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In Final Order, Pa. PUC Rules On ALJs' "Unprecedented" Initial Finding That Retail Electric Telesales Require Wet Signature

Order Also Addresses Proposed Permanent Prohibition On Retail Supplier's Officers Participating In Retail Market

Reduces Civil Penalty Amount On Supplier By More Than Half

July 19, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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In a final order on a complaint case involving Blue Pilot Energy, LLC the Pennsylvania PUC addressed an initial decision's finding that failing to obtain a customer signature on a written contract after a cold call telesale would violate the state's Telemarketer Registration Act (TRA) and therefore also violate the PUC's regulations

The PUC granted Blue Pilot Energy's exceptions on this issue, reversing the initial decision, and finding that its regulations, at this time, do not require a wet signature was the first to report in 2016 the shocking initial decision which contained a conclusion of law that unequivocally stated that, "When Blue Pilot enrolled customers via telemarketing, Blue Pilot failed to obtain customers’ signatures agreeing to enrollment in violation of 52 Pa.Code §111.10(a)(1) [which requires compliance with the Telemarketer Registration Act]."

As more fully discussed in our prior stories, the Telemarketer Registration Act, at 73 P.S. Section 2245(a)(7), makes it illegal to fail to reduce any sale of goods or services made during a telemarketing call to a written contract and makes it illegal to fail to obtain the consumer's signature on the written contract.

All telesales must reduce the sale to writing, with such material sent to the customer. However, within the TRA, there are certain exceptions to the requirement to obtain the customer's signature on the written contract sent to the customer.

Certain of these exceptions are inapplicable to either cold calling (such as for calls in response to an advertisement or calls following a sales pitch at a store) or the electric industry, but relevant here is the exception that, "A signed, written contract is not needed if ... [t]he contractual sale is regulated under other laws of this Commonwealth."

In the initial decision, the ALJs had held that, "Section 111.10(c) of the Commission’s regulations and Section 2245(a)(7) of the TRA require Blue Pilot to reduce any sale of goods or services made during a telemarketing call to a written contract and send that document to the consumer and obtain his or her signature."

In a final order issued today, the PUC held, "we shall decline to adopt the recommendation concerning the requirement of a 'wet signature'" based on the record in this Complaint."

"We agree with the argument of Blue Pilot that our Regulations do not, at this time, require a 'wet signature' to conclude all marketing and/sales transactions," the PUC said in its order

The PUC noted 52 Pa. Code § 111.7(a) provides, "(a) A supplier shall establish a written, oral or electronic transaction process for a customer to authorize the transfer of the customer’s account to the supplier . . . ." and therefore allows a supplier to utilize a verbal, written or electronic transaction process to enroll customers.

"In resolving this Exception, we note further that the Initial Decision’s requirement that signatures be "wet" is not supported by the TRA and other proceedings. See Final Rulemaking to Permit Electronic Filing, Docket No. L-00070187 2008 Pa. PUC LEXIS 170 (Order entered March 23, 2008); Petition of Budget Prepay, Inc. for Limited Designation as an Eligible Telecommunications Carrier for the Purpose of Federal Universal Service Low Income Support, Docket No. P-2011-2269524 2012 Pa. PUC LEXIS 975 (Order entered June 21, 2012); Petition of T-Mobile LLC, T-Mobile Central LLC, and VoiceStream Pittsburgh LP for Limited Designation as an Eligible Telecommunications Carrier for Purposes of Low Income Support Only, Docket No. P-2011-2275748 2012 Pa. PUC LEXIS 1408. (Order entered August 30, 2012); See, also Springfield Twp. v. Mellon PSFS Bank, 586 Pa. 1, 889 A.2d 1184 (2005), n.10," the PUC said in its order

License Revocation, Future Market Participation

See background on violations by Blue Pilot found under the initial decision here

Apart from the wet signature issue, the PUC denied exceptions from Blue Pilot related to other violations found under the initial decision.

The initial decision has recommended that the PUC bar Blue Pilot’s owners, managers, and in-house counsel from ever applying for an EGS license in the future.

