Regulator Issues $2 Million Notice Of Violation To Retail Supplier

Would Require Supplier To Return All Customers In State To Default Service, As Regulator Alleges "Deeply Troubling, If Not Sickening" Sales Call/TPV

NOV Says Use Of Phrases "Fixed Rate", "Price Protection" Are Deceptive "On Their Own"

November 24, 2021

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

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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 Discount Power, Inc. (Discount) which would: impose a fine on Discount in the amount of two million dollars ($2,000,000); would order Discount to pay restitution to all customers enrolled in 2018 and 2019 for all amounts they paid greater than standard service; and would suspend Discount's Connecticut supplier license for three years, requiring Discount to return all of its Connecticut customers to default service

The NOV does not constitute final action by PURA, and Discount has a right to a hearing on the NOV

Of note, and while the discussion is in the context of Discount's specific sales calls (and other associated language allegedly used in such calls), the NOV notably states that, "The Authority also has reason to believe that telling the customer they qualify for a 'fixed rate' and offering them 'price protection' deceives the customer regarding the transaction. Customers receiving standard service are already on a fixed rate program that is price protected (i.e., fully regulated by the Authority). Phrases such as these are used consistently throughout all of Discount’s marketing calls reviewed by the Authority and are deceptive on their own. When coupled with Discount’s failure to state the standard service rate, as discussed below, they become even more confusing to customers, leading customers to believe they have qualified for a benefit rather than a rate higher than they would pay with standard service."

In the NOV, PURA stated, "In 2018, the Consumer Affairs Unit, now part of the Office of Education, Outreach, and Enforcement (EOE), began receiving a variety of complaints from Connecticut residents regarding Discount, including Discount’s use of a pre-recorded message purporting to be from Eversource, its use of 'Eversource ESCO' identification on the caller identification, and deceptive marketing practices."

In the NOV, PURA stated, "the Authority has reason to believe Discount violated Conn. Gen. Stat. § 16-245o(h)(a) by implying the marketing call was from the electric distribution company."

In the NOV, PURA stated, "Discount admitted that it placed marketing calls to customers using the caller identification 'Eversource ESCO' until corrected as a result of PURA complaints."

In the NOV, PURA stated, "Further, Discount fails to state its name in calls and instead states the call is 'about your electricity bill with Eversource.'"

In the NOV, PURA stated, "In other calls, Discount fails to state its name, but says it is calling to 'provide you the benefits on your electric bill.' Id., call XXXXXX8074. When giving the customer service number, the customer asks, 'That’s the customer service number for Eversource,' to which Discount replies, 'Yes, ma’am, that’s the customer service number.' Having not stated its name prior to this time, Discount should have known the customer would not have any reference for the number being Discount’s and not Eversource’s, or that the customer would think the call was from any entity other than Eversource."

In the NOV, PURA stated, "Discount can also be heard not stating its name, but telling customers, 'The name of the customer choice program for the [sic] Eversource, which is helping you for the same Eversource bill, is called Discount Power.' Response to Interrogatory CA-2 ... see also, Response to Interrogatory CA-2 ... (Discount: 'Name of program that is helping you to lower down your bills is Discount Power.' Customer: 'Why are you giving me a different name?' Discount: 'Ma’am that is the name of the program, Discount Power.' ). Discount Power is a supplier and explaining it as a 'program' helping on the Eversource bill mischaracterizes the transaction and implies it is sanctioned by the EDC."

In the NOV, PURA stated, "Finally, Discount misguides customers when they do try to figure out Discount is not associated with Eversource. In Response to Interrogatory CA-2 ... the customer states, 'This is not Eversource? This is another company? Because I had this before and I really got screwed by it.' Discount replies, 'Keep in mind that you are not changing at all from Eversource.' Discount’s statement was not true. The customer was changing her supply from Eversource and that is exactly what she was trying to say harmed her in the past. The Authority has reason to believe such practices violate Conn. Gen. Stat. § 16-245o(h)(2)(A) and contribute to a customer mistaking the call to be from the EDC."

