PUC Staff Recommends Denial Of Retail Supplier's License Renewal, Alleging Lack Of Managerial Fitness

Staff Alleges Falsified TPV

August 30, 2021

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

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Staff of the Public Utilities Commission of Ohio has recommended that PUCO deny the application of Switch Energy, LLC ("Switch") to renew its competitive retail electric service (CRES) provider license

The automatic renewal of Switch Energy's electric license, which was due to expire in April, had previously been suspended. During the interim period, "[a]s a demonstration of Switch’s commitment to addressing the issues raised by Staff," Switch voluntarily agreed to stop (i) telemarketing to and marketing door-to-door to retail electric and gas customers in Ohio and (ii) enrolling new retail electric and gas customers in Ohio that are acquired through telemarketing and door-to-door marketing. Switch indicated that it would continue to engage in online marketing and enrollments

As such, it is believed that Switch is currently serving electric customers in Ohio, and a potential denial of license renewal would require a drop of such customers to default service or an expedited book sale if such would be permitted by PUCO

Staff alleged that, "Switch has not met the managerial criteria to comply with all applicable commission rules and orders."

Staff alleged, "Staff does not believe Switch is managerially fit and capable of complying with the Commission’s rules and orders. Switch has a recent history of noncompliance in Ohio and Illinois, both involving similar conduct."

Staff alleged, "Switch is also under current investigation by the Ohio Staff for marketing violations and submitting falsified or altered recordings to Staff in response to an investigation into a Commission call center complaint."

"Under these circumstances, Staff concludes that Switch has failed to demonstrate that it has the ability to manage its Ohio operations in a manner that is consistent with the Commission’s rules and orders," Staff alleged

Staff cited a prior investigation into Switch in Ohio (story here) and a recently opened investigation in Illinois (story here)

Staff specifically alleged that, "On December 18, 2020, Brandon Jenkins, a member of Staff, filed a complaint with the Commission’s call center about Switch telemarketing him a misleading offer, including a robocall promising a $50 discount for enrolling in electricity supply. In response to Staff’s routine questions as part of its investigation into Jenkins’ complaint, Switch provided Staff with an audio recording of the sales call and TPV call associated with the Jenkins enrollment. Upon review of the calls provided by Switch, not only did the recordings have various deficiencies, including not advising Jenkins of the terms of the contract or providing a confirmation number for the enrollment, but the sales call was clearly edited when compared to the recording Jenkins made of the actual sales call. The initial Switch robocall that Jenkins received from the sales representative was not provided. Most significantly, Jenkins states that he did not perform a TPV for enrollment with Switch. Jenkins believes that the TPV that Switch provided to Staff to verify Jenkins’s enrollment is falsified – that Switch used the audio recording of the sales call to create a falsified TPV."

Staff alleged, "The egregious nature of this conduct cannot be overstated ... Submitting a fraudulent or falsified TPV to Staff in response to Staff’s investigation of a consumer complaint completely undermines Staff’s investigation, and makes it impossible for the Commission to carry out its statutory duties under R.C. 4928.02(I) to ensure 'retail electric service customers protection against unreasonable sales practices * * *' and to protect consumers in this state against unfair, deceptive, and unconscionable acts and practices in the marketing, solicitation, and sale of CRES. R.C. 4928.10."

Staff alleged, "The misleading enrollment and submitting an altered TPV recording to Staff in response to Staff’s investigation of a consumer complaint raised serious concerns about Switch’s conduct and managerial capabilities. The Jenkins complaint sparked Staff to investigate Switch more closely and review contacts about Switch received by the Commission’s call center from late 2020 and early 2021. Staff identified increased customer contacts regarding Switch to the Commission’s call center during this time period. Staff’s review of the Commission’s call center contacts and Switch’s responses to data requests from Staff revealed several rule violations. There were clear issues of repeated misleading and deceptive statements made by Switch representatives in audio recordings of sales calls and TPV calls, and Staff has no evidence that Switch took any corrective action until Staff got involved. The violations found by Staff continued after the Jenkins complaint and consistently demonstrated the same type of conduct: deceptive and misleading marketing and concerning enrollment practices."

Staff alleged that the history described above, "shows that Switch has a pattern of allowing its agents to mislead and deceive consumers, delaying investigations, promising to take steps to correct the issues, and an ultimate inability to properly address the violations. This is Switch’s third occurrence involving misleading and deceptive issues resulting from actions of their third-party vendors. Switch’s inability to oversee compliance with Commission rules is apparent because the violations continued to occur consistently in the sales calls and TPV call recordings reviewed. As outlined above, Staff’s investigation into Switch’s compliance with the Commission’s rules and orders has identified numerous serious concerns with Switch’s managerial capabilities. Staff concludes that Switch has failed to demonstrate that it is fit and capable of complying with all Commission rules and orders. Switch does not possess the managerial capacity to conduct its operations in compliance with the Commission’s rules and orders."

"[B]ecause Staff concludes that Switch has failed to demonstrate that it is capable of complying with the Commission’s rules and orders, Staff recommends that the Commission deny Switch’s CRES Renewal Application," Staff said

Staff did state that Switch has met the technical criteria to perform the services it intends to provide and the financial assurances to provide those services.

Case No. 13-764-EL-CRS

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