New York PSC Revokes Eligibility Of Two ESCOs, Orders Return Of Customers To Default Service

Issues Show Cause Order To Two Other ESCOs Requiring Such ESCOs To Show Why Their New Applications For Continued ESCO Eligibility Should Not Be Denied

May 18, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The New York PSC has issued separate orders revoking the ESCO eligibility of Josco Energy Corp ("Josco") and SunSea Energy, LLC ("SunSea").

The PSC also issued a separate order to show cause requiring Starion Energy NY, Inc. ("Starion") and Smart One Energy LLC ("Smart One") -- as well as Josco and SunSea -- to show cause why their eligibility applications for continued ESCO eligibility should not be denied. ESCOs wishing to continue to serve customers after the PSC's retail market reset order were required to file new applications for continued ESCO eligibility

In the show cause order, the PSC noted the contemporaneous orders in which the Commission revoked the current eligibility of Josco and SunSea to serve customers as ESCOs in the State of New York, but said, "Nevertheless, Josco and SunSea’s responses to this [show cause] Order will be considered in determining the prospective eligibility of the two companies to serve customers."

Starion provided the following statement concerning the matter:

"Starion is in the process of reviewing the Public Service Commission’s Order to Show Cause and will respond accordingly."

--- Statement from Starion

In brief, concerning the eligibility re-applications, the PSC alleges that each ESCO omitted material information from the applications, as more fully described below

"In order to effectively regulate ESCOs operating in New York State, the Commission must ensure that truthful and accurate information is provided to the Commission and Staff. An ESCO that provides false or misleading information in its eligibility application raises significant concerns regarding the company’s ability to operate in conformance with the UBP and Commission orders. Moreover, failure to provide required information in an eligibility application diminishes and circumvents the enhanced eligibility criteria adopted in the December 2019 Order," the PSC said

"For these reasons, Josco, Smart One, Starion, and SunSea are each ordered to show cause why their applications for eligibility to operate as an ESCO in New York State should not be denied," the PSC said

Starion

The PSC's show cause order states, "On November 17, 2020, Starion filed an application, signed by Starion’s Chief Operating Officer (COO), seeking to comply with the December 2019 Order. Starion’s response to Section 1.B. of the RAAF, which requests a list of energy affiliates including upstream owners and affiliates, refers to an attachment that lists Starion Energy Inc. as the parent company of Starion Energy PA, Inc. and Starion Energy NY, Inc. Starion answered in the negative when replying to Section 1.C., which asks if, during the previous 36 months, any criminal or regulatory sanctions have been imposed against any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO. Section 1.D., which lists all states in which the company has operated during the last 24 months, refers to another attachment that states Starion serves customers in New York and Ohio, and is licensed in Michigan and Indiana. In Section 1.E., Starion notes the other trade name used in other states is 'Starion Energy NY, Inc.' The information provided by Starion in these sections indicates that Starion has two affiliates, operates only in New York and Ohio, uses only the trade name 'Starion Energy NY, Inc.' in other states, and that no senior officer of the ESCO applicant or entity holding ownership interests of 10% or more in the ESCO has had any criminal or regulatory sanctions imposed within the last 36 months. An incomplete response was also provided with respect to the complaint data, which only included the number of complaints each month for New York and Ohio."

The PSC's show cause order states, "Staff contacted Starion on January 20, 2021, regarding deficiencies in its application, including the lack of compliant contracts, missing complaint data, non-compliant TPVs, and non-compliant marketing materials. In response, Starion provided additional information on February 17, 2021. Further modifications to its sales agreements were requested on March 1, 2021, which Starion provided on March 10, 2021."

The PSC's show cause order states, "Staff’s review of Starion’s website indicates that, in addition to New York and Ohio, it operates in Connecticut, District of Columbia, Delaware, Illinois, Maryland, Massachusetts, New Jersey, and Pennsylvania. Contradictory evidence was also found as part of the Massachusetts Attorney General’s lawsuit, filed on October 16, 2018, against Starion Energy Inc., two of its principals, including Ruzhdi Dauti, who is named on the RAAF as the president of Starion, and various marketing entities for violations of Massachusetts law. This information suggests that the responses to Sections 1.C. and 1.E. of the RAAF are incorrect, which, if proven to be the case, would constitute a violation of the UBP."

