Regulator's Staff Seek $1.5 Million Fine Against Retail Supplier -- EnergyChoiceMatters.com

Regulator's Staff Seek $1.5 Million Fine Against Retail Supplier

March 2, 2023

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

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The Office of Education, Outreach, & Enforcement (EOE) of the Connecticut Public Utilities Regulatory Authority’s requested that the Authority issue a Notice of Violation and Assessment of Civil Penalty against Xoom Energy Connecticut, LLC, in which EOE seeks a civil penalty of $1,500,000, and restitution to certain customers, for Xoom's alleged inclusion of a statement on certain bills and other customer-facing materials that customers would be subject to an early termination fee or cost recovery fee, when no such fee existed and/or would not be applied.

EOE's sought Notice of Violation has not yet been addressed or adopted by PURA. To the extent PURA were to adopt a Notice of Violation, Xoom would be provided the opportunity to contest any allegations contained therein.

Xoom Energy provided the following statement concerning the matter:

"XOOM Energy has received the motion to post a Notice of Violation against it from the Office of Education, Outreach & Enforcement. The proposed penalties and restitution have not been adopted by PURA, are not final, and XOOM Energy has not yet had an opportunity to be heard in a hearing, as is its right. XOOM Energy looks forward to the opportunity to present testimony and evidence in support of its positions."
--- Statement from Xoom Energy

Conn. Gen. Stat. § 16-245o(h)(7)(A) became effective on July 1, 2021 and states the following: "No contract for electric generation services by an electric supplier shall require a residential customer to pay any fee for termination or early cancellation of a contract."

EOE alleged that, in response to an interrogatory, "Xoom confirmed that as of March 22, 2022, it still had not corrected 1,488 residential customer bills to eliminate the early termination fee (ETF)."

EOE alleged, "Unlike other suppliers, Xoom did not indicate to the Authority that it would encounter any difficulties in correcting the ETF on residential customer’s bills in response to the statutory amendment. See, e.g., Docket No. 13-07-18, Motion No. 117. Further, the Authority’s 'guidance and orders regarding the implementation of Public Act 21-117' state, 'submitting any changes to a customer’s ETF immediately, and before August 15, 2021 at the latest, is appropriate, feasible and required to comply with Public Act 21-117.' Docket No. 13-07-18, Ruling on Motion No. 117, dated July 30, 2021. Despite this, eight months after the Public Act went into effect and seven months after the Authority issued its motion ruling, Xoom still had failed to remove the ETF from all residential customers’ bills. See Response to EOE-38. Xoom submitted its final removals to the electric distribution companies (EDCs) only in response to interrogatories issued by the Office of Education, Outreach, and Enforcement (EOE)."

EOE alleged, "It is irrelevant that many of these 1,488 contracts began before the Public Act went into effect. The statutory amendment was not solely forward looking and it made no exceptions for existing contracts. Xoom understood the effects of the Public Act and knew that it required Xoom to change what they informed customers regarding ETFs. Xoom did not make this required change until forced to do so."

"It is equally irrelevant that Xoom claims it did not charge any customer an ETF after July 1, 2021," EOE said

"The ETF appeared on customers’ bills and Xoom cannot know the extent to which the indication of an ETF on the bill factored into the customer’s calculus not to switch from Xoom. The Authority has reason to believe the continued appearance of the ETF on the customer’s bill negated the intent of the statute to allow customers to freely switch to and from suppliers and standard service," EOE alleged

EOE alleged, "Further, the Authority has reason to believe Xoom’s contracts continue to indicate to residential customers that Xoom will charge them an ETF. In its most recent contracts filed on January 27, 2023, the section of the contract labeled 'Renewal Notice; Notification of Changes' states, 'You will not be charged an early termination fee if you terminate such renewal no later than seven business days after receiving your first billing statement for the renewed contract.' See Compliance Filing dated January 27, 2023, p. 23, 27, 31, 39, 43 71, 75, 79, 87, 91, 95, 99. The Public Act prohibits Xoom from charging an ETF to a residential customer under any circumstances, whether as part of a new contract or a renewal. The statutory amendment prohibits Xoom from indicating to customers that it intends to charge them an ETF."

"It is concerning that even in new contracts Xoom continues to ignore a law that has been in effect for a year and a half," EOE alleged

EOE alleged, "In Response to Interrogatory EOE-47, Xoom indicated that since July 1, 2021, it has provided to 1,748 residential customers welcome communications indicating Xoom charges a cost recovery fee of $50 if the customer cancelled the contract. Xoom explained in its response to EOE-47 that these 1,748 customers enrolling with it would have received the incorrect welcome communications, then would also have received Terms and Conditions stating that a customer cancelling the contract early would be responsible for a cost recover [sic] fee as indicated in the Contract Summary. See also, EOE-48 (providing an example of the English version of the welcome communication customers received). Xoom then claims that the Contract Summary did not mention a cost recovery fee but indicated there was no early termination fee. See EOE-47."

