Proposed Order Would Prohibit Retail Supplier's Use Of eTPV, By Modifying Settlement Agreement

Proposed Order Says Terms & Conditions Cannot Form "Contract" If Not Signed

"e-TPV Also Cannot Help Formulate The Contract," Judge Says

December 10, 2021

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

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A Maryland PSC Public Utility Law Judge (PULJ) would modify a proposed $150,000 settlement agreement among Statewise Energy Maryland LLC ('SWE' or 'Statewise'), Staff of the Maryland Public Service Commission ('Staff') and the Maryland Office of People’s Counsel ('OPC,' together with Statewise and Staff, the 'Settling Parties') such that 'Statewise' would be required to discontinue using its eTPV process for in-person enrollments

The proposed order also makes findings concerning what documents constitute a "contract", based on what documents are "signed", and would find that Statewise's eTPV can not help form a contract

As first reported by EnergyChoiceMatters.com, Statewise would pay $150,000 under the settlement to resolve an investigation into Statewise's compliance with the notice requirements of Maryland's door to door sales law (Commercial Law § 14-302) as well as alleged misrepresentations

The proposed settlement would allow Statewise to continue to use an eTPV process, with various modifications

See our prior story here on the settlement as well as the allegations which gave rise to the proceeding

In the proposed order, the PULJ would find that, "Given the problems with Statewise’s eTPV process, the Settlement as proposed, which allows for continued use of an eTPV, is not reasonable."

As further described below, the PULJ's proposed order would prohibit Statewise from using an eTPV process in Maryland

Discussing complaints which led to the investigation, the PULJ said that the PSC's Consumer Affairs Division (CAD) initially did not address many of the allegations of misrepresentation in such complaints because of the existence of the eTPV used by Statewise.

"However, Statewise’s eTPV does not operate to negate any potential misrepresentations. Thus, Section III, Paragraph C of the Settlement, pursuant to which Statewise agreed to modify its eTPV to confirm that customers receive the agreement, would not operate to address potential misrepresentation by Statewise agents," the PULJ said

The PULJ also addressed broader issues concerning what constitutes a contract

The discussion below, applicable to residential customers, relates to situations in which a supplier solicitation is in writing or a supplier contract is provided in response to documents submitted upon personal contact. COMAR states that, "a signed contract is required," in such cases

As further discussed below with respect to Statewise’s specific sales process, the PULJ would find, "The e-TPV also cannot help formulate the contract between the parties as it occurs subsequent to the signing of the contract by the customer."

"[T]he term 'agreement' [referencing the customer agreement]is not defined in the Settlement, and it is not clear what agreement customers would receive. The language on Statewise’s signature page is: 'By signing below, You agree to purchase Natural Gas and/or Electricity supply from Statewise Energy Maryland LLC, You acknowledge that You have read the Agreement(s) and understand and agree to the Terms and Conditions of the Agreement(s), You confirm that the Agreement(s) constitute(s) notice that You have chosen Statewise Energy Maryland LLC as Your Supplier.' The defined term 'Agreement' is found in the first paragraph of the Terms and Conditions document, labeled 'Agency.' Within that paragraph is the following sentence: 'The Agreement(s) is/are for the sale and purchase of Natural Gas and/or Electricity supply and is/are between Statewise and You under which You shall initiate Natural Gas and/or Electricity supply and begin enrollment with Statewise (the 'Agreement(s)').' However, what constitutes this 'Agreement' was an issue in this case," the PULJ said

"For most of the complaints at issue in this case, Statewise produced the following electronic documents to CAD: (1) a contract summary; (2) a document entitled 'terms and conditions'; (3) a signature page; and (4) a third-party verification when a telephonic TPV was not used. Statewise’s position in its written testimony was that these materials constituted the total legal obligation that results from the parties’ agreement and thus together form 'the contract,'" the PULJ said

"At first CAD accepted Statewise’s contention but was later advised that a separate contract was required. In other words, the electronic documents needed to include: (1) a contract summary; (2) a contract (part of which could be 'terms and conditions' thereof) that is signed; and (3) a third-party verification when a telephonic TPV is not used," the PULJ said

"The document Statewise used that was entitled 'Terms and Conditions' may have included all of the terms and conditions of the contract, but it was not itself a contract; it was not signed. The signature page did not transform either the Contract Summary or the Terms and Conditions into the necessary contract document," the PULJ said

"I recognize that Statewise’s argument is that the documents taken together constitute the total legal obligation that results from the parties’ agreement and thus together form 'the contract.' The difficulty with Statewise’s position, however, is that a signed contract is required pursuant to COMAR 20.53.07.08C(2) (electricity) and COMAR 20.59.07.08C(2) (gas). The most logical interpretation of these regulations is that what is required is a document that itself constitutes a contract that is signed," the PULJ said

"A contract summary is also required, and this is a separate document; the contract summary cannot form part of the contract as in Statewise’s scenario," the PULJ said

"The e-TPV also cannot help formulate the contract between the parties as it occurs subsequent to the signing of the contract by the customer," the PULJ said

While the settlement includes various changes in contract documentation, the PULJ said that, "the change in contract documentation likely does not address potential misrepresentations by Statewise agents."