Josco

The PSC's show cause order states, "On November 18, 2020, Josco filed an application, signed by the Vice President of Operations, seeking to comply with the December 2019 Order. Section 1.B. of the RAAF, which requests a list of energy affiliates including upstream owners and affiliates, was left blank. Similarly, the required complaint data was not included with the application package documents. Section 1.D., which lists all states in which the company has operated during the last 24 months, included only New York. The list of all trade names used in other states, as required in Section 1.E., was marked 'N/A.' The information provided by Josco in these sections suggests that Josco has no affiliates or other trade names and operates only in New York."

The PSC's show cause order states, "Staff notes that the answers indicating that Josco only operates in New York are contradicted by the Third Party Verification (TPV) script that was also submitted by Josco. The script lists choices of utilities in Illinois, Maryland, Massachusetts, New Jersey, New York, Ohio, and Pennsylvania. Furthermore, the website named on Josco’s RAAF, www.joscoenergy.com, indicates that Josco provides service in Illinois, Maryland, New Jersey, New York, Ohio, and Pennsylvania. Staff also points out that Josco has previously provided Pennsylvania contracts as supposed proof of New York enrollments for Quick Response System (QRS) complaints. As part of its review, Staff contacted a representative at the customer service number that Josco listed on its RAAF, and was informed by the representative that Josco does in fact operate in multiple states."

The PSC's show cause order states, "Upon completion of the application review, Staff requested revisions to the sales agreements, TPV scripts, and RAAF, including Sections 1.B., 1.D., and 1.E. Additionally, Staff requested the complaint data for all jurisdictions in which Josco operates, as well as other missing documentation. Because Josco has had a significant history of complaints and enforcement action in New York, the review of complaints from other states was a predominant concern in the application review process. Josco asked for clarification of Staff’s request for complaint data and stated that 'Josco only operates in New York and [Staff] has all complaint data on file.'"

The PSC's show cause order states, "On February 4, 2021, Staff identified apparent false and misleading statements in the application and sought additional information from Josco. Josco filed a response on April 15, 2021, including complaint logs for Illinois, Maryland, New Jersey, Ohio, and Pennsylvania. Josco stated in its response that Josco Energy MA, LLC, Josco Energy IL, LLC, and Josco Energy USA, LLC are separate and distinct, for corporate purposes, from Josco. It claimed that the misinformation provided on the RAAF was a simple mistake and that the individual completing the application did not believe that the above-named companies met the definition of affiliate. However, Josco failed to address the fact that the Vice President of Operations signed the RAAF attesting that the information was true, complete, and accurate. Further, Josco’s attorney did address this misinformation in their January 5, 2021 email correspondence with Staff."

The PSC's show cause order states, "Josco filed a revised RAAF on April 15, 2021. Section 1.B. of the RAAF, which requests a list of energy affiliates including upstream owners and affiliates, refers to an Attachment that now lists Josco’s affiliates as Josco Energy MA, LLC, Josco Energy IL, LLC, and Josco Energy USA, LLC. Section 1.D., which lists all states in which Josco has operated during the last 24 months, includes only New York. Section 1.E., which lists all trade names used in other states, continues to be marked 'N/A' despite its affiliates’ activities beyond New York. The final page of the RAAF that includes the attestation and signature is absent."

The PSC's show cause order states, "The fact that Josco has affiliates operating in multiple states appears to directly contradict the information provided in Section 1.B. of the initial RAAF and Sections 1.D. and 1.E. of both the initial and revised RAAFs. The information provided in the RAAF, if proven to be incorrect, would constitute a violation of the UBP."

With respect to the revocation of Josco's current eligibility, see our prior story for background on the alleged violations

At the time of an October 2020 show cause order, Josco served residential and non-residential electric and gas customers in various territories

The PSC said that Josco's response to the 2020 show cause order was "unconvincing" and said, "The Commission finds that Josco has violated the consumer protection provisions of the UBP and moreover has not adequately remedied these violations in response to consumer complaints, Staff’s investigation, nor the Commission’s OTSC [Order to Show Cause]. Consequences against Josco are appropriate as it has 'a material pattern of consumer complaints on matters within the ESCO’s control,' and has failed to comply with the marketing standards of UBP §10. The significant number of complaints filed against Josco between 2016 and 2020 alleging marking violations demonstrate a material pattern of complaints on matters within Josco’s control."

"[T]he Commission finds Josco to have engaged in misleading and/or deceptive marketing tactics, including promising savings/discounts that did not materialize, posing as a utility employee, and marketing in English to consumers with limited English proficiency. Moreover, Josco has violated UBP requirements related to TPVs, as well as the Commission’s complaint response procedures," the PSC said

The PSC stated in its order that, "Josco refers to its 'demonstrated commitment to compliance and customer service...' with regard to its complaints in New York. In fact, Josco has demonstrated the opposite, as proven by the fact that the complaint types remained the same over the course of four years and the QRS responses were consistently insufficient during that time, even when Staff provided multiple notices of violations and deficiencies."

