New York Elects Not to Suspend ESCO's Ability to Enroll Customers Given Remedial Measures

The New York PSC has decided to not suspend the ability of Family Energy Inc. to enroll new customers after determining that remedial measures by the company have been successful in reducing customer complaints.

After an increase in customer complaints and alleged marketing violations, the PSC had previously ordered Family Energy show cause why the Commission should not revoke the company's eligibility to enroll new customers or to offer services as an energy services company in New York.

In adopting a Staff recommendation yesterday during its public meeting, the PSC determined that Family Energy's authority to enroll new customers should not be suspended at this time, and that the company should continue all of the enhanced marketing policy and procedure measures that it has implemented, until further order of the Commission.

The PSC said that it has seen a marked decrease in deceptive marketing complaints against Family Energy.

Among other things, such remedial measures adopted by Family Energy included new fixed-rate contracts lasting two or three years with no early termination fee.

Family Energy also required each sales agent to begin distributing business cards to potential door-to-door customers at the beginning of every sales pitch. The business card includes the agent's number, the ESCO's name, address, toll-free customer service phone number, and website address. Sales agents are required to wear Family Energy branded clothing and two buttons; one button identifies the company; the other states "We are not from the utility." In addition, to reduce potential customer confusion between the utility and Family Energy, Family Energy removed the names of all specific utility companies from its marketing materials and enlarged the Family Energy logo on all customer sales agreements.

Family Energy began using an independent third party for verification calls, and now requires third-party verification to be conducted after the sales agent has left the customer's premises to avoid coaching by the sales agent during the TPV call. As such, Family Energy committed to verifying all newly signed contracts by calling each customer to verify the customer's personal information, to ensure his or her understanding of the Family Energy sales agreement and to confirm that the customer is aware that Family Energy is not the utility.

Family Energy terminated the employment of many of the sales agents responsible for the complaints that the PSC had observed, and also required all sales agents to be retrained, including a review of the New York energy market, the UBP marketing requirements, Family Energy's Code of Conduct, contract terms and conditions, and the customer's cancellation rights

The PSC did stress that the extent to which the practices Family Energy has implemented are sufficient or even appropriate in the long-term to assure continued compliance with the UBP's marketing practice requirements, "cannot be determined without continued scrutiny and a longer period of observation."

"Therefore, as Family Energy continues its enhanced compliance measures, the Department should continue its enhanced oversight of the Company. Family Energy should continue to investigate and report to the Department the results of each customer complaint sent to it by the Department. Staff should report back to the Commission with recommendations for further action when appropriate," the PSC said.

Case 13-M-0139