In the NOV, PURA stated, "The evidence indicates Discount’s marketing violates Conn. Gen. Stat. § 16-245o(h)(2)(a) by not clearly explaining the purpose of the solicitation and by using the undefined terms 'price protection' and 'benefits.'"

In the NOV, PURA stated, "Discount admitted to placing more than 2,600 pre-recorded calls to customers telling them the call was from 'Mrs. Peterson' and directing the customer to call back regarding their utility bill. Response to Interrogatory CA-42. This message did not state the call was from Discount and did not state the purpose of the call was a solicitation for a new supplier. As such, the message would have deceived a customer into responding without knowing the purpose of the call or the caller. The Authority has reason to believe such pre-recorded messages violate Conn. Gen. Stat. § 16-245o(h)(2)(A)."

In the NOV, PURA stated, "The evidence indicates that Discount’s live marketing equally violates Conn. Gen. Stat. § 16-245o(h)(2)(A). All win-back marketing reviewed follows the same general pattern: the agent initially tells the customer Discount was their supplier, explains that the customer is no longer receiving 'price protection' or 'benefits' and that the agent wants to reinstate the 'price protection' or 'benefits' on the customer’s account, then proceeds to reenroll the customer without asking if they want to reenroll with Discount. Never does the agent state that the purpose of the call is to engage in a transaction in which the customer is entering a contract to switch suppliers and never in the calls does the agent explain 'price protection' or 'benefits.'"

In the NOV, PURA stated, "The Authority has reason to believe Discount does not sufficiently inform a customer that the purpose of the call is for the customer to change their electric supplier or to receive electric supply from an entity other than their EDC or their current supplier, and that at the conclusion of the marketing calls, customers do not realize they have contracted with Discount."

In the NOV, PURA cited a call in which PURA alleged, "Discount tells the customer they are her former supplier and want to 'get the benefits back' on her account. The customer states, 'I already have a discount supplier. Clearview Electric.' Discount responds, 'Yea, discount, Discount Power,' confusing the customer and then proceeding to enroll her."

In the NOV, PURA stated, "Discount sometimes outright falsely states the purpose of the call to ensure the customer does not realize they are entering into a contract. For example, in Response to Interrogatory EOE-1, call XXXXXX6589 the customer says, 'But I’m not changing now,' to which Discount replies, 'We are just trying to get information and send it to you by mail.' A few seconds later the customer again asks if they 'are putting it in process to switch it now,' to which Discount replies, 'No, actually, what we are doing is a pre-process. There will be a preview.' After the customer completes the TPV, Discount comes back on the line and the customer questions, 'This did tell me I was transferring over to you guys.' Discount unabashedly tells the customer, 'That will be only the case if you cancel with that company and transfer to us…Provide us a call back with your complete decision.' Contrary to what Discount stated, the customer was entering a contract with Discount that he had to rescind to prevent it from going into effect, not that he had to contact Discount again to make go into effect. Based on what Discount stated, the customer would not have understood this was the purpose of the call."

In the NOV, PURA stated, "The Authority has reason to believe Discount does not define the terms 'price protection' and 'benefits' in its marketing and often uses these undefined terms in a misleading manner. For example, in Response to Interrogatory EOE-1, call XXXXXX7173, the customer expresses confusion regarding price protection and Discount’s agent tells the customer he is getting the rate of 9.5 cents per kWh for thirty months and implies in the conversation this is a good rate. [PURA footnote: This is said in the context of the customer asking what he is paying now and the agent telling him the standard service rate is 10.143 cents per kWh.] Further, the agent tells the customer the purpose of the calls is to, 'Get your benefits back and be protected from any potential rate increases.' Implying that the so-called price protection was beneficial and would protect the customer from 'rate increases' was not genuine, as the agent did not know what rate the customer was paying or what the standard service rate would be in the future. In fact, standard service has been less than 9.5 cents per kWh every month since the customer enrolled."

