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Enforcement Staff Seek $2 Million Fine Against Retail Supplier, License Suspension & Drop Of Customers To Default Service

Enforcement Staff Allege Use Of "Undefined" Terms Such As "Benefits", "Price Protection", & "Program" Are Deceptive

August 8, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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The Office of Education, Outreach, and Enforcement of the Connecticut PURA requested that PURA issue a Notice of Violation and Assessment of Civil Penalty against Verde Energy USA Inc. in the amount of $2 million, which would also require restitution to all customers enrolled after October 2, 2020, and which would suspend Verde's electric supplier license, requiring the drop of customers to default service

With respect to restitution, EOE specifically proposed that Verde be required to pay restitution to every customer enrolled from October 2, 2020 to the present for the amounts they have paid Verde to date that exceed what the customer would have paid if they were served on the standard service rate.

EOE seeks to suspend Verde's license for a period of five years.

"Verde cannot serve customers while its license is suspended and will need to return its current customers to standard service. Verde will need to inform those customers via their preferred method of communication that its license has been suspended and it is returning them to standard service," EOE proposed

To the extent the NOV sought by EOE is issued by PURA, Verde would have a right to a hearing by delivering to the Authority a written application for a hearing within 20 days from the date of receipt of the NOV

EOE alleged, "The majority of Verde’s marketing calls begin the same: Verde tells the customer that as of the customer’s next meter reading 'with Verde Energy as their supplier they will finally receive price protection on their account,' that this has been available for some time but is not applied automatically, and that because the customer has not acted it is now the agent’s job 'to facilitate the price protection' for the customer. Verde then asks the customer to retrieve a copy of their utility bill and states the Verde agent is required to wait while the customer gets the bill. Within the first minute or less of the calls, the evidence indicates Verde violates multiple provisions of Conn. Gen. Stat. § 16-245o. The marketing only worsens from there."

"Conn. Gen. Stat. § 16-245o(h)(2)(A) requires that during a marketing call a supplier must '(iv) explain all rates, fees, variable charges and terms and conditions for the services provided.' The Authority believes Verde’s marketing violates Conn. Gen. Stat. § 16-245o(h)(2)(A) in that it fails to explain or define terms, such as 'price protection,' 'benefits,' and 'program,'" EOE alleged

"The evidence indicates Verde does not define these terms used in its marketing and often uses these and other undefined terms in a misleading manner to imply they equate to lower rates, a state program, or a benefit available only to that customer. The Authority has held the Conn. Gen. Stat. § 16-245o(h)(2)(A)(iv) requirement that a supplier 'explain all rates, fees, variable charges and terms and conditions for the services provided' cannot misrepresent a rate as a savings, yet the Authority has reason to believe Verde’s marketing implied so-called price protection was beneficial and stated it would protect the customer from 'rate increases,'" EOE alleged

EOE alleged instances where the marketing rep stated, "get you on a fixed [sic] that is significantly lower" or that Verde, "helps with the amount of money you are spending on the bill".

"These promises of savings were not genuine, as the agents in these marketing calls did not know what rate the customer was paying or what the standard service rate would be in the future. If the customers were on standard service, the standard service rate decreased shortly after most of these calls and enrolling with Verde would have cost customers more than had they remained on standard service (in many calls Verde’s rate was 9.69 or 10.19 cents per kWh, which was already more than the standard service rate at the time)," EOE alleged

"In another call, Verde tells a customer the protection, '[I]s to avoid the scheduled rate increases on the bill.' ... This call took place in April 2020 and there were no scheduled rate increases for standard service at that time. In fact, standard service significantly decreased in July 2020, causing this customer to pay more by receiving service from Verde," EOE alleged

"The Authority has reason to believe Verde also implies that 'price protection' is a state program. For example, in Response to Pro-4, XXXXXX5449 ... Verde tells the customer that this is the 'state’s utility choice program' that is 'just called price protection that’s offered in your territory,'" EOE alleged

EOE alleged that marketing reps made statements that price protection was, "something the Public Utility Commission has set up for you as a customer," that it is, "an energy choice program ... that the public utility department has put up for you."