In its final order, the PUC reversed this recommendation

"We are doubtful that, under the facts of this Joint Complaint, we have the authority to permanently bar Blue Pilot owners, managers, and officers from participating in Pennsylvania’s competitive energy market. Moreover, taking such action against these individuals would not be consistent with principles of due process. We note that the individual officers of Blue Pilot, its managers, owners, etc., have not been named or otherwise involved in their individual capacities in this proceeding. Therefore, the particular facts in this case do not support permanently barring Blue Pilot owners, managers, and officers from participating in Pennsylvania’s competitive energy market," the PUC said in its order

"We emphasize, however, that with any future EGS application filed at the Commission by or associated with the owners, officers, directors, or managers of Blue Pilot, the applicant(s) will be required to demonstrate that they are technically, financially, and legally fit to operate. See 52 Pa. Code §§ 54.33(a)(6)-(8). We further note that the Commission is free to scrutinize the involvement of Blue Pilot’s owners, officers, directors, or managers when adjudicating any future application, and has the discretion to either deny, approve, or conditionally approve such an application," the PUC said in its order

The initial decision also had recommended that Blue Pilot's license be "permanently" revoked. While the PUC did revoke the license, it said that a "permanent" revocation is not permissible under its rules

"With regard to the recommended revocation of Blue Pilot’s EGS License by the ALJs, we agree with the ALJ that Blue Pilot’s license should be revoked; however, we do not agree that the license should be 'permanently' revoked because our licensing regulations do not provide for a permanent revocation of an EGS license. Nevertheless, part of the license application process includes consideration of 'evidence of information demonstrating the applicant’s ability to comply with Commission’s applicable requirements concerning customer billing, . . . and terms of service . . . .' 52 Pa. Code § 54.33(a)(8). Should Blue Pilot apply for an EGS license in the future, this Commission will be able to consider Blue Pilots past billing violations when determining whether to deny, approve, or conditionally approve any application," the PUC said in its order

Civil Penalty, Refunds

The PUC in its final order imposed a civil penalty of $1,066,900 on Blue Pilot, versus the ALJs' recommendation of $2,554,000

"On consideration of the position of Blue Pilot, we find that the recommended civil penalty in this Joint Complaint is unduly disproportionate to the civil penalty imposed in HIKO, which is the only other Polar Vortex-related complaint filed by either the OAG/OCA or the Commission’s Bureau of Investigation & Enforcement that was a litigated outcome. In HIKO, this Commission imposed a $125 per-violation civil penalty against the EGS for over 14,500 occurrences of overbilling, based on what the Commission found was intentional misconduct," the PUC said in its order

"In this Joint Complaint, the civil penalty recommended under the Initial Decision is $195 per-violation for the 4,490 occurrences of residential overbilling and $498 per-violation for the 3,371 occurrences of overbilling of small business customers. Consistent with our decision in HIKO, we shall modify the recommendation and assess a civil penalty of $1,066,900 for Blue Pilot’s intentional overbilling of customers for the period from December 2013 through March 2014, in violation of Section 54.4(a) of our Regulations. This civil penalty amount constitutes $125 per-violation for 4,490 occurrences of overbilling of residential customers ($561,250) and $150 per-violation for the 3,371 occurrences of overbilling of small business customers ($505,650) during the time-period in question," the PUC said in its order

"On consideration of the Rosi factors, as applied to the conduct of HIKO and Blue Pilot, we acknowledge that HIKO committed twice as many overbilling violations as Blue Pilot. We also acknowledge that HIKO’s top management decisions regarding misconduct were found to be intentional, while no such intent has been found with Blue Pilot. However, we find that there are aggravating factors in Blue Pilot’s case that support the civil penalty amount determined here. These factors include, inter alia, Blue Pilot instituting over a 500% increase in price as compared to the PTC during March 2014 and Blue Pilot attempting to leave the Pennsylvania market without providing sufficient refunds or financial security in compliance with our Regulations so as protect its customers for improper overbillings. In comparison, HIKO agreed to issue approximately $2 million in refunds to affected customers. We also note that the Joint Complaint with Blue Pilot involves 3,371 occurrences of commercial overbillings that, typically, involve larger overbilling amounts than with residential customers, while HIKO’s overbillings were limited to residential customers only," the PUC said in its order

Separately, the PUC directed Blue Pilot Energy to pay the sum of $2,508,449, less the amounts previously refunded to its customers, into a Refund/Rebilling Pool, for the purpose of providing a rebilling credit to at least 2,516 consumers based on a rebilling of all charges that are determined to be over and above the Price-to-Compare of their respective electric distribution companies’ service territories for amounts that were charged from December 2013 through March 2014.

The PUC said that payment into the refund pool shall be prioritized over payment of the civil penalty.

The PUC also affirmed that it may order across-the-board relief to all affected customers pursuant to its plenary authority under Section 501 of the Code, 66 Pa. C.S. § 501.


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