In the NOV, PURA stated, "Similarly, in Response to Interrogatory EOE-1, call XXXXXX0863, Discount refers to its 'price protection' and tells the customer he is, 'Protected from any potential rate increases.' See also, Response to Interrogatory EOE-1, calls XXXXXX7377, XXXXXX7173, XXXXXX9627. What Discount fails to tell the customer is he is also 'protected' from rate decreases, which is exactly what would have occurred, as the standard service rate decreased almost immediately after he enrolled. The Authority has reason to believe implying to a customer that the purpose of the call is to protect them from rate increases does not indicate the honest purpose of the solicitation. Such false claims of price protection can be heard in all win-back calls."

In the NOV, PURA stated, "The Authority also has reason to believe that telling the customer they qualify for a 'fixed rate' and offering them 'price protection' deceives the customer regarding the transaction. Customers receiving standard service are already on a fixed rate program that is price protected (i.e., fully regulated by the Authority). Phrases such as these are used consistently throughout all of Discount’s marketing calls reviewed by the Authority and are deceptive on their own. When coupled with Discount’s failure to state the standard service rate, as discussed below, they become even more confusing to customers, leading customers to believe they have qualified for a benefit rather than a rate higher than they would pay with standard service."

In the NOV, PURA stated, "the evidence indicates Discount’s marketing violates Conn. Gen. Stat. § 16-245o(h)(2)(a) by failing to correctly explain rates."

In the NOV, PURA stated, "the Authority has reason to believe Discount’s marketing violates Conn. Gen. Stat. § 16-245o(h)(3) by failing to state and misrepresenting the standard service rate."

In the NOV, PURA stated, "Discount consistently failed to disclose the EDC’s current supply charge in its marketing ... Further, when it did disclose the EDC charge, it misrepresented the comparison. For example, in call XXXXXX6589, Discount says, 'Summertime is coming and usually the rate goes up,' and further states that the standard service rate was going to be more than 10 cents per kWh. The call took place the week of June 1, 2019. Eversource released the upcoming standard service rate on May 3, 2019, and it was lower than both 10 cents per kWh or Discount’s rate, which Discount knew or should have known when it called this customer."

In the NOV, PURA stated, "Discount can also be heard misinforming the customer that the standard service rate is variable."

In the NOV, PURA stated, "Discount can also be heard telling customers information that may be incorrect regarding their current supplier. In Response to Interrogatory CA-2 ... the customer tells Discount that her current supplier, Ambit, is providing her a rate less than Discount is offering. Discount then tells her to find her customer service charge, which the customer thinks is $19.25. A review of the energizect.com Rate Board indicates Ambit did not have a rate at that time with a $19.25 customer service charge. It would, therefore, appear that Discount misled the customer into thinking her Ambit rate was greater than what it was. Further, when the customer questions what will happen with Ambit, Discount tells her, 'The contract with Ambit will be handled by the Eversource side.' Discount fails to tell her the contract with Ambit might have had a cancellation fee, which Discount would not know."

In the NOV, PURA stated, "the record indicates Discount violates Conn. Gen. Stat. § 16-245o(h)(3) by implying a customer must choose a supplier."

