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PUC Approves Settlement With Retail Supplier

July 13, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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The Pennsylvania Public Utility Commission approved in a final order a Settlement Agreement (Settlement) filed on May 12, 2017, by the Commission’s Bureau of Investigation and Enforcement (I&E) and Residents Energy, LLC (Residents or Company) (collectively, the Parties), with respect to an informal investigation conducted by I&E.

A company spokesperson for Residents Energy provided the following statement to "This settlement stems from an isolated incident in 2015 involving the improper enrollment of one customer by an independent sales agent. Residents Energy views sales and marketing compliance of paramount importance, and the company continually reinforces its compliance requirements with third party vendors conducting sales activities on our behalf. In this case, we responded to the initial customer inquiry with immediate account cancellation, and an offer of a full refund. We worked cooperatively with the Commission during its subsequent investigation, and demanded the agent in question be terminated and permanently prohibited from marketing on behalf of our company."

As stated in a PUC March 1 order noticing the settlement for comment, "This matter concerns an alleged 'slamming' incident committed by a sales agent of Residents. The Commission’s Bureau of Consumer Services (BCS) received the allegation from a residential customer of Duquesne Light Company (Duquesne) who claimed that Residents switched her electric generation service without her authorization."

As stated in the PUC's March 1 order noticing the settlement for comment, "The slamming allegation stems from an informal complaint filed by a residential customer of Duquesne on September 28, 2015. In the informal complaint, the customer alleged that a male individual came to the customer’s door and stated that he was enrolling customers in a Customer Assistance Program (CAP) designed to assist low income individuals. The customer was interested in CAP and agreed to enroll in the program. It was determined that the male individual was employed as a sales agent by a third-party contractor hired by Residents to solicit EGS service on behalf of the Company. After meeting with the customer, the sales agent began the third-party verification (TPV) process to switch the customer’s EGS service to Residents. Settlement at 4."

As stated in the PUC's March 1 order noticing the settlement for comment, "During the TPV phone call, the customer asked whether her EGS service was being switched and the TPV provider confirmed that the customer’s agreement would result in the switching of her service. In response, the customer stated that she did not want to switch her EGS service and the call ended. Although she did not complete the TPV process, the customer’s EGS service was switched to Residents. By letter dated September 22, 2015, Duquesne confirmed the switch. Residents provided EGS service to the customer for seventeen days, from September 25, 2015, to October 11, 2015. After receiving Duquesne’s confirmation letter, the customer filed her informal complaint with BCS alleging the unauthorized switch in service. Id. at 3-5."

As stated in the PUC's March 1 order noticing the settlement for comment, "In response to the informal complaint, Residents investigated two separate TPV calls regarding the customer’s EGS service. Upon review of the first recording, Residents determined that the first TPV call confirmed the customer’s informal complaint allegations that she refused to authorize a switch of her EGS service. In the second TPV recording, however, an individual purporting to be the customer authorized the switch to Residents. As part of its internal investigation, the Company played the second recording to the customer who stated that she was not the person on the call making the authorization. Residents determined that the second TPV recording was fraudulent and therefore an invalid TPV authorization. Id. at 5."

From its investigation, I&E alleged that an individual serving as an independent contractor for a third-party vendor used by Residents to conduct door-to-door sales, "was involved in a scheme, without the Company’s [Residents] knowledge, to obtain third-party verifications by directing the TPV’s to an accomplice posing as a customer and enrolling the accounts."

"Although audio recordings of TPVs were conducted, it is alleged that the authorizing party on the other end was not the actual customer," I&E alleged. The independent contractor alleged to have engaged in such behavior had conducted door-to-door sales on behalf of Residents from September 15, 2015, to September 29, 2015

After completing an internal investigation, Residents directed its vendor to remove the individual from conducting any marketing on behalf of Residents and made the individual ineligible for rehire for any employment with Residents. Additionally, Residents refunded to the customer the amount of $3.14, which represented the cost difference between the rate charged by Residents for the seventeen days of service and Duquesne’s default service rate.

Pursuant to the Settlement, Residents will pay a civil penalty of $6,000.

Furthermore, as stated in the PUC's March 1 order noticing the settlement for comment, "The Settlement acknowledges that the Company has taken corrective action and is diligently applying its policies to safeguard against the unauthorized switch of customer accounts by a third-party vendor."

As stated in the PUC's March 1 order noticing the settlement for comment, "The Settlement notes the refund provided to the affected customer in the amount of $3.14 and further directs a refund for the entire EGS service portion of the customer’s bill for the entire seventeen days that the customer was served by Residents. The Settlement explains that the Company charged the customer $12.36 and has already refunded to the customer $3.14. Thus, the remaining refund owed to the customer would be $9.24."

The settlement also requires various reporting requirements and a requirement for Residents to inquire with each third-party, with which it seeks to engage in business, whether the at-issue individual is employed by or associated with the third-party vendor.

Docket M-2017-2511372

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