EOE alleged, "It is to no avail that the Contract Summary did not indicate there was a cost recovery fee. After July 1, 2021, Xoom never should have mentioned a cost recovery fee to a residential customer. If anything, the failure of the Contract Summary to state there was no fee caused more confusion to residential customers, who received a very clear welcome communication from Xoom indicating it would charge them a cost recovery fee and then no mention of the cost recovery fee elsewhere. These customers reasonably could have believed that, contrary to law, if they cancelled their contract with Xoom prior to the expiration date, Xoom would monetarily penalize them for that cancellation. Such a belief could have impacted a residential customer’s calculation of whether or not to switch from Xoom, contrary to the intent of the statutory amendment."

"Further, it is equally to no avail that Xoom never charged a residential customer a cost recovery fee. The same as the ETF, Xoom cannot know how many customers included that cost recovery fee in their calculus of whether or not to cancel with Xoom and return to standard service or switch to another supplier. Although charging the fee would have been an even more egregious offense, the Authority has reason to believe damage was done once Xoom included the fee in its welcome communications," EOE alleged.

EOE alleged, "The Authority has reason to believe that Xoom’s actions exhibit, at best, a flagrant disregard for the statutory amendment or, at worst, a pattern of continuing attempts to subvert the law. Xoom continued to display ETFs for months after the Public Act went into effect and did not stop until EOE issued interrogatories on the subject. After Xoom removed the ETFs from customers’ bills, it then indicated to customers that it would charge them a cost recovery fee, which is, in effect, an ETF. Further, Xoom continues to indicate in residential customers’ contracts that it will charge them an ETF if they cancel their renewal outside of a specified time frame. Based on Xoom’s continued actions surrounding ETFs and cost recovery fees, Xoom appears not to have made any good faith effort to comply with the law."

EOE alleged, "Pursuant to monthly compliance filings made in Docket No. 06-10-22, Xoom is one of the larger suppliers serving residential customers. Xoom’s actions in the residential market have significant repercussions on these customers who may want to find a better rate but who incorrectly believe they will be penalized if they cancel their contract with Xoom."

With respect to the sought restitution, EOE requested that PURA order Xoom to pay $100 to: (1) each account allegedly implicated in the 1,488 contracts continuing to have ETFs displayed on their bills after the Public Act went into effect, and (2) the 1,748 accounts alleged to have welcome materials indicating cost recovery fees. EOE proposed that if any account falls into both categories, the account would receive $200

Xoom had stated in an interrogatory response to EOE that, "When a customer enrolls with XOOM Energy Connecticut, LLC ('Company'), (s)he is presented with the terms of the offer through a variety of means. After Governor Lamont signed Public Act 21-117 into law on July 6, 2021, the Company modified its residential customer online enrollment materials to indicate that there was no cost recovery fee. Since that time, residential customers enrolling with the Company pass through three separate screens that specifically indicate that there is no cost recovery fee. In addition, as part of the online enrollment process, customers also have the opportunity to click on links to the applicable Terms and Conditions, Contract Summary, and Disclosure Label. The Terms and Conditions available at the link indicate that, if the customer cancels the agreement early, (s)he will be responsible for paying a cost recovery fee 'set forth in the Contract Summary.' The Contract Summary form available at the link indicates that the early termination fee is $0. There is no reference to the cost recovery fee in the Disclosure Label."

Xoom had stated in an interrogatory response to EOE that, "After a residential customer completes the enrollment, (s)he is sent a confirmation that includes the Terms and Conditions, Contract Summary Form and Disclosure Label associated with the offer in which the customer enrolled as attachments. The attached Terms and Conditions indicate that, if the customer cancels the agreement early, (s)he will be responsible for paying a cost recovery fee 'set forth in the Contract Summary.' Since the Governor signed Public Act 21-117, the attached Contract Summary form indicates that the early termination fee is $0. There is no reference to the cost recovery fee in the Disclosure Label."

Xoom had stated in an interrogatory response to EOE that, "After the electric distribution company accepts a residential customer’s enrollment, (s)he is sent a welcome communication confirming the enrollment. Unfortunately, due to a coding error, after the Governor signed Public Act 21-117, that single communication indicated that the cost recovery fee was $50. This communication was sent to 1,748 residential customers that enrolled with the Company between July 6, 2021 and December 16, 2022 – the date on which the error was corrected. Since the Governor signed Public Act 21-117, the Company has not billed a residential customer for a cost recovery fee or collected such a fee."

Docket No. 11-06-05

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