Pennsylvania Draft Order Proposes Fine for Retail Supplier Over Marketing, Warns on License Status

An initial decision from a Pennsylvania Administrative Law Judge (ALJ) proposes to impose a civil penalty on a retail supplier, and would warn the supplier that future violations could jeopardize the supplier's license.

The initial decision arises from a customer complaint against Great American Power, LLC (GAP). The complaint case addresses marketing practices of Great American Power and its third-party marketing agents, including the use of the utility's name during the solicitation, the representation of the verification used for enrollment, and Do Not Call procedures.

Parties may file exceptions to the initial decision, which would then prompt Commission review of initial decision prior to any final action.

A civil penalty is appropriate, the ALJ said, after finding that, "GAP violated the Commission's 2010 Interim Guidelines and several Pennsylvania and federal consumer protection laws by failing to clearly represent itself as a supplier independent from Duquesne Light, by failing to expeditiously place the Complainant's contact information on its internal do-not-call list and by failing to provide an accurate call-back telephone number on its caller ID."

"[T]he type of nuisance behavior described by the Complainant in these proceedings negatively impacts not only the Complainant and other individual customers, but negatively impacts other market participants and the success of the retail market as a whole. Therefore, the nature and consequences of these violations merit a higher penalty," the ALJ said.

The ALJ would impose a civil penalty in the amount of $5,000. "This penalty is sufficient to emphasize the importance of compliance with the Commission's regulations and to put GAP and other suppliers on notice that when designing marketing campaigns it must pay careful attention to telemarketing and unfair trade practice rules and take proactive measures to ensure that its contractors do the same," the ALJ said.

"Although the Commission's regulations permit the Commission to suspend or revoke the license of a supplier who fails to comply with Commission rules or Pennsylvania consumer protection laws, this drastic measure is not merited at this point," the ALJ said.

"However, GAP should be on notice that if further conduct which violates unfair trade practice laws comes to light, the Commission may reconsider the status of its license to participate in Pennsylvania's retail electricity market," the ALJ said.

Great American Power issued the following statement to Matters: "Great American Power continues to work with the Public Utilities Commission in all matters regarding regulatory compliance and quality marketing efforts."

The initial decision notes that the complaint arose from a "telemarketing blitzkrieg" undertaken by Great American Power, through two third-party call centers, in the spring of 2012. The call centers were not paid based on the number of hours spent contacting customers or the number of telemarketers they employed. Rather, they were paid based upon the number of customers who were enrolled in GAP's electricity supply program, the initial decision notes.

"The result of the structure of the campaign chosen by GAP was that the Complainant, and no doubt other consumers in the Duquesne Light service territory, were subjected to numerous phone calls by aggressive sales representatives using potentially misleading statements that at the very least created a substantial risk that the consumer would not understand who was calling and that they were enrolling in an electric supply agreement that they would later have to opt-out of rather than affirmatively consenting to choose GAP as their independent electricity supplier. While not all of GAP's actions rise to the level of violations of consumer protection laws, GAP's conduct and design of the marketing campaign at the very least raise serious concerns that may merit closer attention by the Commission in the future," the initial decision said.

A finding of fact in the initial decision finds that a Great American Power agent informed the customer that, "the reason for [the] call today is Duquesne Light authorized us to provide you with an immediate savings program where we are giving you 15 percent off your rate for the first billing cycle ..."

A finding of fact in the initial decision finds that when the Complainant asked the agent if he was calling from Duquesne Light, the agent explained that he was calling from Great American Power, "an approved supplier of Duquesne Light's energy choice program."

A finding of fact in the initial decision finds another agent of Great American Power in a separate call, "went on to explain that Duquesne Light did not have enough resources to call all their customers and give them information about the savings that were available to them: 'So, that's basically what our job is, as being an approved supplier in their electric choice program, is to let you know that ... you have an opportunity to save some money on your bills ...'"

"I find that after reviewing the transcript that GAP representatives misstated the relationship between GAP and Duquesne Light," the ALJ said.

"Although they identified themselves as calling from GAP, their statements had a high potential to lead customers to believe that GAP had a special association or relationship with Duquesne Light and did not state that they are an independent supplier not endorsed or approved by Duquesne Light," the ALJ said.

The initial decision notes that Section 201-2(4) of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (CPL), provides that it is an unfair or deceptive trade practice to cause, "a likelihood of confusion or of misunderstanding as to the source, sponsorship, approval or certification of goods or services" or to cause, "a likelihood of confusion or of misunderstanding as to affiliation, connection or association with, or certification by, another."

The complainant was never switched to Great American Power, and thus the ALJ would not find that an unauthorized switch occurred. However, the ALJ said that Great American Power's marketing and verification procedures, "raise a great risk that a consumer less savvy than the Complainant could agree to enrollment with GAP without a complete understanding of what is happening."

"As the Complainant contends, the GAP representatives never explicitly asked him if he wanted to enroll in GAP's supply program. Rather, the representative began a taped 'verification' process after explaining GAP's rate program. The verification process begins with the statement 'Thank you for enrolling with Great American Power ...' and closes with the statement that 'You have now selected Great American Power as your supplier of generation ...' At the conclusion of the taped verification process, it asks the consumer to say 'yes' if they understand the terms of enrollment. By failing to explain to a consumer that the 'verification' process is actually an enrollment process, GAP puts a consumer into the position where he may have to 'opt-out' of a supplier agreement with GAP, rather than specifically agreeing to 'opt-in' in the first place," the ALJ found [emphasis in original].

Docket C-2012-2307991