PUC Staff Recommend That Retail Supplier Pay Forfeiture Of $775,000, Suspend Marketing
Staff Alleges Supplier's Flat Daily Rate Plan Is Not Permitted Under PUC Rules
October 14, 2020 Email This Story Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
The following story is brought free of charge to readers byEC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com
Staff of the Public Utilities Commission of Ohio issued a report concerning an investigation of SFE Energy Ohio, Inc and Statewise Energy Ohio, LLC in which, among other things, Staff recommends that the companies pay a forfeiture of $775,000, pay certain restitution, and suspend all marketing until February 1, 2021, for alleged violations of the Ohio Adm.Code
SFE and Statewise provided the following statement to EnergyChoiceMatters.com concerning the matter:
SFE and Statewise are reviewing the allegations in the Staff Report. The companies take public health, compliance with the laws of Ohio, and their interactions with customers very seriously. SFE and Statewise have been proactive in addressing compliance and regulatory concerns, as outlined in the staff report, and the companies look forward to continuing to work with PUCO Staff and other parties to the proceeding to resolve any remaining concerns regarding the allegations in an appropriate manner.
-- Statement from SFE Energy and Statewise Energy
As first reported by EnergyChoiceMatters.com, PUCO had opened an investigation of the suppliers as a result of various allegations, including an allegation that an agent for SFE conducted a door to door sales call, shortly after such marketing was permitted to be resumed subject to health and safety conditions, while allegedly not wearing a mask. As alleged by Staff in the report, "On June 24 and 26, 2020, Staff received two videos that show a sales
representative soliciting at a residential home on behalf of SFE Energy Ohio, Inc. (SFE Energy)
making misleading and deceptive statements while not wearing a mask or other personal
protective equipment (PPE)."
The Staff report includes additional new allegations, most notably including allegations that the companies' flat daily rate product is not permissible under the Commission’s rules
According to the Staff report, "SFE Energy and Statewise are affiliates. SFE Energy, Inc. is the parent company of both
entities, owning 100% of SFE Energy and 51% of Statewise."
Concerning the daily flat rate plans, the Staff report alleges, "In 2018, the regulatory contact for the Companies reached out to Staff for guidance on
what product offerings were permissible in Ohio. After discussion, Staff advised that flat daily rate contracts were not permissible under the Commission’s rules."
The Staff report alleges, "However, during the
course of Staff’s investigation, Staff reviewed several contracts signed by customers as a result
of a door-to-door enrollments and telephonic enrollment welcome packages with contract
terms and conditions. These contracts listed several rate options and there were numerous gas
and electric or single commodity contracts referencing a fixed daily rate with conditions on the
usage limits for total CCF and/or kWh. After reviewing these contracts and documentation
provided in association with Staff’s investigation, Staff determined that contracts for a fixed
daily rate were submitted and accepted by the Companies. Staff found that not only did the
Companies offer a product/rate structure that is not allowed under the Commission’s rules, but
that the contracts failed to clearly explain, in understandable language, the actual rates
customers would be charged. The contracts also failed to explain, in clear and understandable
language, how the Companies calculate the overages that would be added to customer’s fixed
daily rates or when those overages would apply."
Staff further alleged, citing an example of the daily flat rate contract, that, "In the
electricity agreement summary section, it states that the electricity supply price of '$1.62/day
is Your Daily price. See Section Pricing of the Terms and Conditions.' Under the pricing
section in terms and conditions, there is no bullet point for a daily price or daily rate. Under
the details for the Hybrid Plan, it states in part that 'In addition to the daily charge, You may
be subject to an overage charge. If You have chosen the Single Family Home Hybrid Plan price,
annual consumption above the maximum allotment, as determined at the time of enrollment,
will be billed to You at the overage price as indicated in Your Agreement Summary.' The
summary makes no mention of an overage charge, it does not state that the $1.62 per day is
the rate for an annual allotment of kWh per year, nor does it inform the customer of what their
annual allotment is. For these, and other reasons, Staff believes that the fixed daily rate
contracts marketed and administered by the Companies are not in compliance with the
As to other alleged violations, the Staff report alleges that, "Between January 1 and October 1, 2020, the Commission’s call center received 69 customer
contacts regarding SFE Energy’s provision of CRES and CRNGS and 100 contacts regarding Statewise, for a total of 169 contacts. The customer contacts were primarily customers
enrolled via door-to-door marketing; however, some were related to telemarketing sales,
including the solicitation of a PUCO staff member."
