non-compliant."

The PSC said that the TPVs failed to include several following requirements specified in UBP §5 Attachment 1.A

"Flanders currently serves over 10,000 customers," the PSC said in its order

"In 28 of the 100 TPVs provided by Flanders, the marketing representative is clearly on the line and is at times coaching the customer through the supposedly independent TPV, even prompting the customer to 'just say yes' to questions. In addition, other comments made by the marketing representative on the calls include; 'Con Edison buys their fuel from us', 'we are removing taxes from your bill', 'we are removing the surcharges from your bill, but we can’t do that unless you say yes.' There is also an instance where the customer asks 'Is this Con Edison?', and the marketing representative says 'yes,'" the PSC said in its order

The PSC said in its order that there is no record that Flanders has complied with the requirement to post prices on Power to Choose since it began actively marketing to customers in September 2016.

"Also concerning, Flanders’ conduct has called into question whether the Department, this Commission or New York State consumers can rely on the information that Flanders provides. Flanders had previously provided compliant sample sales agreements to the Department, but has since used a non-compliant sales agreement in its marketing to and enrollment of customers," the PSC said in its order

"Moreover, the NOAF stipulated, on a going-forward basis, that Flanders provide specific documentation and information in response to complaints received by the Department. Flanders continues to insufficiently respond to complaints received by the Department. Moreover, Flanders’ inability to provide some of the information required of it demonstrates that it does not follow adequate record retention policies," the PSC said in its order

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