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Regulator Issues Notice Of Violation To Retail Supplier Which Would Suspend Supplier's License, Require Supplier To Return Customers To Default Service, Due To Alleged Enrollment Violations

September 15, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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The Connecticut Public Utilities Regulatory Authority (Authority or PURA) issued a Notice of Violation and Assessment of Civil Penalty (NOV) against Liberty Power Holdings, LLC (Liberty or Company) which, subject to Liberty's right to contest the NOV via hearing, would suspend Liberty’s electric supplier license for five years and would require Liberty to return all customers to standard service.

The NOV would further order Liberty to pay restitution to all customers enrolled through TPVs conducted by a specific vendor in the amount of the difference between what the customers paid Liberty throughout the contract entered into through what PURA termed the "incorrect TPV" and what they would have paid on the standard service rate.

Liberty has a right to a hearing on the NOV by delivering to the Authority a written application for a hearing within 20 days from the date of receipt of the Notice of Violation and Assessment of Civil Penalty.

PURA noted that, in its Marketing Standards, the Authority required that: "[B]efore a TPV procedure begins, the marketing agent depart the call or premises, and that a proper TPV must collect the customer’s name and account number, the supplier’s name, term, price, and rescission rights… the Authority’s experience is that a marketing agent is unnecessary during a TPV if the marketing agent has sufficiently conveyed information to the customer during the previous interaction and the customer sufficiently understands the transaction. The converse is also true: a marketing agent only becomes necessary during a TPV when the customer does not understand the transaction and has a question. As the Authority has repeatedly stated in its decisions, a customer that does not understand the transaction should not be engaging in a TPV that results in a contract."

The NOV states, "In short, all of Liberty’s TPVs reviewed by the Authority followed the same pattern in which the TPV agent told the customer the account holder name, address, account number, and name key, the marketing agent failed to leave the TPV, and the TPV agent failed to read the specific questions required of them by the Marketing Standards Decision. As a result, the Authority has reason to believe Liberty’s TPVs violate Conn. Gen. Stat. § 16-245s and the Marketing Standards."

The NOV states, "The Authority is also concerned with Liberty’s description of standard service. Throughout the script, Liberty repeatedly refers to its 'green' plan, but never once states to a customer if this plan purchases renewable energy credits (RECs) in addition to renewable portfolio standards (RPS) requirements. Liberty goes out of its way, however, to tell the customer that standard service is 'non-green.' Id. at 24, 28. This not true [sic]. Standard service meets the state’s RPS requirements and is offset by 30.5% RECs. Therefore , [sic] the Authority has reason to believe that Liberty provides customers with deceptive information in its marketing regarding the standard service rate."

The NOV states, "The Authority has reason to believe Liberty violated Conn. Gen. Stat. § 16-245s and the Marketing Standards in its TPVs. In the recordings submitted by Liberty, the TPV agent reads the customer’s name key, address, and phone number to the customer. See all recordings submitted in response to EOE-19; TPV recordings included in intakes of Janice, R., Daisy H., and Robert M. (in many of the TPVs the TPV agent tells the customer not to say anything as he reads the information to the customer). The Authority has reason to believe this violates the Marketing Standards and Conn. Gen. Stat. § 16-245s."

The NOV states, "The TPV agent also first states the customer’s name, spells it, and then asks the person on the call for their name. See all recordings submitted in Response to EOE-19; TPV recordings included in intakes of Janice, R., Daisy H., and Robert M. The Authority has reason to believe this violates the Marketing Standards and Conn. Gen. Stat. § 16- 245s. The Marketing Standards state that the customer on the call must state their name, but telling the person on the call the name of the customer on the account (and spelling it in case they had difficulty understanding) simply provides the person on the call with sufficient information to engage in slamming. Moreover, since Liberty violates the law by providing the caller with the account number, name key, and address associated with the account, there is nothing the caller provides other than their name that offers any identification. Providing a name immediately after being told the customer’s name, and without having to provide any other identifying information, violates the very purpose of ensuring 'it is the customer, and not someone posing as the customer, completing the TPV.'"

The NOV states, "Further, the Marketing Standards also require the TPV to 'confirm the agent left the call.' Id. at Exhibit B, Section G.2., p. 11. The Authority has reason to believe Liberty’s TPV do not confirm this. See all recordings submitted in Response to EOE-19; TPV recordings included in intakes of Janice, R., Daisy H., and Robert M. The Authority also has reason to believe the TPV agent is aware the marketing agent is still on the call. For example, in one call, the TPV agent can be heard asking if it was the customer or the marketing agent that asked a question during the TPV."