The PSC stated in its order that, "Josco further claims that it has 'consistently worked and continues to work cooperatively and proactively with Staff to quickly and fairly address customer issues and complaints.' The OTSC directed Josco to provide four pieces of information pertaining to the 13 listed complaint cases, including: enrollment documentation, disconnect dates, cost analysis, and refund information. Josco’s response included the enrollment documentation and images of refund checks, but no disconnect dates or cost analyses. This is not indicative of a company working cooperatively with Staff and fairly addressing customer complaints."

"Josco repeatedly claimed that it would implement improvements in its marketing and complaint handling procedures. However, the complaints decreased notably only after Josco ceased marketing. Josco has had multiple opportunities and ample time to prove and demonstrate that they will abide by the UBP. Josco also repeatedly claimed that it would improve its complaint response practices, yet 17 of the 29 responses to complaints received during 2020 were inadequate and eight of those were during the second half of the year," the PSC stated in its order

Josco was ordered to return its customers to full utility service within 60 days of the effective date of the PSC's revocation order

These transfers shall occur on the customers’ regularly scheduled meter reading dates.

Smart One

The PSC's show cause order states, "On December 8, 2020, Smart One filed an application, signed by the Chief Executive Officer (CEO) seeking to comply with the December 2019 Order. Section 1.B. of the RAAF, which requests a list of energy affiliates including upstream owners and affiliates, was marked 'N/A.' Smart One answered 'no' in response to Section 1.C., which asks if, during the previous 36 months, any criminal or regulatory sanctions have been imposed against any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO. In Section 1.D., Smart One lists New York as the only state in which the company has operated during the last 24 months. Section 1.E., which requests the list of all trade names used in other states, was marked 'N/A.' The information provided by Smart One in these sections indicates that Smart One has no affiliates, uses no other trade names, has operated only in New York in the last 24 months, and has had no regulatory sanctions imposed in the last 36 months. The required complaint data was also missing from the application package."

The PSC's show cause order states, "Upon completion of the application review, Staff requested revisions to the sales agreements, TPV scripts, the complaint data from all jurisdictions in which Smart One operates, and other missing documentation. Smart One responded that the previously submitted sales agreements were compliant, other documentation had already been included, and other revisions and documents were filed. It stated that 'the company only operates in New York State and the company’s complaint data is on file with [Staff].'"

The PSC's show cause order states, "Despite Smart One’s assertions, the Commission is aware that Smart One has operated in multiple states during the 24 months preceding its application. On August 2, 2019, the Maryland Public Service Commission issued its Order Suspending Retail Supply License, Imposing Civil Penalty, and Directing the Transfer of Service against Smart One. In addition, the California Public Utilities Commission issued Energy Citations to Smart One on February 13, 2020, April 21, 2020, August 20, 2020, and September 17, 2020, totaling $25,000 for violations of the Public Utilities Code. On November 21, 2019, the Commonwealth of Virginia State Corporation Commission issued a Rule to Show Cause against Smart One Energy for violations of the Rules Governing Retail Access to Competitive Energy Services. These facts appears [sic] to directly contradict the information provided in Sections 1.C. and 1.D. of the RAAF which, if proven to be the case, would be a violation of the UBP."

SunSea

The PSC's show cause order states, "On November 17, 2020, SunSea filed an application, signed by their CEO, seeking to comply with the December 2019 Order. The RAAF indicates that SunSea Energy, LLC has four affiliates, operates in Ohio, Maryland, New Jersey, and District of Columbia, uses the trade names SunSea and SunSea Energy in other states, and that no senior officer of the ESCO applicant or entity holding ownership interests of 10% or more in the ESCO has had any criminal or regulatory sanctions imposed within the last 36 months. The complaint data provided included the types of complaints for Maryland and only the number of complaints for Ohio, New Jersey, and the District of Columbia."

The PSC's show cause order states, "Upon completion of the application review, Staff requested complaint type and resolution details from Ohio, Maryland, District of Columbia, and New Jersey, as well as other revisions and missing documentation. Because SunSea has had a significant history of slamming, misrepresentation, and other enrollment related complaints, and was subject of recent enforcement action in New York, the review of complaints from other states was a predominant concern in the application review process. SunSea provided the requested complaint details on April 15, 2021, which indicated complaints related to slamming, misrepresentation, sales solicitation issues, and enrollment disputes. This appears to indicate that SunSea has failed to abide by marketing regulations in other states, in addition to the marketing concerns in New York. Additionally, Staff notes that on October 7, 2020, the Maryland Public Service Commission issued an order to impose consequences against SunSea for violations of numerous provisions of the Public Utility Article and the Code of Maryland Regulations. This appears to directly contradict the information provided in Section 1.C. of the RAAF which, if proven to be the case, would be a violation of the UBP."

