Update: PUC Staff Alleged Violations Based On Supplier's Language Including, "Nothing Will Change", Statement About Protection When Supplier Rate Exceeds PTC; "Market Rate"

June 2, 2023

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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A January 12, 2023 Amended Notice of Probable Non-Compliance ("notice") provided by Staff of the PUC of Ohio to SmartEnergy Holdings, LLC has been made public, providing further information regarding what behavior Staff had alleged was in non-compliance with the marketing rules

As previously reported, SmartEnergy Holdings and Staff entered into a stipulation concerning the matter (see details here), but the stipulation did not provide much detail concerning any alleged behavior

SmartEnergy has provided the following statement concerning the matter:

"As stated, SmartEnergy has reached a resolution with the Public Utilities Commission of Ohio (PUCO) staff, addressing specific concerns raised in the notice of probable non-compliance.

"SmartEnergy prioritizes issues of this nature and acknowledges the efforts made by the PUCO staff to address all issues raised in a fair and satisfactory manner."

--- Statement from SmartEnergy

The now-filed Notice of Probable Non-Compliance provides further details on the alleged behavior which gave rise to the stipulation, which such behavior including broader issues beyond narrow concerns related to a specific piece of marketing

Staff said that it reviewed customer complaints for SmartEnergy, along with documents and call recordings provided in response to investigations, information provided by SmartEnergy in response to Staff’s requests, and SmartEnergy’s response to Staff’s initial notice of probable non-compliance.

Aside from the previously reported mailer and rebate (also discussed further below), Staff had alleged in the notice that examples of misleading or deceptive information included telling customers (as alleged by Staff):

• Nothing will change.

• They will be protected from rate increases for a number of months when the rate they will receive from SmartEnergy is higher, sometimes significantly, than the customer’s current rate.

• SmartEnergy is fixing the rate so it won’t go up, when asked by the customer if the bill will be less.

• The utility will deliver 100% renewable energy to their home because SmartEnergy is trying to reduce pollution in their area.

• The price-to-compare on the bill is not accurate.

• They are eligible to claim the gift card even though they are not yet eligible to receive the promotional gift card.

• Enrolling a customer who is clearly confused.

Staff's notice of probable non-compliance did not expand on these points. In particular, it was unclear if the concern about 100% renewable energy and statement about reducing pollution was due to the potential use of non-local RECs, or due to another circumstance

Concerning the previously reported mailer and rebate program discussed in our prior story, Staff's notice provided more details, including an alleged claim rate

Staff had alleged in the notice that, "SmartEnergy enrolls many customers in response to a mailing campaign that offers an incentive (e.g. – gift cards, free supply service, etc.) for enrolling and remaining enrolled for at least six continuous months. One such mailing gives the customer a 'P.I.N. for a $XXX Visa Gift Card.' The customer contacts SmartEnergy to claim their gift card, only to then find out they have to 'claim' the gift card yet again, but after six months. From information provided by SmartEnergy, it appears that the number of customers who become eligible for the incentive is approximately 20%. Of those eligible for the incentive, only 12% actually took the extra step to 'claim' their incentive a second time. Staff believes this is just one example of how customer are being misled."

Staff had also alleged, "Staff also found that SmartEnergy’s sales representatives and promotional materials highlight a 'market-rate' for customers following conclusion of the introductory, fixed-rate portion of the contract. However, SmartEnergy charged customers variable rates that were unconscionably high, some as much as $0.299/kWh. During review, Staff could find no evidence that these rate increases were based on any actual market conditions. In addition, the contract does not include 'A clear and understandable explanation of the factors that will cause the price to vary,' as is required under Ohio Adm.Code 4901:1-21-12(B)(7)(c) and Ohio Adm.Code 4901:1-29-11(J)(2)."

Staff had in the notice proposed a forfeiture of $122,000. The stipulation provides for an $85,000 forfeiture

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