Updated: Customers Of Active ESCOs To Be Returned To Default Service Under New York PSC Orders Denying Mass Market Eligibility

Reason For Two Separate ESCO Show Cause Orders Revealed

November 19, 2021

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

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Update, 11/23:

SunSea Energy issued the following statement concerning a recent order from the New York PSC which denied the application submitted by SunSea Energy LLC seeking eligibility to serve mass-market customers as an ESCO in the State of New York:

"SunSea denies all allegations and intends to continue to serve its existing customers to the extent permitted by law or order."

--- Statement from SunSea Energy

As previously reported, the PSC ordered a return of SunSea's mass market customers to default service within 60 days

See more details on the PSC's story in our prior story here

Original Story: (11/19)

The New York PSC has issued written orders related to the denial of mass market eligibility to four ESCOs, and the issuance of show cause orders to two additional ESCOs

Generally, the denial of mass market eligibility relates to ESCOs' responses to sections of the RAAF (application form) which request a list of energy affiliates including upstream owners and affiliates, operations in other states, and complaints or legal sanctions taken against any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO.

Starion Energy

As previously reported, the Commission denied the application submitted by Starion Energy NY, Inc. (Starion) seeking eligibility to serve mass-market customers as an ESCO in the State of New York.

The PSC's order indicates that Starion is currently serving customers in New York, as the PSC's order directs that Starion shall, "return each of its mass-market customers to full distribution utility service in the utility service territories it operates, with transfers occurring on the customers' regularly scheduled meter reading dates." In contrast, for an inactive ESCO whose mass market eligibility was denied (noted below), the PSC's ordering paragraph stated such direction, but added the specific phrase, "to the extent it has any [customers]."

The PSC in its order stated, "On November 17, 2020, Starion filed an application, signed by Starion's Chief Operating Officer (COO), seeking to comply with the December 2019 order. Starion's response to section 1.B. of the RAAF, which requests a list of energy affiliates including upstream owners and affiliates, refers to an attachment that lists Starion Energy Inc. as the parent company of Starion Energy PA, Inc. and Starion Energy NY, Inc. Starion answered in the negative when replying to section 1.C., which asks if, during the previous 36 months, any criminal or regulatory sanctions have been imposed against any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO. Section 1.D., which lists all states in which the company has operated during the last 24 months, refers to another attachment that states Starion serves customers in New York and Ohio, and is licensed in Michigan and Indiana. In section 1.E., Starion notes the other trade name used in other states is 'Starion Energy NY, Inc.' The information provided by Starion in these sections indicates that Starion has two affiliates, operates only in New York and Ohio, uses only the trade name 'Starion Energy NY, Inc.' in other states, and that no senior officer of the ESCO applicant or entity holding ownership interests of 10% or more in the ESCO has had any criminal or regulatory sanctions imposed within the last 36 months."

The PSC's order stated, "Staff's review of Starion's website indicated that, in addition to New York and Ohio, it operates in Connecticut, District of Columbia, Delaware, Illinois, Maryland, Massachusetts, New Jersey, and Pennsylvania. Contradictory evidence was also found as part of the Massachusetts Attorney General's lawsuit, filed on October 16, 2018, against Starion Energy Inc., two of its principals, including Ruzhdi Dauti, who was named on the RAAF as the president of Starion, and various marketing entities for violations of Massachusetts law. This information suggested that the responses to Sections 1.C. and 1.E. of the RAAF were false."

As described by the PSC, Starion replied that any perceived inaccuracy resulted from differing interpretations of the questions posed

More specifically, Starion said in a PSC filing that, "Neither the 2019 Order, the Rehearing Order, the Uniform Business Practices, nor the RAAF define what is meant by 'regulatory sanctions.' The Staff Guidance, however, indicates: 'Staff will contact other State Public Service Commissions to obtain information on any enforcement actions and will compare such information to information disclosed by the ESCO.'"

"Based on the Staff Guidance, Starion believed that its obligations to report regulatory actions was limited to sanctions imposed by a state public service commission. Consequently, Starion's purported failure to report the Massachusetts action [undertaken by an Attorney General] in Section 1.C was based solely on a different interpretation of the information requested," Starion said in a PSC filing

With respect to questions about complaint history and operations in other states, Starion said in a PSC filing that, "These sections of the RAAF only request information about the applicant itself. However, it appears that Staff has interpreted these sections of the RAAF to require that an ESCO report information not only about the company submitting the application but also regarding its affiliates. For example, the Order indicates that Starion provided incomplete complaint data because it only included information for New York and Ohio. However, while its affiliates operate elsewhere, Starion (i.e., the applicant) only operates in New York and Ohio. As a consequence, by providing complaint data for those two states, Starion provided a complete response to Section 7.P of the RAAF."

