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PUC Staff Recommends Approval Of Retail Suppliers' License Renewals Which Are Opposed By Consumers' Counsel

Retail Supplier Details Marketing, Compliance Changes

June 16, 2020

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Copyright 2010-20
Reporting by Paul Ring •

Staff of the Public Utilities Commission of Ohio filed comments recommending that PUCO approve the renewal of Verde Energy USA Ohio, LLC's (Verde) electricity and gas supplier licenses in Ohio.

The current term of the licenses came due for renewal while PUCO was considering alleged marketing behavior and alleged violations that ultimately resulted in a settlement approved by PUCO (see details of the alleged behavior and alleged violations as well as the terms of the settlement here). PUCO suspended automatic approval of the renewals to allow for more time for consideration, with the existing terms extended pending review of the renewals.

As previously reported, the Ohio Consumers' Counsel filed comments opposing the electric and gas license renewal applications of Verde Energy, and sought several conditions on the licenses if they are granted. Among other things, OCC said that Verde should have to accept a condition, to obtain renewal of its certificates, to not charge customers more than a designated percentage of the applicable gas utility's standard offer or GCR, as applicable, and the applicable electric utility's price to compare. That percentage limit should be no more than 150% of the applicable comparison rate that consumers could otherwise obtain from their utility, OCC has said

In newly filed comments, PUCO Staff recommended approval of the renewals, stating that Verde has demonstrated that it has the financial, managerial, and technical capabilities to continue to provide competitive retail electric service and competitive retail natural gas service in Ohio.

Staff also cited a Verde compliance plan and changes in Verde's upper management personnel. Previously reported changes in management for Spark Energy, Verde's parent, include W. Keith Maxwell III being named interim CEO, Kevin McMinn being named COO, and Barbara Clay being named Interim General Counsel:

Staff said that the Verde compliance plan is, "very comprehensive and proposes several significant measures that Staff and Verde believe will address Staff's previous concerns."

Verde noted in a recent filing that, among other measures, the company is creating a new position for an Ohio Compliance Representative to coordinate the company's interactions with Ohio consumers and regulators and to oversee Ohio compliance matters, with a support team assisting the position. The Ohio Compliance Representative and support team will conduct self-audits of Verde Energy's Ohio operations, which will include monitoring Verde Energy's telemarketing, door-to-door, and third-party verification programs.

Verde is also instituting marketing changes.

"At the very top, the company will be limiting the number of third-party vendors it uses for its telemarketing and door-to-door marketing programs. Instead of using multiple vendors for the same geographic area, Verde Energy will only use one vendor in each area and will ensure that there is no overlap in vendors," Verde said in a recent filing

"In addition to changing the structure of its management of third-party vendors, Verde Energy will also be revamping its training and oversight of its marketing agents. That will include working directly with the agents of third-party vendors to provide Verde Energy specific training on the company's policies, Ohio regulations, and the do's and don'ts of working with interacting with potential customers," Verde said

Verde said that it will monitor outbound telemarketing and door-to-door vendors.

"For telemarketing calls, Verde Energy will be using an outside telemarketing and TPV call vendor to evaluate all sales calls using artificial intelligence technology. To ensure that the technology is providing accurate results, the company will also have human auditors review randomized calls and Verde Energy will have periodic auditing meetings with the vendor to review the results of their reports. For door-to-door sales, whenever the Commission approves the restarting of that sales channel, Verde Energy will be using an app that it supplies to all of its agents via an electronic tablet to track agent movements and ensure that all agents are working within their sales territory. This app will also allow Verde Energy to ensure that customers are receiving the correct information about its services by requiring agents to provide their tablet to customers so that they can fill out portions of the enrollment process. Verde Energy will also be conducting unannounced field audits of door-to-door agents by members of its compliance team," Verde said