"Staff’s review of PUCO call center contacts and complaint investigations identified a
pattern of misleading and deceptive sales practices in the solicitation and enrollment of
customers using door-to-door and tele-sales channels, as well as systemic deficiencies in the
Companies’ administration of contracts. Misleading and deceptive issues were consistent
during the review of both SFE Energy and Statewise Energy contacts, and the Companies were
using similar methods for marketing and contract administration," the Staff report alleges
"Staff determined that the majority of the sales calls provided by the Companies, in
response to a data request, were in violation of Ohio Adm.Code 4901:1-21-05 and 4901:1-29-
05," the Staff report alleges
Among other things, the Staff report alleges that such sales calls showed that, "Sales representatives for the Companies did not make a clear offer for sale. Instead,
very soon into the calls, customers were instructed to 'grab a copy of your
electric/gas bill' and provide the representative with their account number(s) and
told they are enrolling in the product stated."
Further, the Staff report alleges that in such sales calls, "Sales representatives requested the customer’s bill information before providing the
customer with any rate offer or asking them if they wished to enroll with the
Regarding such sales calls, the Staff report alleges, "Other misleading statements included statements that the representative was
following up on information that was sent to the customer about price protection to
avoid the scheduled rate increases on the customer’s electric bills; informing the
customer that they have selected a certain program option and providing program
details to the customer without ever asking if the customer wishes to enroll or
telling the customer what the rate would be; and referring to the services provided
by the Companies as 'price protection.'"
"Although Staff did not find any egregious issues with the Companies’ sales scripts, it was
clear that sales agents marketing on behalf of the two companies were not following them
when soliciting Ohio consumers. In several of the investigations from customer contacts to the
PUCO call center customers alleged sales agents promised lower rates and savings. Several
customer contacts referenced promotions that were never realized, and referenced rate
protection that would result in savings when in actuality the fees and high rates raised the
monthly bill," the Staff report alleges
"Another issue with door-to-door representatives became evident when contacts
referenced monthly fees and daily rate contracts. Originally, customers were told SFE Energy
or Statewise was the cheaper option and there would be savings resulting from enrollment with
a multi-year contract; however, once bills were received the recurring monthly fees resulted in
higher rates than the bills prior to enrollment and if the customer was serviced under the
default service," the Staff report alleges
"Staff believes it is important to acknowledge that a representative for the Companies
reached out to Staff in March of this year regarding an issue that they discovered with a vendor
marketing door-to-door for Statewise. After receiving several complaints from the PUCO’s call
center, Statewise began an internal investigation into the vendor. Their investigation found
that sales agents marketing on Statewise’s behalf were enrolling Ohio consumers without their
consent, also referred to as 'slamming' customers. Statewise took immediate action and Staff
was satisfied with their response. Therefore, Staff did not include those slamming complaints
as part of this investigation," the Staff report said
"Staff also found other issues, including door-to-door enrollments where the Companies’
sales agent remained at the customer’s residence while the TPV was completed for both gas
and electric supply, and telephonic enrollments where the sales representatives stayed on the
phone call during the TPV process," the Staff report alleges
Staff sought an order requiring the companies to pay a forfeiture of $775,000
Staff also recommended that the companies be required to
suspend all marketing until February 1, 2021 and until
the companies have submitted an acceptable compliance plan to Staff
Staff said that PUCO should require the companies to immediately stop marketing, enrolling, and administering
customer contracts that offer/charge customers a fixed daily rate. All customers
currently being charged a fixed daily rate should be contacted by the companies and
offered the choice of re-enrolling with the companies under a different
program/rate plan, or being returned to their utilities’ standard offers without
incurring any early termination fees from the companies, Staff said
Staff recommended that PUCO order the companies to provide restitution to those customers, with the amount as follows:
• Enrolled through door-to-door and telephonic marketing from November 1,
2019 to June 26, 2020;
• Customers who contacted the PUCO call center from January 1, 2020 to
October 1, 202; and
• Customers who were charged under a Hybrid Plan or a fixed daily rate plan
from September 18, 2018 to present.