"Price protection is not a 'program' at all, much less a state program. The evidence indicates it is a meaningless phrase created to deceive customers into unwittingly contracting with Verde," EOE alleged

"The Authority has further reason to believe that beginning the marketing by telling the customer they 'qualify' for a 'fixed rate' that is 'price protected' uses undefined terms that deceive the customer into engaging in the call. Residential customers do not 'qualify' for a fixed rate; a fixed rate is required under the law and there is no longer an option for anything other than a fixed rate for a residential customer. See Conn. Gen. Stat. 16-245o(g)(2). Further, customers receiving standard service are already on a fixed rate that actually is price protected (i.e., fully regulated by the Authority and a pass-through rate for the utility). The evidence indicates that Verde uses these terms together to deceive the customer into believing Verde is offering them something they have earned that is unavailable elsewhere,' EOE alleged

"The Authority has reason to believe it is deceptive to use these undefined terms to imply to a customer that the purpose of the call is to protect them from rate increases or enroll them on a state program that confers benefits, yet such false claims of 'price protection,' 'benefits,' and 'state program' can be heard throughout Verde’s calls. Although phrases such as these are deceptive on their own, when coupled with Verde’s failure to state the standard service rate ... 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," EOE alleged

EOE alleged, "Further, Verde can also be heard incorrectly explaining rates to customers in violation of Conn. Gen. Stat. § 16-245o(h)(2)(A). In Response to EOE-4, XXXXXX0507 ... Verde tells the customer they are 'lowering' his rate to 9.99 cents. The customer says, 'That’s what I am paying now,' and Verde responds that his next bill will be $0.105607. Although the price Verde stated was the UI standard service rate at the time of the call, if the customer told Verde he was paying 9.99 cents then Verde had no basis to believe he would pay the standard service rate on his next bill (9.99 cents was not the standard service rate at the time of the call). Further, Verde did not ask the customer about his contract with another supplier, even though the customer later states that he has a fee with another supplier of $50, clearly indicating to Verde he is with another supplier at that time. As a result of Verde’s misrepresentations, this customer most likely was required to pay a $50 cancellation fee to another supplier for his right to switch to Verde to be charged a rate that was more than the standard service rate only two cycles later and was the same rate he was paying with his other supplier,"

"Worse still, Verde can be heard incorrectly explaining its own renewal rates to customers. In Response to EOE-09, 004338891.wav, Verde tells the customer that if she does not respond to the automatic renewal notification she will be renewed on a variable rate. This is incorrect, as variable rates are not permitted for Connecticut residential customers. If the customer failed to respond to the automatic renewal notice, she would be automatically renewed at the rate indicated in the notice for the contract length included in the notice. Customers unaware of the importance of a renewal notice would not understand the requirement to act on it," EOE alleged

EOE alleged that, "The evidence indicates Verde’s marketing violates Conn. Gen. Stat. § 16-245o(h)(2)(A) in that it fails to explain the real purpose of the solicitation is for a customer to enter a contract with Verde. The Authority also has reason to believe Verde 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 electric distribution company (EDC) or their current supplier, and that at the conclusion of the marketing calls, customers do not realize they have contracted with Verde."

EOE alleged, "The evidence indicates Verde sometimes outright falsely states the purpose of the call to ensure the customer does not realize they are entering into a contract. In one call, the customer states that they want a letter from Eversource regarding what Verde is offering and Verde tells the customer, 'There was information sent out a few months ago. It is on record it was not responded to that’s the reason for my call this afternoon.' Response to Pro-4, XXXXXX5719 ... The purpose of the call was to enroll the customer on a new contract with Verde, plain and simple. The Authority has reason to believe that stating the purpose of the call as anything else violates Conn. Gen. Stat. § 16-245o(h)(2)(A)."

Conn. Gen. Stat. § 16-245o(h)(3) states that an electric supplier may not make any statement, oral or written, suggesting a prospective customer is required to choose a supplier.

EOE alleged, "The evidence demonstrates that most of Verde’s calls involved an introduction that violated Conn. Gen. Stat. § 16-245o(h)(2)(A) and then violated Conn. Gen. Stat. § 16-245o(h)(3)(B) by a sequence of instructions that imply that the customer must proceed with the transaction. As previously discussed, the evidence indicates that the outset of all Verde marketing confuses customers into thinking they must contract with a supplier. The first three lines of every call state, most often without pause, that 'As of your next meter reading with Verde as your supplier you finally will receive price protection on your account,' this will 'avoid any potential rate increase,' this has been 'available for quite some time,' but is 'not applied automatically,' and since the customer has not 'done it with us [Verde] it has become my [the agent’s] job to help facilitate it for you today.' Without gaining assent from the customer, Verde then immediately begins requesting customer information. Verde does not ask customers if they are interested in changing suppliers and does not clarify during its sales calls that a customer is changing suppliers."

EOE alleged, "Verde also implies the customer must choose a supplier by often emphasizing to the customer that they are calling about a state program that needs to be applied to their bill. For example, in Response to PRO-4, 018F5EBB-67CC-40DB-953F- 2C3B0339394E-01, the agent tells the customer that state guidelines dictate the customer is entitled to receive this program, the customer has fallen off the program, and the agent’s job is 'to take care of this for your today.' The ability to choose a supplier is not an 'energy choice' program sponsored by the state and imposed upon customers; it is an option provided to customers who have been fully informed. There is nothing to 'take care of' for customers who have not enrolled with a supplier and stating otherwise to the customer implies they must enroll."