In the NOV, PURA stated, "It is difficult to overemphasize how Discount’s method of marketing confuses customers into thinking they must contract with a supplier. The first approximately thirty seconds (sometimes less) of every call is packed with nothing but the Discount agent telling the customer their benefits or price protection expired, telling the customer they were already a Discount customer, and proceeding to 'verify' the customer’s information and reenroll them. Discount’s agents barely take a breath between sentences, much less give the customer an opportunity to understand what is occurring. Discount appears to capitalize on this quick succession of events, assuming, often correctly, that the customer is so confused they will not ask questions. Response to Interrogatory EOE-1, call XXXXXX8073 is a prime example. In this call, within the first 25 seconds of the call, Discount tells the customer they are calling regarding price protection, then states, 'You were already a customer of ours. I just need to make sure the information I have here is still accurate.' Discount then repeats the information to the customer and enrolls her without ever asking if she wants to enroll or telling her she is enrolling with a new supplier. See also, call XXXXXX9847 (Discount begins the call by stating within twenty seconds that they 'Realized the benefits are no longer being applied to the account, so we are simply giving you a call back to reapply the benefits. Since you were already a customer of ours we already have most of the information on file but we do need to reconfirm.' Discount then immediately proceeds to verify customer information); call XXXXXX5666 (Discount begins the call by stating within twenty-two seconds, 'We’ve noticed the benefits are no longer being applied to your account. We’re giving you a call today to reapply the benefits. Since you were already a customer of ours we have the information on file however we just need to reconfirm.' Discount then immediately proceeds to verify customer information); XXXXXX6626 (Discount begins the call by stating within the first thirty seconds, 'We’ve realized the benefits are no longer being applied to your account. We are giving you a call back to reapply the benefits. Since you were already a customer of ours we have the information on file however we do need to reconfirm'). Similar marketing tactics are heard throughout Discount’s calls."

In the NOV, PURA stated, "the Authority has reason to believe discount violated Conn. Gen. Stat. § 16-245s by conducting improper TPVs."

"The Authority has reason to believe Discount’s TPVs violate Conn. Gen. Stat. § 16-245s in that they are not independent. Throughout the calls, Discount agents can be heard returning to the calls during TPVs to explain to the customer how to answer questions when the TPV stalls," PURA stated

In the NOV, PURA stated, "The Authority has reason to believe the TPV associated with the April 5, 2018, [] sales recording and TPV is exemplary of what should never occur in a TPV. There the customer completed four TPVs because in the first three she stated she did not want to enroll with Discount. Each time the agent stopped the TPV, came back on the line, lied to the customer about the transaction, and resumed the TPV."

In the NOV, PURA alleged a specific sales call and TPV were, "deeply troubling, if not sickening."

In the NOV, PURA stated, "The sales recording '[name] sales recording and TPV' in Response to Interrogatory CA-64 is deeply troubling, if not sickening. In this marketing call, Discount contacts a customer that is clearly elderly. Confused during the sales call, the customer asks if this is 'electric gas.' Discount proceeds with the call and enters the first TPV, during which the customer says nothing. Discount comes back onto the line and the customer states, 'I don’t want to be with electric gas,' to which Discount replies, 'No, no, no, you will not be with electric gas, you will be with Discount Power. There will be no natural gas anymore.' Discount begins a second TPV during which the customer says, 'I’m not enrolling with your company.' Discount again comes back on the line and the customer states, 'She’s telling me I’m agreeing to enroll … I’m not enrolling.' Discount replies, 'You will receive your bill from Eversource so don’t worry about it,' and the customer says, 'All right as long as I’m not enrolling again.' There is then a nonsensical exchange in which Discount states, 'You will not receive bills from National Gas and Electric again,' the customer states, 'I don’t want to be with natural gas because I’ve already signed up with another company as of April 1,' and Discount states, 'That’s what I’m saying,' the last statement by Discount being apropos of nothing. Discount then begins a third TPV, during which the customer, for the third time, refuses to enroll with Discount. Discount’s agent then comes back on the line, belligerent with the elderly customer, and states, 'I’ve told you that ten times and you forgot again…It’s not changing anything.' Beaten down and lied to by Discount, the elderly woman finally completes the fourth TPV. It is difficult to imagine a call more representative of the type of marketing to which Connecticut customers should never be subjected."

In the NOV, PURA stated, "the evidence indicates Discount’s marketing is a deceptive and unfair trade practice and violates Conn. Gen. Stat. §§ 16-245o(h)(4), 16-245o(j), and 42-110b."

