New York PSC Issues Show Cause Order To ESCO, Alleges Information "Raises Doubt" As To Supplier's Ability To Operate In A Compliant Manner
September 9, 2021 Email This Story Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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Alleging an, "apparent misrepresentations with respect to certain information provided by SmartEnergy Holdings LLC (SmartEnergy) as part of its ESCO eligibility [re-]application to serve customers in the State of New York," the New York PSC directed SmartEnergy to show cause why the Commission should not revoke SmartEnergy's eligibility to operate as an Energy Service Company in the State of New York, or why other consequences as set forth in the Uniform Business Practices should not be imposed.
The PSC also said that various regulatory proceedings involving SmartEnergy in other states, "raises doubt as to SmartEnergy's ability to operate in a compliant manner in New York."
SmartEnergy provided the following statement concerning the matter:
"SmartEnergy has received the Order to Show Cause issued today by the New York State Public Service Commission, is reviewing it carefully and will respond in due course within the requisite 30 days. We agree that ESCOs operating in New York State should provide truthful and accurate information and we have always undertaken to provide truthful and accurate information to the Commission and Staff. We will review this matter with counsel immediately and look forward to providing the Commission with all relevant information."
--- Statement from SmartEnergy
The show cause order relates to the PSC's previously reported requirement that ESCOs submit new applications to certify their continued eligibility as part of the retail market reset order, with such new application including additional information to be provided by ESCOs
The PSC alleged, "SmartEnergy filed its application pursuant to the December 2019 Order on November 17, 2020. Section 1.C. 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 response, SmartEnergy checked the box marked 'NO,' indicating that SmartEnergy and its senior officers have had no regulatory sanctions imposed against them in the last 36 months. The application was signed by the Chief Operating Officer and dated November 12, 2020. SmartEnergy's application was approved by Staff on January 25, 2021."
Section 1.C specifically asks: "During the previous 36 months, have any criminal or regulatory sanctions been imposed
against any senior officer of the ESCO applicant or any entity
holding ownership interests of 10% or more in the ESCO?"
The PSC further alleged, "SmartEnergy submitted an updated RAAF on May 28, 2021, that likewise indicates 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 against them within the last 36 months, although in a subsection to Section 1.C. of the RAAF it does acknowledge sanctions imposed upon SmartEnergy in Maryland."
The PSC further alleged, "After receipt of the updated RAAF on May 28, 2021, Staff conducted an investigation as to the accuracy of the information provided on the updated RAAF and uncovered several additional enforcement actions taken against SmartEnergy in other jurisdictions, which were not disclosed by SmartEnergy in its RAAF."
The PSC alleged, "On July 2, 2019, the Illinois Attorney General's Office issued an Assurance of Voluntary Compliance related to violations of Illinois' Consumer Fraud Act arising out of SmartEnergy's direct mail marketing and telephone enrollment practices. The practices in question related to deceptive marketing tactics that were determined to be in violation of the Illinois Consumer Fraud Act."
The PSC alleged, "On August 16, 2019, the Ohio Public Utilities Commission opened an investigation into SmartEnergy's marketing and enrollment practices involving a 'sweepstakes contest' and deceptive marketing practices that were deemed a probable violation of the Ohio Administrative Code. The investigation resulted in a Joint Stipulation between SmartEnergy and the Ohio Public Utilities Commission where regulatory sanctions were issued against the company. The sanctions required SmartEnergy to pay a forfeiture of $19,000 to the Ohio Public Utilities Commission and to cease its marketing practices that were deemed a probable violation of the Ohio Administrative Code."
The PSC alleged, "These sanctions against Smart Energy appear to directly contradict the information provided in Section 1.C. of the SmartEnergy RAAF, which would be a violation of UBP Section 2.B.3."
Although the PSC alleged that SmartEnergy did "acknowledge" sanctions imposed upon SmartEnergy in Maryland in a subsection to Section 1.C., the PSC also raised broader concerns about such Maryland sanctions, regardless of disclosure
The PSC alleged, "Additionally, on December 22, 2020, the Maryland Public Service Commission issued an order to impose an enrollment moratorium against SmartEnergy for systemic violations of the Annotated Code of Maryland, Public Utilities Article, and other Maryland Public Service Commission regulations. On March 31, 2021, the Maryland Public Service Commission issued another order to impose further sanctions against SmartEnergy, which resulted in a continuation of the enrollment moratorium and required SmartEnergy to drop, re-rate, or refund its customers."
The PSC alleged, "[T]his history of noncompliance in other jurisdictions raises doubt as to SmartEnergy's ability to operate in a compliant manner in New York."
The PSC said, "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. For these reasons, SmartEnergy is ordered to show cause why their eligibility to operate as an ESCO in New York State should not be revoked, or alternatively, why other consequences as set forth in §2.D.6. of the UBP should not be imposed."