"I find Statewise’s addition of the 3-page document entitled Natural Gas (or Electricity) Agreement Details, the first 2 pages of which simply replicate the Contract Summary, even though followed by a more complete signature block, only adds potential confusion, given that what is purported to be the contract document does not encompass the terms and conditions of the contract or agreement; a document entitled Terms and Conditions remains a separate document," the PULJ said

"Moreover, the signature block still has the same language quoted above: 'You have read the Agreement(s) and understand and agree to the Terms and Conditions of the Agreement(s).' This language in the signature blocks implies that there is an Agreement document that contains terms and conditions, which the document entitled Natural Gas (or Electricity) Agreement Details does not," the PULJ said

"More importantly is the fact that it remains unclear what customers actually see when they sign electronically. Witness Donnelly’s testimony is not clear on this point, having stated in written testimony that a customer may elect to sign on the sales representative’s electronic device after reviewing all of the agreement terms and conditions, and then clicking 'accept terms and conditions,'" the PULJ said

"Witness Robinson testified at the Settlement hearing that CAD requested to see what customers actually see on the representative’s electronic device but that CAD was never provided with this information. Because this is critical to the consumer protection issues in this case, Statewise and Staff and OPC should meet so that Statewise can show Staff and OPC exactly what customers see on its representatives’ electronic devices. The documents viewed on the representatives’ electronic devices should consist of (1) a contract or agreement document that contains terms and conditions that is signed with the signature block containing all of the necessary information and notice of cancellation with dates filled in; and (2) a contract summary. The customer should see the same documents that are subsequently provided to the customer via email. Statewise shall revise its documentation accordingly and submit it to Staff and OPC for approval as part of a revised Compliance Plan," the PULJ said

"As stated above, however, even after Statewise revises its documentation, sending this revised documentation to customers will likely not address potential misrepresentation by Statewise agents that occurs at the beginning of transactions," the PULJ said

"Statewise Witness Donnelly testified that agents first obtained signatures through the iSign platform, resulting in a signature on the signature page that became part of the file, prior to Statewise transmitting an eTPV via email. Based on this testimony, signatures on the signature page would be that of the enrolled customer. My review of Statewise Exhibit 1A reflects that in at least 11 instances, the signature on the signature page does not match the signature on the subsequently signed eTPV," the PULJ said

"Although the Commission is not bound by strict rules of evidence, Maryland Rule 5-901(b)(3) supports comparison of signatures on the signature pages (authenticated based on Witness Donnelly’s testimony) to the signatures on the eTPVs by the Public Utility Law Judge. The eTPVs in the 11 instances do not appear to have been signed by the enrolled customer," the PULJ said

"I note that in all of these 11 instances, the customers would have no reason to point out a discrepancy between signatures because the complaints were resolved to their satisfaction, often by refund of ETFs. Additionally, it is not clear that customers ever received copies of these completed eTPVs," the PULJ said

"Given the problems with Statewise’s eTPV process, the Settlement as proposed, which allows for continued use of an eTPV, is not reasonable," the PULJ said

"A valid TPV addresses the affirmative consent requirements of COMAR 20.53.07.08C(1) and COMAR 20.59.07.08C(1). The telephonic TPVs produced by Statewise were not as problematic as its eTPVs. Section III, Paragraph C of the Settlement is therefore modified as follows: Statewise agrees: (i) to discontinue use of its electronic verification ('eTPV'); (ii) to modify its telephonic third-party verification ('TPV') to confirm that the customers have received the Agreement (the Agreement shall be defined as part of the Settlement as a contract or agreement document that contains terms and conditions that is signed with the signature block containing all of the necessary information and notice of cancellation with dates filled in), and Contract Summary; (iii) to generate proper enrollment documentation to all customers, and to distribute proper enrollment documentation to all customers that filed complaints. Proper enrollment documentation consists of the Agreement and Contract Summary," the PULJ proposed

The PULJ would direct Statewise to modify its compliance plan to reflect such proposed modification of the settlement, and the PULJ would order that Statewise shall continue to suspend residential in-person and telemarketing until such time as the settlement, as modified by the proposed order, is approved by the Commission, and Staff and OPC have approved the revised Compliance Plan.

The PULJ would also adjust the timing of $150,000 payment by Statewise

"A civil penalty of $150,000 is appropriate in this case, but the timing of the payment under the terms of the Settlement is not. Section III, Paragraph A of the Settlement is modified to require Statewise to deposit $150,000 into the Phillips Lytle LLP escrow account within 10 days of the date of this Proposed Order, and to require counsel for Statewise (Phillips Lytle LLP) to file a statement in the docket in this case attesting to receipt of same within 5 days thereafter (15 days from the date of this Proposed Order), and to further require Staff to file an appeal of this Proposed Order within 25 days of the date of this Proposed Order if counsel for Statewise does not attest to receipt of the $150,000 payment into its escrow account," the PULJ proposed

Case 9661

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