Settlement Reached Between FirstEnergy Advisors, RESA That Supports Grant Of Pennsylvania Broker License To FirstEnergy Advisors

October 16, 2020

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Commentary by Paul Ring • ring@energychoicematters.com

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Suvon LLC, d/b/a FirstEnergy Advisors and the Retail Energy Supply Association have reached a settlement concerning the electric broker/marketer application of FirstEnergy Advisors before the Pennsylvania PUC.

Under the settlement, RESA does not oppose the grant of a broker/marketer license to Suvon LLC, d/b/a FirstEnergy Advisors. FirstEnergy Advisors has applied for an electric broker/marketer license (a form of electric generation supplier under the PUC's licensing program) to serve all customer classes in all service areas

FirstEnergy Advisors's application for a Pennsylvania broker license had been exclusively first reported by EnergyChoiceMatters.com. RESA had previously filed a protest concerning the application, alleging that the application lacked the requisite details on how Suvon intended to ensure compliance with various Commission regulations, such as EDC affiliate regulations (story here). As noted, RESA under the settlement now does not oppose the grant of the broker license to Suvon LLC, d/b/a FirstEnergy Advisors

A set of stipulated facts included with the settlement states that Suvon, "ensures appropriate marketing of its services[.]"

"Legal staff is included in the process of developing marketing materials, and will ensure compliance with the Pennsylvania Public Utility Code, the Commission’s regulations and orders, including but not limited to 52 Pa. Code § 54.122," the set of stipulated facts states

"All employees of FirstEnergy Corp. subsidiaries are required to take annual training that includes the review, and acknowledgement of understanding, of 52 Pa. Code § 54.122 conduct) [sic]," the set of stipulated facts states

"All marketing materials include an affiliate disclaimer," the set of stipulated facts states

The set of stipulated facts included with the settlement states that Suvon will not receive a preference from any Pennsylvania public utility. The set of stipulated facts noted that, "All employees of FirstEnergy Corp. subsidiaries are required to take annual training that includes the review and acknowledgment of understanding of 52 Pa. Code § 54.121-122 (including the prohibition against an electric distribution company giving any preference to any electric generation supplier, including with respect to the disclosure of customer information)."

The set of stipulated facts also states that Suvon ensures no preferential sharing of leads and customer information

Among other things, the set of stipulated facts states, "Employee access to information and information systems is restricted based on Federal Energy Regulatory Commission ('FERC') employee classification. Sales or customer-facing services will be performed by individuals classified as marketing function employees working on behalf of Suvon. Employees with market employee classifications do not have access to transmission or distribution systems, facilities, or related information. Marketing and regulated employees do not have access to each other’s market useful information systems. The access restriction is ensured through a limitation on both physical access and information technology access. Access is consistently reviewed and monitored in accordance with FirstEnergy corporate policy."

The set of stipulated facts further states, "Employees working on behalf of Suvon are classified as market function employees. As such, these employees do not have access to transmission or distribution information, including customer data. If an employee begins a new position with a new classification, an internal process is initiated that includes the wiping of the employee’s computer and files to ensure information is not shared."

The set of stipulated facts states that FirstEnergy Corp adopted 52 Pa. Code § 54.122 as company policy. As part of this effort, annual training is provided for employees regarding the code of conduct.

The set of stipulated facts states that Suvon ensures the independence of its finances and that Suvon is financially independent of any Pennsylvania public utility.

"There is no mechanism by which FirstEnergy Corp. retains revenue from Pennsylvania electric distribution companies," the set of stipulated facts states

"Suvon does not share any costs or functions with FirstEnergy Corp. or any FirstEnergy Corp. subsidiaries. Suvon will rely on and properly allocate costs for typical shared services (such as human resources, accounting, information technology, fulfillment and legal), according to FirstEnergy Corp.’s Cost Allocation Manual ('CAM'). The CAM prescribes the appropriate methodologies for allocating costs. Shared service employees bill and account for their time appropriately when supporting Suvon. Allocation is done based on which entity a service company employee is serving. If a shared service employee works for an hour (or half hour) for Suvon, the time is charged directly to Suvon. If a service company employee is working on a specific project, any time spent on that project is allocated to that project," the set of stipulated facts states

The set of stipulated facts states that the independence of employees is ensured.

The set of stipulated facts states, "The use of shared employees is permitted by the Pennsylvania affiliate restrictions. FirstEnergy Service Company provides typical shared services, such as human resources, accounting, information technology, fulfillment and legal to various FirstEnergy Corp. subsidiaries, including Suvon. Brian A. Farley is the Vice President of Sales and Operations for Suvon. The employees engaged in marketing and sales that report to him are classified as marketing-function employees. They do not have access to regulated distribution or transmission information or customer information."

RESA also does not oppose the customary lower bond amount of $10,000 which is typically granted for brokers not taking title to the electricity.

In a statement in support of the settlement included in the PUC filing, Suvon said that it is financially fit to receive a broker license.

Suvon stated, "In terms of financial fitness, Suvon is a start-up company, having been founded in 2017. Joint Stipulation of Fact ¶ 1. Like many other start-up companies, it has run an initial deficit, but it expects to earn a profit in the near future. To demonstrate its financial fitness, it submitted a credit report, forecasted financial statements, and a tax certification statement. Application p. 9. It also submitted unaudited financial statements to TUS in response to data requests. Answer to TUS Data Request Set I No. 2."

Suvon also noted in its statement that it has also received its certificate for electric and gas aggregation services in Virginia.

In a statement in support of the settlement included with the filing, RESA stated, "With the stipulated facts, Suvon demonstrates an intention to comply with the Code of Conduct and the processes and procedures which will ensure that it does so."

"Based on RESA's analysis of the settlement parameters and stipulations agreed to by Suvon showing its intent to comply with the Commission's Code of Conduct regulations, acceptance of the Joint Petition for Approval of Settlement of all issues is in the public interest," RESA said in its statement of support

Docket No. A-2020-3020377

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