With respect to the revocation of Sunsea's current eligibility, see our prior story for background on the alleged violations and a prior December 2020 show cause order

The PSC said that it found Sunsea's response to the 2020 show cause order "unconvincing" and stated in its new order that, " The Commission finds that SunSea has violated the consumer protection provisions of the UBP and moreover has not adequately remedied these violations in response to consumer complaints, Staff’s investigation, nor the Commission’s OTSC [order to show cause]. Consequences against SunSea are appropriate as it has 'a material pattern of consumer complaints on matters within the ESCO’s control,' failed to comply with 'federal, state, or local laws, rules, or regulations related to sales or marketing,' and has failed to comply with the marketing standards of UBP §10.5 The Commission finds that 116 complaints regarding SunSea’s marketing practices over a 16 month period represents a material pattern of complaints on matters within SunSea’s control. Furthermore, SunSea has failed to comply with State laws related to sales or marketing as it continued to knowingly make unsolicited telemarketing sales calls during a declared State of Emergency."

The PSC stated in its order that, "Turning to the marketing provisions of the UBP, SunSea violated the UBP by failing to remove customers from its marketing database after the customers asked to no longer be called by SunSea. Additionally, the Commission finds that SunSea engaged in misleading or deceptive conduct in marketing to New York customers, including making false or misleading representations regarding the rates or savings offered by SunSea."

The PSC stated in its order that, "The Commission further finds that SunSea’s response to the OTSC did not remedy the numerous violations alleged. SunSea stated in its response that it is 'committed to making whole all customers which were identified in Appendix A and B to the OTSC – as well as additional customers as a gesture of good faith.' Of the 93 total cases listed in the attachments to the Order, Staff identified 73 cases where the refund was denied or not provided in response to the QRS/SRS and NOAF, but then granted after the OTSC. This includes 12 that were confirmed to be checks dated February 2021 for refunds that had been promised on various dates ranging from February 19, 2020, through October 19, 2020. Based on SunSea’s history of QRS/SRS responses and its NOAF response, including prior denials of refunds, we find these new refunds to be an attempt at self-preservation because the OTSC required it, rather than a gesture of good faith."

The PSC stated in its order that, "SunSea also remarked that it strives 'to achieve the highest standards of customer satisfaction, and takes its compliance obligations, its relationship with regulatory authorities, and the handling of consumer inquiries and complaints very seriously.' The lack of adequate responses to the QRS/SRS complaints from July 2019-November 2020 directly contradicts the statement regarding SunSea’s handling of consumer inquiries and complaints. Staff’s review of the sales calls found that the majority of the agents spoke very quickly and merely completed the script and connected the customer to the TPV. That, combined with the consistent complaints about misleading sales tactics and promises of rebates, rewards, and/or discounts, is not indicative of high standards of customer service."

The PSC stated in its order that, "SunSea states that in response to the NOAF, SunSea denied the allegations against it and provided enrollment documentation. This is also not indicative of a company that has been taking its relationship with regulatory authorities seriously since the allegations included questionable marketing practices and misrepresentation, not just disputed enrollments."

The PSC stated in its order that, "Additionally, the enrollment documentation that SunSea is referring to was missing from 12 of the cases in the NOAF which prompted Staff to include the records retention violation to the OTSC. The Commission recognizes that SunSea did provide the enrollment documentation with its response to the OTSC. Providing these documents remedied the allegation of records retention violations, but not the deficient manner in which SunSea submitted QRS/SRS responses."

The PSC stated in its order that, "SunSea states that 'this unfortunate circumstance is not due to willful noncompliance, but rather the rogue actions of marketing vendors. . .' We find that after months of similar complaints without corrective action, the noncompliance became willful. Moreover, the corrective action eventually taken to terminate a marketing vendor did not address these complaints which originated with an entirely different vendor."

The PSC ordered that SunSea shall return its customers to full utility service within 60 days of the effective date of the revocation order.

These transfers shall occur on the customers’ regularly scheduled meter reading dates.

Cases 15-M-0127, et al.; 20-M-0589; 20-M-0446

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