Retail Supplier To Pay $200,000 In Refunds Under Assurance of Voluntary Compliance With Attorney General

Agreement Includes List Of Prohibited Terms During Marketing

Requires Reporting To AG

August 3, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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SmartEnergy Holdings, LLC is to provide $200,000 in customer refunds under an Assurance of Voluntary Compliance ('AVC' or 'Agreement') with the Attorney General of the State of Illinois to resolve the Attorney General’s inquiry into certain SmartEnergy marketing practices in Illinois.

SmartEnergy provided the following statement on the matter:

"SmartEnergy takes matters such as these very seriously. While we did not agree with all of the issues raised by the Illinois Attorney General, we worked collaboratively with them to resolve the issues to their and our mutual satisfaction. We entered into a Settlement Agreement with the Illinois AG in July of 2019 for the purpose of avoiding the burden and expense of litigation and any further disruption to SmartEnergy’s business. In entering into the Agreement, we did not admit to violating any applicable laws, regulations or guidelines.

"We very much appreciate the work done by the Illinois AG’s office. Working with the Illinois AG had a profoundly positive impact on SmartEnergy’s business, and we thanked them for the feedback they shared with us."

--- Statement from SmartEnergy

The Assurance of Voluntary Compliance states that, "The Attorney General alleges that SmartEnergy violated Section 2 of the Consumer Fraud Act by using deceptive practices to market its electric supply to Illinois consumers. The Attorney General alleges these deceptive practices comprised misrepresentations and omissions of material facts made by SmartEnergy to Illinois consumers with the intent that Illinois consumers rely on them. In particular, the Attorney General alleges SmartEnergy routinely misrepresented to Illinois consumers that (a) consumers would save money on their energy bills by switching to SmartEnergy, (b) SmartEnergy’s rates are always or usually lower than the consumer’s utility rate, (c) the consumer’s utility rate is not competitive, (d) SmartEnergy would lock in consumers’ current electric supply rate for six months, (e) SmartEnergy’s offer was a reward for the consumer’s status with the public utility, (f) SmartEnergy was enrolling consumers in a 'program' offered by their utility or 'applying benefits' to their utility accounts, (g) consumers’ electric supply could not be switched from their utility, and (h) consumers were merely being asked to complete 'pre-enrollment' that would not result in actually switching electric supply providers. The Attorney General also alleges SmartEnergy routinely omitted or obscured the material fact of ComEd’s current rate for electric supply during its interactions with consumers residing in ComEd’s service territory."

Under the Assurance of Voluntary Compliance, SmartEnergy denies violating the Consumer Fraud Act or any other applicable provision of Illinois law. "SmartEnergy is entering this AVC to amicably resolve the Attorney General’s concerns. SmartEnergy’s execution of the AVC shall not be construed as an admission of liability for the violation of any Illinois law or regulation," the Assurance of Voluntary Compliance states

Under the Assurance of Voluntary Compliance, SmartEnergy shall issue a total of $200,000 in refunds to eligible customers. Refunds shall be based on the variance between the customer's charges under SmartEnergy versus default service, with the total of $200,000 allocated proportionally among customers based on such variance

Under the Agreement, SmartEnergy shall pay to the Office of the Illinois Attorney General a total sum of $50,000 as a voluntary contribution to the Attorney General Court Ordered and Voluntary Compliance Payment Projects Fund. However, if the Attorney General at his sole discretion determines that SmartEnergy has complied with the provisions of the Agreement and Illinois law following the effective date of this Agreement, then SmartEnergy shall not be required to make the this payment

Under the Assurance of Voluntary Compliance, SmartEnergy agrees to the following practices:

• SmartEnergy shall not state, imply, or create the impression that an Illinois consumer is eligible to receive any offer from SmartEnergy, in whole or in part, because of such consumer’s status as a customer of any utility. This prohibition includes, but is not limited to, statements that an Illinois consumer is eligible for an offer from SmartEnergy because he or she is a 'good' or 'valued' customer of a utility.

• SmartEnergy shall not use the term 'program' to refer to any of its products or services, or to any offer made to any Illinois consumer, in a context which suggests the consumer is not entering into a contract to change electric suppliers; nor shall SmartEnergy state, imply, or create the impression that it is 'applying benefits' to an Illinois customer’s utility account.

• SmartEnergy shall not state, imply, or create the impression that an Illinois consumer is not entering into a new contract by enrolling with SmartEnergy.

• SmartEnergy shall not state, imply, or create the impression that an Illinois consumer’s enrollment with SmartEnergy is preliminary, tentative, or incomplete. This prohibition includes, but is not limited to, the phrases 'pre-enrollment' and 'preliminary enrollment.'

The Agreement provides that, beginning in the first full month following the effective date of the Agreement, for each month during which SmartEnergy solicits Illinois consumers regarding the sale of electric supply service via telephone, SmartEnergy shall perform an audit of either 25 such calls or 1 percent of such calls, whichever number is larger. The calls subject to this monthly audit shall be randomly selected from all Illinois calls placed or received that month that exceed one minute in length. SmartEnergy shall analyze the calls subject to this monthly audit to determine whether its telemarking [sic] agents are complying with all applicable laws and this AVC. For the first six such monthly audits, SmartEnergy shall report the results to the Attorney General within 7 days after the audit is complete. This audit requirement will terminate after the completion of eighteen monthly audits.

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