The NOV states, "Pursuant to the Marketing Standards the TPV should not continue if the customer has a question, yet when a customer asks, 'I still will get the UI, right? I’m all mixed up.' the TPV agent attempts to answer the customer’s question and explain, 'You will remain a customer of your utility. The only change being made is that on the supplier portion of your bill it will be Liberty Power.' See Response to EOE-19, XXXXXX6954. The customer has to state that she does not understand again and refuse further information for the call to end. See also, Id. at XXXXXX8220 (customer does not understand the concept of a supplier and TPV agent has to explain)."

"The Authority has further reason to believe Liberty’s TPVs do not follow the Marketing Standards, which require a TPV to 'confirm that the customer understands the contract with supplier will renew automatically and it could renew at a rate different from the rate at which the customer currently is signing up,' and require the TPV agent to state, 'Are you aware that by authorizing this transaction, you confirm that you are entering into a contract with [Electric Supplier], which changes your electric generation service to [Electric Supplier].' Decision, Exhibit B, p. 11-12 (emphasis added [by PURA]). Throughout the TPVs the Authority did not hear the TPV agent explain that the contract could be renewed with a different rate and the Authority did not hear the direct quote above," the NOV states

The NOV states, "The Authority has reason to believe Liberty has not properly monitored and/or audited its marketing to ensure its TPVs did not violate the Marketing Standards. Had Liberty listened to even one of the TPVs conducted on its behalf, it should have known the TPVs did not follow the Marketing Standards’ requirements."

The NOV states, "Liberty’s inability to monitor its own marketing is demonstrated by its failure to notify the Authority of any of the violations noted herein and its failure to even recognize the violations on its own. It [sic] its pre-filed testimony in Docket No. 06-12-07, Liberty implied that EOE [PURA Staff] had an obligation to inform Liberty of its own marketing violations. Docket No. 06-12-07, Pre-filed Testimony dated July 27, 2021, pp. 8-9. To the contrary, Conn. Gen. Stat. § 16-245o(h)(1) makes suppliers responsible for monitoring their own agents, and the Authority has reason to believe Liberty failed to do so."

The NOV states, "Moreover, Liberty’s telesales scripts, updated at least twice since the Authority issued the Marketing Standards, instruct a customer to obtain their bill immediately, contrary to the Marketing Standards. Further, despite the Marketing Standards making it clear that the Authority was attempting to prevent suppliers from mischaracterizing standard service, Liberty tells customers that standard service is 'non-green,' a purposefully nebulous term that does not truthfully indicate standard service meets the state’s RPS requirement."

The NOV states, "These violations are despite Liberty’s recent NOV and fine, which resulted in continued auditing of its marketing. See Docket No. 06-12-07RE07, Decision dated July 31, 2019. In this Decision, the Authority cited Liberty for, among many other violations, incorrect TPVs and dishonest marketing. When given a second chance, Liberty did not take it. Liberty’s actions lead the Authority to believe that Liberty is incapable of monitoring its own marketing, either because it is incapable of applying the plain language of the Marketing Standards or because it simply does not bother to try, or both."

The NOV states, "Liberty has demonstrated no good faith effort to achieve compliance, has offered nothing to indicate it can ensure compliance in the future, and given its repeated marketing violations, has proven only that it cannot be trusted to continue marketing to Connecticut customers."

Because of Liberty's bankruptcy proceeding, the NOV states that, "the Authority will forego a civil penalty in the instant proceeding and craft its penalty to better protect the customers harmed by Liberty’s actions."

In a separate ruling in which PURA denied certain objections from Liberty to a proposed NOV, PURA rejected Liberty's argument that the PURA proceedings are subject to the automatic stay provision in the United States Bankruptcy Code

PURA agreed with Staff that because the NOV, "seeks no civil penalty and is entirely a consumer protection proceeding focused on marketing violations," then the bankruptcy automatic stay provision is not applicable.

PURA further ruled, "In addition, Liberty’s assertion that the Authority lacks jurisdiction to determine that the automatic stay does not apply to the Proceedings and that therefore the Authority is required to recognize the applicability of the automatic stay unless and until a court with proper jurisdiction indicates otherwise is incorrect. The Authority has jurisdiction to determine whether the Proceedings are subject to the automatic stay. See, Sheri Speer v. Connecticut Dep’t of Ag. et al., Docket No. HHBCV156030870S, 2019 WL 2432092, (May 6, 2019). Accordingly, Liberty’s third argument in the Motion to Dismiss does not support a rescission of the July 7, 2021 Notice, a denial of the Proposed NOV Motion, or a dismissal or suspension of the proceedings on and related to matters identified in Proceedings."

Docket 06-12-07RE09

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