Starion further said in a PSC filing that the UBP explicitly requires disclosure of the following: "each state in which the applicant operates" [emphasis by Starion]

However, the PSC stated in its order that, "The question posed in the RAAF Section 1.C. refers to 'criminal or regulatory sanctions [that have] been imposed against any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO[.]' Starion indicated on the RAAF that there were no sanctions and reiterated that it disagrees with Staff's belief that the response to Section 1.C. is inaccurate. The sanctions imposed by the Massachusetts Attorney General's lawsuit were against Starion's parent company, Starion Energy Inc, and its President, Ruzhdi Dauti. The Commission finds Starion's assertion that its 'purported failure to report the Massachusetts action in section 1.C. was based solely on a different interpretation of the information requested' unconvincing. The sanctions proposed against Starion's parent company and president clearly fall within the purview of Section 1.C. of the RAFF [sic] which sought information regarding sanctions imposed against any senior officer or any entity holding ownership interests of 10% or more in the ESCO. This misrepresentation is a violation of the UBP."

Starion also argued in a PSC filing that, to the extent its different interpretation resulted in deficiencies, the PSC did not give it a chance to cure such deficiencies, as is required under the RAAF process

However, in its order the PSC stated, "while Staff identifies deficiencies and provide ESCOs with the opportunity to correct such deficiencies in an application, misrepresentations or false information are not considered 'deficiencies' and such misrepresentations or false information are often not discovered until further Staff investigation into the information provided."

SunSea Energy

As previously reported, the Commission denied the application submitted by SunSea Energy LLC seeking eligibility to serve mass-market customers as an ESCO in the State of New York.

Based on the same interpretation noted above for Starion, the PSC's order indicates SunSea is currently serving mass market customers, and ordered a return of such customers to default service within 60 days

The PSC's order states that, in its RAAF, SunSea indicated that no senior officer of the ESCO applicant or entity holding ownership interests of 10% or more in the ESCO has had any criminal or regulatory sanctions imposed within the last 36 months.

The PSC stated that, "[DPS] Staff notes that on October 7, 2020, the Maryland Public Service Commission issued an order to impose consequences against SunSea for violations of numerous provisions of the Public Utility Article and the Code of Maryland Regulations. This contradicts the information provided in Section 1.C. of the RAAF which asks if criminal or regulatory sanctions have been imposed against any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO."

As summarized in the PSC's order, "SunSea asserts, in its response to the Order to Show Cause, that the application package filed was truthful and accurate. It argues that sanctions were imposed against the company itself and not specifically an officer or entity holding ownership interests of 10% or more. It asserts that because the RAAF did not specifically request information on sanctions against the applicant itself, that it was not required to disclose the Maryland order."

The PSC stated, "the Commission finds SunSea's reasoning behind the RAAF omission misleading and unconvincing."

The PSC stated, "the [Maryland] Order directed SunSea to immediately cease marketing to and enrolling customers, and to provide refunds, based on allegations of multiple regulatory violations, which does constitute sanctions." v However, the PSC ruled that, even without the issue of SunSea's responses, it is appropriate to deny SunSea's mass market application for eligibility due to its complaint history in other states

"Even if the Commission was persuaded by SunSea's argument that the information provided in its application was accurate, the Commission still finds it appropriate to deny SunSea's application for eligibility to serve mass-market customers due to the complaint history in New York and other jurisdictions. The December 2019 Order directed Staff to collect data regarding ESCOs' complaint history in other jurisdictions and concluded that '[t]he Commission will retain discretion to consider complaint history in other states as a basis for denying or withdrawing ESCO eligibility.' The Commission takes complaints regarding improper marketing and slamming very seriously and SunSea's history of noncompliance with these type of requirements in Maryland, New Jersey, and Ohio raises significant concerns with SunSea's ability to operate in a compliant manner in New York," the PSC said

Josco Energy

As previously reported, the Commission denied the application submitted by Josco Energy Corp seeking eligibility to serve mass-market customers as an ESCO in the State of New York.

Based on the same interpretation noted above for Starion, the PSC's order indicates Josco is currently serving mass market customers, and ordered a return of such customers to default service within 60 days

The PSC stated in its order that, "On November 18, 2020, Josco filed an application, signed by the Vice President of Operations, seeking to comply with the December 2019 Order. Section 1.B. of the RAAF, which requests a list of energy affiliates including upstream owners and affiliates, was left blank. Similarly, the required complaint data was not included with the application package documents. Section 1.D., which lists all states in which the company has operated during the last 24 months, included only New York. The list of all trade names used in other states, as required in Section 1.E., was marked 'N/A.' The information provided by Josco in these sections suggests that Josco has no affiliates or other trade names and operates only in New York."