In the NOV, PURA stated, "The examples of Discount’s marketing practices cited throughout meet all criteria of deceptive marketing. The record shows that Discount’s marketing is likely to mislead customers in several ways: Discount misrepresents the purpose of the call; Discount misrepresents that the call is from the EDC; Discount uses undefined terms such as 'price protection' and 'benefits' that confuse the customer as to the purpose of the call; Discount misrepresents that the EDC standard service rate is variable; Discount implies that customers must engage in the transaction and pushes customers to provide their account information prior to or without obtaining informed consent; Discount implies that customers must have a supplier; Discount implies, and sometimes states, that a customer completing the TPV is not enrolled in a contract; and Discount misrepresents its own rates as being lower than standard service. A reasonable customer would interpret Discount’s marketing to think that they were receiving a protection from being charged more than standard service (they frequently were not), that they were receiving a benefit rather than a new supplier, that they had to complete the call, that they did not affirmatively have to prevent enrollment with Discount after they completed a TPV, and that standard service is variable. These examples, which are not a comprehensive collection of the myriad violations in the record of this docket, affect consumer decisions and conduct because they implicate what a customer pays for their supply and the customer’s choice to be enrolled with a supplier or receive standard service from the EDC."

In the NOV, PURA stated, "The Authority has reason to believe Discount has not properly monitored and/or audited its marketing to ensure its third-party vendors did not engage in misleading or deceptive conduct," which PURA said is in violation of Conn. Gen. Stat. § 16-245o(h)(10)

In the NOV, PURA stated, "Discount was unaware its third-party marketers were not adhering to their contractual obligations, specifically: 1) using pre-recorded sales calls; (2) representing themselves as the electric distribution company (EDC); (3) using ringless voicemail solicitations; (4) slamming; and (5) not retaining sales calls for review by Discount representatives."

"Further, there is reason to believe Discount failed to monitor its vendors’ compliance with its own contracts. It was only as a result of the Authority’s interrogatories that Discount discovered its vendors were not retaining recordings," PURA stated

In the NOV, PURA stated, "The Authority also has reason to believe Discount did not properly train its agents and third party vendors. Discount provided online, web-based training for both telemarketers and door-to-door agents in Connecticut ... third party vendors were expected to conduct their own supplemental training ... The fact that all training was conducted via online, web-based modules and assessments is inconsistent with the requirements of § 16-245o(h)(1), which requires training to be conducted directly by the electric supplier. The fact that third-party vendors were required to conduct training is in violation of the statute."

In the NOV, PURA stated, "The Authority has reason to believe it has uncovered evidence of grave, systemic violations by Discount in the present case. Discount’s marketing violations are emblematic of the type of deceptive and unfair marketing practices that the law is intended to prevent and the Authority has worked hard to eradicate."

In the NOV, PURA stated, "A review of Discount’s marketing leads the Authority to conclude that Discount is incapable of conducting proper marketing, incapable of monitoring its own marketing, incapable of monitoring its agents, and incapable of ensuring its third party vendors even adhere to their contracts. It took the Authority’s investigation for Discount to realize its own vendors were not maintaining sales recordings, a telling indictment of Discount’s monitoring its vendors. Due to the vendors’ failure to abide by their own contracts, the number of calls to review was more limited that [sic] it normally would be. Yet even with the reduced number of recordings, the Authority can hear that every recording by every marketer has some violation, frequently multiple violations, of Connecticut law."

In the NOV, PURA stated, "Furthermore, this investigation began in 2018, yet many of the calls cited herein (all calls from Interrogatory EOE-1) are from 2019. More than one year after being subject to an investigation, Discount still could not produce marketing calls that adhered to the law. If Discount failed to improve its marketing when it knew the Authority was examining it, one has to wonder exactly what it will take to force Discount to abide by the marketing laws."

In addition to the broad restitution to customers described above (refund of anything paid above default service), the NOV would require Discount to refund to certain specific customers any amounts paid above the lower rates cited during sales calls to such customers.

Of the $2 million fine, the NOV would provide that one million nine hundred ninety-nine thousand five hundred dollars ($1,999,500) shall be payable to Operation Fuel, Inc. to provide financial assistance to electric customers experiencing difficulties

Docket No. 08-09-14RE02

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