EOE said that Conn. Gen. Stat. §16-245o(h)(3) provides that, "When advertising or disclosing the price for electricity, the electric supplier, aggregator or agent of an electric supplier or aggregator shall (i) disclose the electric distribution company’s current charges ..."

EOE alleged, "The Authority has reason to believe Verde consistently failed to disclose the EDCs’ current supply charge in its marketing. This lack of disclosure is not only illegal, but it is particularly harmful when Verde attempted to enroll customers on rates greater than standard service."

EOE alleged, "Verde can also be heard misinforming the customer that the standard service rate is variable and misrepresenting the standard service procurement to convince customers being on standard service is harmful."

EOE alleged, "when customers protest that Verde’s rate is more expensive Verde states, 'But actually it isn’t more expensive because of the fact that the current program you’re on right now is a variable rate. Ok so your rate is going to fluctuate from month to month depending on what the utility wants to charge in your area. And it also goes by weather. You know weather plays a big factor in your rate. What we’re doing is we’re giving you a fixed rate.' Response to PRO-4, E5A147E2-47AC-417D. The rate Verde offered this customer was $0.10190 per kWh when the Eversource rate was $0.09414 per kWh and decreased to $0.07375 per kWh in July. Again, the evidence indicates that every part of what Verde said to this customer was deceitful."

EOE alleged, "Further, Verde can be heard misrepresenting the standard service rate. In XXXXXX5449 ... Verde tells the customer, 'Rates are scheduling to go up…I can tell you what they are scheduling to go up to…13 to 15 cents per kWh.' When the customer asks what the standard service rate is now Verde replies, 'Some customers I have spoke [sic] with are still paying about 12 or 13…They charge you 10, 11, 12, 13 cents.' The customer finds the standard service rate on her bill, tells it to Verde, and Verde again tells her, 'It’s scheduling to go up…The whole benefit of the program is fixing the rate so it doesn’t go up to that 13 or 14 cents.' During the year this call was made the standard service rate was less than ten cents for the entire year; in fact, it was 7.375 cents for half of the year, half of what Verde represented it as."

EOE alleged, "The evidence indicates that in some calls Verde implies the call is from the electric distribution company (EDC). For example, in Response to Pro-4, Attachment A(2), 20200128075740-6118057013-XXXXXX5842, the customer states that if the agent calling is selling something, 'We don’t want it.' Verde replies they are 'the electric company regarding your electricity bill.' "

EOE alleged, "Verde also makes statements that contribute to the customer’s misunderstanding that the call is from the EDC. For example, Verde tells customers what it is offering is 'through Eversource’s energy choice program…through your utility company’s energy choice program.' Response to Pro-4, XXXXXX2558 ... Response to EOE-9, 004363400wav ('This is the utility’s choice program so it’s free.'). Allowing service with a supplier is not the utility’s program and stating it is such incorrectly implies an affiliation with the utility."

EOE alleged, "Verde tells customers, 'Since you are customer in good standing with Eversource there are no fees associated with this program.' XXXXXX7670 ... Such statements are not only untrue (Verde does not know if the customer is in good standing with Eversource), but by associating the customer’s payment to Eversource with the lack of fees Verde incorrectly associates Eversource with the transaction."

EOE alleged, "In fact, Verde frequently tells customers they are 'verifying' information on the customer’s bill. See e.g., Response to Pro-4, XXXXXX5449 ... XXXXXX8171 ... Verifying information implies Verde has the information and needs the customer to confirm it. That is completely untrue and the Authority has reason to believe it leads customers to associate the caller with the EDC. This can be seen in Response to Pro-4, ... in which Verde harasses the customer because she throws away all of her bills and the customer replies, 'If you’re the company you have everybody’s bill.'"

EOE alleged, "The difference between saying I need to 'obtain' or 'you need to give me' your EDC account number and I need to 'verify' your account number is significant to a customer because of its implications (the EDC is the only company that should have a customer’s account number, so Verde’s implying they already have the account number implies they work with the EDC). The Authority has reason to believe Verde is aware of these implications and uses them as part of its overall marketing scheme to deceive customers into enrolling with Verde."

EOE alleged, "Verde further implies the call is from or affiliated with the EDC by telling customers they will receive information from the EDC regarding their enrollment. See Response to Pro-4 XXXXXX5719 ... (tells customer they will receive everything from Eversource within three business days); XXXXXX5727 ... (tells the customer they will receive information from Eversource); XXXXXX7670 ... (tells the customer they will receive a welcome letter from Eversource); Response to Pro-2 (tells customer he will receive information from Verde and Eversource in the same package); Response to EOE-9, 004324628.wav (March 25, 2021) (You will get a notification from Eversource letting you know that you are still in [sic] customer choice program with Verde for that portion of the bill.'). The EDC does not send customers information when they change suppliers. The EDC, in fact, does not know if a customer has changed suppliers until the supplier sends an electronic data request to the EDC after the customer has enrolled. The Authority has reason to believe incorrectly telling customers that the EDC will provide them information about their enrollment with a supplier implies to the customer that the EDC is part of the transaction. It is not."