After DPS Staff inquired about operations in other states, the PSC in its order stated, "Josco filed a revised RAAF on April 15, 2021. Section 1.B. of the RAAF, which requests a list of energy affiliates including upstream owners and affiliates, refers to an Attachment that now lists Josco's affiliates as Josco Energy MA, LLC, Josco Energy IL, LLC, and Josco Energy USA, LLC. Section 1.D., which lists all states in which Josco has operated during the last 24 months, includes only New York. Section 1.E., which lists all trade names used in other states, continues to be marked 'N/A' despite its affiliates' activities beyond New York. The final page of the RAAF that includes the attestation and signature is absent."

The PSC's order states, "The fact that Josco has affiliates operating in multiple states appears to directly contradict the information provided in Section 1.B. of the initial RAAF and Sections 1.D. and 1.E. of both the initial and revised RAAFs."

In summarizing Josco's response to a show cause order, the PSC stated, "Josco's response to the May 13, 2021 Order to Show Cause reiterated its position that the misinformation provided on the RAAF was a mistake on the part of the individual completing the application as well as the Vice President of Operations that signed off on it."

In summarizing Josco's response to a show cause order, the PSC stated, "Josco's response to the OTSC concludes that although it made a mistake on the initial RAAF, the mistake was not knowing or willful."

However, the PSC's order states, "Josco does not mention the fact that its attorney confirmed the misinformation in an email to Staff prior to the receipt of the revised RAAF. The Commission finds Josco's reasoning behind the RAAF omission misleading and unconvincing. This misinformation on the RAAF is a violation of the UBP."

Further, the PSC ruled that, even without the issue of Josco's responses, it is appropriate to deny Josco's mass market application for eligibility due to its complaint history in other states

The PSC stated, "Even if the Commission was persuaded by Josco's argument that the misinformation provided in its application was a mistake, the Commission still finds it appropriate to deny Josco's application for eligibility to serve mass-market customers due to the complaint history in New York and other jurisdictions. The December 2019 Order directed Staff to collect data regarding ESCOs' complaint history in other jurisdictions and concluded that '[t]he Commission will retain discretion to consider complaint history in other states as a basis for denying or withdrawing ESCO eligibility.' The Commission takes complaints regarding improper marketing and slamming very seriously and Josco's history of noncompliance with these type of requirements in Maryland, New Jersey, Ohio, and Pennsylvania raises significant concerns with SunSea's [sic] ability to operate in a compliant manner in New York."

Smart One Energy, LLC

As previously reported, the Commission denied the application submitted by Smart One Energy, LLC seeking eligibility to serve mass-market customers as an ESCO in the State of New York.

As previously reported, Smart One responded to a show cause order on June 17, 2021, with a letter stating that it, "is leaving the New York market and therefore voluntarily forfeiting its approval to operate as an energy service company in the State."

Generally, the PSC said that Smart One's RAFF indicated that Smart One has no affiliates, uses no other trade names, has operated only in New York in the last 24 months, and has had no regulatory sanctions imposed in the last 36 months. The required complaint data was also missing from the application package.

"Despite Smart One's assertions, the Commission is aware that Smart One has operated in multiple states during the 24 months preceding its application. On August 2, 2019, the Maryland Public Service Commission issued its Order Suspending Retail Supply License, Imposing Civil Penalty, and Directing the Transfer of Service against Smart One. In addition, the California Public Utilities Commission issued Energy Citations to Smart One on February 13, 2020, April 21, 2020, August 20, 2020, and September 17, 2020, totaling $25,000 for violations of the Public Utilities Code. On November 21, 2019, the Commonwealth of Virginia State Corporation Commission issued a Rule to Show Cause against Smart One Energy for violations of the Rules Governing Retail Access to Competitive Energy Services. These facts appear to directly contradict the information provided in Sections 1.C. and 1.D. of the RAAF which is a violation of the UBP," the PSC said The PSC noted that, as of the effective date of its Order, Smart One has returned its existing customers to utility service.

Revocation Show Cause Orders To Two ESCOs

As previously reported, the PSC ordered that Got Gas?, LLC and Graystone Technologies, Inc. each show cause within 30 days why each's eligibility to act as an ESCO in New York should not be revoked for allegedly violating the Commission's Uniform Business Practices rules

With respect to Got Gas?, LLC, the PSC stated, "Got Gas did not comply with the UBP requirement for filing its annual compliance attesting that the information and attachments submitted in its RAAF and application are current. Despite the multiple notices provided to Got Gas, its non-compliance continues."

With respect to Graystone Technologies, Inc., the PSC stated, "Graystone did not comply with the UBP requirement for filing its annual compliance filing attesting that the information and attachments submitted in its RAAF and application are current. Despite the multiple notices provided to Graystone, its non-compliance continues."

As previously noted, the PSC said that neither Got Gas?, LLC nor Graystone Technologies, Inc. is serving customers in New York

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