• Restitution provided by the Companies should be provided by refunding or
crediting the customers with the difference of what the customers were
charged by the Companies (including any monthly fees, overages, service
charges, and early termination fees), and what the customers would have
been charged for the same usage under the customer’s electric distribution
and/or natural gas utility's default rate, Staff said
Staff said that PUCO should prohibit the companies from transferring any customer contracts to another entity
until all affected customers have been provided notification and restitution.
Staff specifically alleged violations of the following provisions:
• In re the Proper Procedures and Process for the Commission’s Operations and Proceedings
During the Declared State of Emergency and Related Matters, Case No. 20-591-AU-UNC,
(Emergency Case), Entry (June 17, 2020) at ¶15, which states in part that 'we find that door-to-door
solicitation of CRES and CRNGS may resume, subject to all relevant requirements and best
practices issued by the Ohio Department of Health and any relevant local health authority.'
• The Ohio Department of Health’s operating requirements for Consumer, Retail, Services &
Entertainment, available at https://coronavirus.ohio.gov/static/responsible/Consumer-Retail-
Services.pdf, which requires, among other things, 'all employees to wear facial masks * * * .'
• Ohio Adm.Code 4901:1-21-03(A) 'Competitive retail electric service (CRES) providers shall not
engage in unfair, misleading, deceptive or unconscionable acts or practices related to, without
limitation, the following activities: (1) Marketing, solicitation, or sale of a CRES. (2)
Administration of contracts for CRES (3) Provision of CRES, including interactions with
• Ohio Adm.Code 4901:1-29-03(A) 'A retail natural gas supplier ['CRNGS'] or governmental
aggregator shall not engage in unfair, misleading, deceptive, or unconscionable acts of practices
related to, without limitation, the following activities: (1) Marketing, solicitation, or sale of a
competitive retail natural gas service. (2) Administration of contracts for such service. (3)
Provision of such service, including interactions with consumers.'
• Ohio Adm.Code 4901:1-21-05(C) 'No CRES provider may engage in marketing, solicitation, or
sales acts, or practices which are unfair, misleading, deceptive, or unconscionable in the
marketing, solicitation, or sale of a CRES. Such unfair, misleading, deceptive, or unconscionable
acts or practices include, but are not limited to, the following: (8) Advertising or marketing
offers that: (a) Claim that a specific price advantage, savings, or guarantee exists if it does not. *
* * (c) Offer a fixed price for CRES without disclosing the cost per kilowatt hour and all recurring
and nonrecurring charges. * * * (h) Lead the customer to believe that the CRES provider is
soliciting on behalf of or is an agent of an Ohio electric utility when no such relationship exists.'
• Ohio Adm.Code 4901:1-29-05(D) 'No retail natural gas supplier or governmental aggregator
may engage in marketing, solicitation, sales acts, or practices which are unfair, misleading,
deceptive, or unconscionable in the marketing, solicitation, or sale of a competitive retail
natural gas service. Such unfair, misleading, deceptive, or unconscionable acts or
practices include, but are not limited to, the following: (8) Advertising or marketing offers that
(a) Claim that a specific price advantage, savings, or guarantee exists if it does not. '
• Ohio Adm.Code 4901:1-21-05(C)(10) prohibits a CRES provider from offering 'Engaging in any
solicitation that will lead the customer to believe that the CRES provider is soliciting on behalf of
or is an agent of any entity other than the CRES provider.'
• Ohio Adm.Code 4901:1-29-05(D)(5) prohibits CRGNS providers from 'Engaging in any solicitation
that leads the customer to believe that the retail natural gas supplier or governmental
aggregator or its agent is soliciting on behalf of or is an agent of any entity other than the
competitive retail natural gas supplier or governmental aggregator.'