EOE alleged that the evidence indicates Verde’s TPVs violate Conn. Gen. Stat. § 16-245s in that they are not independent

"Throughout the calls, Verde’s agents can be heard returning to the calls during TPVs to explain to the customer how to answer questions when the TPV stalls," EOE alleged

EOE alleged, "The Authority has further reason to believe Verde sent [to verification] customers that did not wish to enroll to TPVs. In Response to Pro-4, XXXXXX6267 .... the customer is elderly and tells Verde at the outset of the call that her daughter handles these matters. Verde presses on, asking, 'You can’t make decisions regarding the account, this is for price protection?' After Verde continues for a few minutes, the customer then tells Verde, ''I have to go, this is too much for me.' Verde presses on, keeping the customer on the phone and trying to send her to a TPV. Verde states, 'If you do have a question just hold it to the end. I’ll come back on the line,' and the customer states again, 'This is a little bit too much for me.' Despite this, Verde still sends the customer to a TPV. In another call, the customer states during the TPV, 'All of this stuff I can’t keep up with. I just told you I was 78 years old. I want to stop now because I am really...' Verde then interrupts the TPV (illustrating that Verde’s agent was still listening), comes back onto the line, and tries to continue with the call but the customer finally hangs up. A supplier should not foist itself upon elderly customers who have expressed that they have no interest in the phone call and should not attempt to enroll customers who have indicated they are incapable of enrolling."

EOE alleged, contrary to the adopted marketing standards, "Verde’s script does not contain a confirmation that Verde’s marketing agent left the call, and states the customer’s service and billing address and the account number to the customer. Response to Interrogatory EOE-4, Attachment A, p. 2. As a result, the Authority has reason to believe Verde provided its TPV agents with TPV scripts that violate Conn. Gen. Stat. § 16-245s and the Marketing Standards."

EOE alleged, "the evidence indicates Verde violated Conn. Gen. Stat. § 16-245o(h)(4) by incorrectly claiming it was providing customers with a product that was 100% green or 100% renewable energy"

EOE alleged, "Verde indicated in its Response to EOE-16 that all of its offers in 2018 were for products Verde labeled as '100% green' or '100% renewable energy.' Although the Authority has previously held in the Docket No. 16-12-29 Decision that this statement is inaccurate, even if the Authority accepts the definition of '100% green' or '100% renewable' posited by suppliers, the Authority has reason to believe Verde’s statement for its offers in 2018 was inaccurate. As can be seen in the Docket No. 19-06-01 Decision, Verde did not purchase enough renewable energy credits to meet its renewable portfolio standards (RPS) obligations. Docket No. 19-06-01, Decision dated March 3, 2021, p. 11, 15; see also Response to EOE-17. If Verde did not meet the minimum RPS obligations, the Authority has reason to believe it could not have exceeded the minimum RPS to offer a '100% renewable' product."

EOE alleged, "The Authority has reason to believe Verde has not properly monitored and/or audited its marketing to ensure its third-party vendors did not engage in misleading or deceptive conduct [as required by Conn. Gen. Stat. § 16-245o(h)(10)]. This docket contains more than one thousand marketing recordings. As documented throughout this NOV, it appears the majority of Verde’s marketing was illegal."

EOE alleged, "A review of Verde’s marketing leads the Authority to conclude that Verde is incapable of conducting proper marketing, incapable of monitoring its own marketing, and incapable of monitoring its agents. This investigation began in 2020, yet many of the calls cited herein are from 2021. More than one year after being subject to an investigation, Verde still could not produce marketing calls that adhered to the law. Verde claims it ceased marketing in 2020 and its 2021 calls were retention calls, but this argument is to no avail because the retention calls equally violated the law."

EOE alleged that the examples of Verde’s marketing practices meet all criteria of deceptive marketing, contrary to appreciable statutes

EOE alleged, "Verde lacks all compunction in its unfailing pursuit of customers. In 20200128091705-6118746110-XXXXXX9064 the customer tells Verde she is in the hospital at the time of the call. The agent proceeds with the call and later says to the customer, who sounds quite ill, 'You sound a bit under the weather here,' to which the customer says again, 'I’m in the hospital.' After hearing this twice and hearing the sounds of the hospital throughout the background of the call, Verde’s agent proceeds undeterred in her desire to make a sell. It is concerning if the supplier market has sunk to the level of suppliers doing anything to enroll someone and telemarketers desperately trying to earn a commission under any circumstances."

Docket 09-06-08

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