Pennsylvania PUC Again Subjects Retail Supplier to Conditions Upon Licensure, But No Clear Policy Evident

The Pennsylvania PUC has granted another electric generation supplier license contingent on a series of additional conditions applicable to the applicant, but a consistent philosophy regarding imposition of such conditions remains elusive.

Specifically, the PUC granted Bounce Energy an electric generation supplier license to serve all customer classes in all service areas, but tentatively proposes to impose several conditions on the license for a period of 18 months, apparently due solely to the results of a compliance audit conducted on Bounce by Staff of the Public Utility Commission of Texas.

Bounce Energy's application for a Pennsylvania license was first reported in Matters

Specifically, the Pennsylvania PUC voted 5-0 to accept a motion from Commissioner Wayne Gardner to impose the conditions on Bounce through a tentative order. Bounce may file comments on the tentative order before it becomes final.

Gardner's motion stated, "In its Application, Bounce disclosed information regarding compliance issues relating to its corporate parent in Texas, Bounce Energy Inc. In that proceeding, the Public Utility Commission of Texas investigated Bounce Energy for violations of the Texas Commission's customer protection rules for retail electric service. The Texas Commission determined that Bounce Energy had violated customer protection rules including, among other things, failing to provide all the required information to customers regarding their rights and options as retail electricity customers. In September 2010, Bounce Energy entered into a Settlement with the Texas Commission and agreed to pay a $28,000 administrative penalty."

"The actions of Bounce's corporate [parent] cause me to question Bounce's willingness to carefully observe customer protections in Pennsylvania. I take my duty to ensure a properly functioning and transparent retail market seriously. As such, I believe the imposition of some conditions is warranted. The imposition of conditions on Bounce's license will offer further protections to Pennsylvania customers until such time as Bounce is able to demonstrate that it has proper customer protections and procedures in place," Gardner said.

Gardner's motion cites no other reason, aside from the Texas compliance audit, for his concern.

As previously noted by Matters, the PUC has granted either new or expanded supplier licenses to two similarly situated retail electric providers who were subject to similar compliance audit settlements with the Public Utility Commission of Texas, and in neither case did the PUC impose any conditions on the license.

Most recently, the PUC originally imposed conditions on YEP Energy due to a settlement regarding a Texas compliance audit, but upon reconsideration withdrew the conditions.

To date, nearly all mass market REPs in ERCOT have been found in violation of various PUCT substantive rules under the market-wide compliance audits. While the violations of each REP vary widely from perfunctory violations (such as using language not 100% following that prescribed in rule) to serious (incorrect pricing disclosures), aside from the broad statement that Bounce's Texas violations included, "failing to provide all the required information to customers regarding their rights and options," it is unclear if the Pennsylvania PUC is putting emphasis on certain violations in Texas audits which merit disparate treatment of otherwise similarly situated REPs.

A written order from the Pennsylvania PUC in the Bounce proceeding, which may further distinguish the case, was not immediately issued.

Under Gardner's accepted motion, Bounce's EGS license is tentatively proposed to be contingent on the following conditions for a period of eighteen months from the date that Bounce begins providing service in Pennsylvania:

• "When Bounce successfully signs-up a customer, Bounce shall provide the customer with a copy of a disclosure statement developed in cooperation with the BCS [PUC Bureau of Consumer Services]. See 52 Pa. Code § 54.5 and § 62.75 (relating to disclosure statement for residential and small business customers).

• "Bounce's marketing agent or sales agent shall offer to provide the customer with written information regarding its products and services. This information shall include Bounce's name, website, and telephone number for inquiries, verification and complaints.

• "We remind Bounce that it must comply with relevant Commission regulations concerning marketing or sales including:

a. 52 Pa. Code § 54.3. Standards and pricing practices for retail electricity service.

b. 52 Pa. Code § 54.6. Request for information about generation supply.

c. 52 Pa. Code§ 62.76. Request for information.

d. 52 Pa. Code § 54.7. Marketing/sales activities.

e. 52 Pa. Code § 62.77. Marketing/sales activities.

f. 52 Pa. Code§ 54.43. Standards of conduct and disclosure for licensees.

g. 52 Pa. Code § 62.114. Standards of conduct and disclosure for licensees.

h. 52 Pa. Code § 57.176. Valid written authorization.

i. 52 Pa. Code§ 59.96. Valid written authorization.

• "Bounce shall inform consumers of state consumer protection laws that govern the cancellation or rescission of electric generation supply contracts. See section 7 of the Unfair Trade Practices and Consumer Protection Law (73 P. S. § 201-7). See also 52 Pa. Code § 54.43(f), and § 62.114 (e).

• "Bounce and its agents shall comply with the federal cooling off period requirements. See Rule Concerning Cooling-Off Period for Sales Made at Homes or at Certain Other Locations; 16 CFR Part 429 (FTC).

• "Bounce shall provide a single point of contact and a list of designated escalation contacts for Commission staff to resolve consumer inquiries or complaints received by the BCS. Bounce shall respond to all consumer inquiries and any other BCS requirements, including providing all information regarding the customer and complaint as requested by Commission staff (including a copy of the contract and any audio recordings of the verification call). The BCS, per standard procedures, will encourage callers to first attempt to resolve the matter with the companies involved if they have not done so already.

• "Bounce shall investigate customer inquiries and complaints concerning marketing or sales practices, and shall cooperate with the relevant agencies regarding complaints about marketing or sales practices prohibited by the Commonwealth and with local law enforcement officials in investigations concerning deceptive marketing or sales practices.

• "Bounce shall maintain and document an internal process for handling customer complaints and resolving disputes arising from marketing and sales activities, and should respond promptly to complaints. These documents shall be made available to Conm1ission staff upon request.

• "Bounce shall comply with the relevant dispute regulations, including:

a. 52 Pa. Code § 56.141. Dispute procedures.

b. 52 Pa. Code § 56.151. General rule

c. 52 Pa. Code§ 56.152. Contents of the utility company report.

d. 52 Pa. Code § 54.9. Complaint handling process.

e. 52 Pa. Code § 62.79. Complaint handling process

f. 52 Pa. Code§ 57.177. Customer dispute procedures.

g. 52 Pa. Code§ 59.97. Customer dispute procedures.

• "Bounce shall:

a. Not engage in misleading or deceptive conduct as defined by State or Federal law, or by Commission rule, regulation or order;

b. Not make false or misleading representations including misrepresenting rates or savings offered by Bounce;

c. Provide accurate and timely written information about services and products being offered. Such information shall include information about the rates being offered, contract terms, early termination fees and right of cancellation and rescission.

d. Ensure that any product or service offerings that are made by Bounce contain information, verbally or written, in plain language that is designed to be understood by the customer. This includes providing any written information to the customer in the language in which Bounces's [sic] representative had sales discussions with the customer."