"These changes exceed the recommendations by OCC for Verde Energy to remain in the Ohio market. For example, OCC alleges that Verde Energy's certificates should be revoked because it has been accused of spoofing caller ID information and slamming customers. But Verde Energy's compliance plan addresses any allegation of spoofing and slamming by now requiring all telemarketers to use a single, centralized dialer program. Under the new marketing program, Verde Energy will be using its parent company's new dialing system, developed in conjunction with a cloud contact company. With this technology, Verde Energy will control all aspects of dialing for its sales calls, including but not limited to: what numbers can be dialed; what numbers will show up on a customer's caller ID; how often numbers can be called; when numbers can be called; and how records of all calls are kept," Verde said

"As a result of this fundamental change in Verde Energy's telemarketing program, Verde Energy will have the ability to ensure that only its approved numbers are being used by outbound telemarketers. This new technology will also have the benefit of addressing Staff's concerns about telemarketers dialing consumers on the federal Do-Not-Call ('DNC') registry. With the new dialer, Verde Energy will be able to directly monitor and control which numbers can be dialed by third-party vendors and will be able to ensure that vendors do not contact persons on the DNC list," Verde said

Turning back to Staff's comments on the license renewal applications, Staff specifically stated, "The standards for reviewing an application for a CRNGS certificate are set forth in R.C. 4929.20 and Ohio Adm.Code 4901:1-27-10, and R.C. 4928.08 and Ohio Adm.Code 4901:1-24-10 for CRES certificates. The language in the rules is substantially similar: The commission will act to approve an application if it finds all of the following: (1) The applicant is managerially, financially, and technically fit and capable of performing the service it intends to provide; (2) The applicant is managerially, financially, and technically fit and capable to comply with all applicable commission rules and orders; and (3) The applicant is able to provide reasonable financial assurances sufficient to protect the utility (EDU or LDC) and the applicant's customers in the event of default. Staff reviews each application to determine whether, in Staff's expert opinion, the applicant meets these standards. For renewal applications, if the applicant has been operating in the State of Ohio and serving customers, Staff is primarily looking to see what, if anything, has changed since the applicant's most recent certificate was issued."

Staff stated, "Here, Staff reviewed whether Verde is managerially, financially, and technically fit to continue to provide CRES and CRNGS in Ohio. The financial sections of both applications have also been reviewed by Staff and are in compliance with Ohio Administrative Code. Staff previously expressed concerns with the managerial and technical capabilities of Verde as part of the COI case [investigation] and requested that these renewal applications be suspended. Through the resolution of the COI Case with the Commission-approved Stipulation, Staff's concerns with Verde's managerial and technical capabilities have been addressed. Circumstances have not changed since the Commission approved the Stipulation, and Staff is unaware of any new facts that would merit a change in Staff's opinion that the Stipulation adequately addresses Verde's previous compliance issues."

"Verde implemented numerous changes to its operating procedures in Ohio in response to the COI case. Among other things, there have been at least three changes to Verde's upper management personnel. In addition, the compliance plan Verde provided for Staff's review, pursuant to the Stipulation, is very comprehensive and proposes several significant measures that Staff and Verde believe will address Staff's previous concerns. The plan is very thorough and includes information on new and improved methods for auditing vendors, improved trainings, updated marketing programs, a dedicated Ohio compliance representative, and operational changes that focus on ensuring compliance with Commission rules. The plan also proposes improvements to Verde's records retention program that should alleviate any past issues with Verde's inability to access or retain certain records and improve Verde's responses to future Staff investigations. Therefore, Staff has approved Verde's plan for implementation," Staff stated

"With the changes implemented by Verde, Staff believes that appropriate steps have been taken to help prevent future issues of non-compliance with Commission rules. Staff has also reviewed and evaluated the certification applications, accompanying exhibits, and amendments. Based on this review, Staff believes the applications filed by Verde Energy USA Ohio, LLC, as amended, demonstrate that Verde has the financial, managerial, and technical capabilities to continue to provide CRES and CRNGS in Ohio. Therefore, Staff recommends that the Commission approve Verde's renewal applications," Staff said

Case No. 11-5886-EL-CRS et al.

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