• Ohio Adm.Code 4901:1-21-06(B)(1) 'CRES providers are prohibited from knowingly enrolling
PIPP and arrearage crediting program customers.'
• Ohio Adm.Code 4901:1-29-06(C) 'A retail natural gas supplier or governmental aggregator is
prohibited from enrolling a potential customer that has failed to discharge, or enter into a plan
to discharge, all existing arrearages owed to or being billed by the incumbent natural gas
company including those customers enrolled in the percentage of income payment plan plus
program (PIPP plus).'
• Ohio Adm.Code 4901:1-21-04(A)' Each natural gas company (for records retention related to
competitive retail natural gas services), each retail natural gas supplier and each governmental
aggregator shall establish and maintain records and data sufficient to: (1) Verify its compliance
with the requirements of any applicable commission rules. (2) Support any investigation of
• Ohio Adm.Code 4901:1-29-08(B)(5) 'Each retail natural gas supplier or governmental aggregator
shall retain records of customer complaints, investigations, and complaint resolutions for two
years after the occurrence of such complaints and shall provide such records to the staff within
three business days of request.'
• Ohio Adm.Code 4901:1-21-06(D)(1)(h)(ii) The independent third-party verifier must confirm with
the customer that the sales agent has left the property of the customer. The sales agent is not to
return before, during, or after the TPV process.
• Ohio Adm.Code 4901:1-29-06(D)(6)(b)(ii) the independent third-party verifier must confirm with
the customer that the representative of the retail natural gas supplier or governmental
aggregator has left the property of the customer. The representative of the retail natural gas
supplier or governmental aggregator is not to return before, during, or after the independent
third-party verification process.
• Ohio Adm.Code 4901:1-21-06(D)(1)(j) requires a CRES provider to leave the premises of a
customer when requested to do so by the customer.
• Ohio Adm.Code 4901:1-29-05(E)(3) requires a CRGNS provider to leave the premises of a
customer when asked to do so by the customer.
• Ohio Adm.Code 4901:1-21-08(B)(5) 'Each CRES provider shall retain records of customer
complaints, investigations, and complaint resolutions for one year after the occurrence of such
complaints and shall provide such records to the staff within three business days of request.'
• Ohio Adm.Code 4901:1-21-11(A) states, in relevant part, that 'In their administration of such
contracts, CRES providers are prohibited from engaging in unfair, deceptive, misleading, and
unconscionable acts and practices.'
• Ohio Adm.Code 4901:1-29-10(A), which states in part that 'In its administration of such
contracts, a retail natural gas supplier or opt-in governmental aggregator is prohibited from
engaging in unfair, deceptive, misleading, and unconscionable acts and practices.'
• Ohio Adm.Code 4901:1-29-05(A)(1)(a) 'The cost per Ccf or Mcf, whichever is consistent with the
incumbent natural gas company's billing format, for natural gas supply, if the product is based
on a per-unit price or, for flat-monthly rate offers, a specific listing of the rate to be charged per
month for the duration of the contract.'
• Ohio Adm.Code 4901:1-21-12(B) which states in part that 'All CRES provider contracts with
residential and small commercial customers shall include, but not be limited to, the following
information (to be stated in clear and understandable language): (7)[f]or fixed fixed-rate offers,
such information shall, at minimum, include the cost per kilowatt hour for generation service,
and, if applicable, transmission service.'
• Ohio Adm.Code 4901:1-29-11(J) which states that contracts must include an itemized list and
explanation of all prices in clear and understandable language and all fees associated with the
service such that: (1) For fixed-rate offers, such information shall, at minimum, include: the cost
per Ccf or Mcf, whichever is consistent with the incumbent natural gas company's billing format,
for competitive retail natural gas service, if the product is based on a per-unit price, or for flat-monthly
rate offers, a specific listing of the rate to be charged per month for the duration of the
contract; the amount of any other recurring or nonrecurring retail natural gas supplier or opt-in
governmental aggregator charges; and a statement that the customer will incur additional
charges for the incumbent natural gas company's services.'