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PUC Approves $160,000 Settlement With Retail Supplier, Over Consumer Advocate Objections
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The PUC of Ohio approved without modification a settlement under which Inspire Energy Holdings LLC ('Inspire' or 'Company') shall pay a civil forfeiture of $160,000 to resolve allegations from PUCO Staff that Inspire was, "providing misleading or deceptive statements to customers and charging unconscionably high rates."
In early 2024, when PUCO set the settlement for hearing, Inspire had provided the following statement concerning the matter:
"Inspire Clean Energy is a certified B Corp that maintains the highest level of transparency, accuracy and service to our customers, ensuring that our electricity plans adhere to all local and state regulatory guidelines. We worked with the Public Utilities Commission of Ohio to reach a resolution in this matter and have already implemented the approved Stipulation. Because the settlement is reasonable, we will continue to abide by its terms.
"Our goal is always to provide the best experience possible for our customers. Our member support team remains available to address any questions they may have."
--- Feb. 2024 Statement from Inspire
As previously reported, the settlement addresses certain marketing and products from Inspire, including the prior offering of a monthly subscription electricity plan which included a low introductory trial cost, with PUCO Staff alleging that the product had an, "unconscionably high subscription rate," after an introductory period
Staff had alleged instances in which, under the monthly cost subscription product, Inspire would charge $59 for an introductory month, then charge $699 for each remaining month during the term
The Ohio Consumers' Counsel argued that Inspire's product was a, "flat-monthly rate offer"
OCC argued that Inspire's marketing of the subscription product violated O.A.C. 4901:1-21-05(A)(4), governing flat-monthly rate offers, in two respects
O.A.C. 4901:1-21-05(A)(4) requires that, for a flat-monthly rate offer, the offer shall include a, "a specific listing of the rate to be charged per month for the duration of the contract."
OCC argued that Inspire, in marketing the introductory rate, failed to provide the cost for the months after the introductory price (the duration)
OCC further claimed that O.A.C. 4901:1-21-05(A)(4) requires that offers include "a" rate, and that an introductory offer with a separate cost for the duration violates the requirement for "a" single rate
Inspire argues that, as its product contained two "separate" prices (introductory and the price for the duration), its product is a variable rate and thus not subject to OCC's cited rule. Inspire said that it followed the rules applicable to variable offers
Citing testimony, OCC alleged that Inspire enrolled 15,932 customers on the relevant product
OCC alleged that 10,000 of such customers had their subscription cost increase by at least two times after the introductory period ended, with 5,800 customers allegedly seeing a cost increase of at least three times
OCC argued that Inspire should be ordered to cease service to such remaining customers (which, absent a selection by the customer beforehand, would mean a drop to default service)
The settlement stated that, "Inspire is no longer marketing or enrolling Ohio consumers in any monthly subscription rate plans with low introductory trial rates, and will not resume marketing or enrolling Ohio consumers in any such plans without notifying Staff."
In addition to the $160,000 forfeiture, the settlement provides for certain customer notices and re-rates (noted below). During the proceeding, Inspire had stated that it stopped all door-to-door sales in Ohio in May 2023 and stopped all other in-person marketing in early 2024. Inspire had also "blacklisted" [as termed by Inspire] eight third-party representatives under various remedial measures
See full details on the settlement here
PUCO had initially adopted the settlement in December 2023, but, on rehearing, reversed an earlier decision which had denied intervention to the Ohio Consumers' Counsel. PUCO set the matter for hearing after, on rehearing, allowing OCC to intervene
In adopting the settlement on Dec. 18, PUCO denied several objections and proposed relief sought by OCC
Notably, PUCO said that the rules governing settlements for notices of probable non-compliance issued to retail suppliers are not governed by the "three-prong test" which typically governs stipulations before PUCO. Generally, a stipulation under the three-prong test is evaluated based on: (1) whether serious bargaining among parties occurred, (2) whether the stipulation, as a package, benefits customers and the public interest, and (3) whether the stipulation violates any important regulatory principle or practice
PUCO said, "The Commission notes that no other party must be involved in order for Staff to reach a noncompliance settlement with a regulated entity, and as authorized by statute, the Commission reviews final settlement agreements submitted in its noncompliance cases."
PUCO said that, in addressing retail supplier enforcement settlements, PUCO considers whether the settlement is a "reasonable" resolution of the allegations
Among other relief, OCC had sought a PUCO order that Inspire cease service to all customers who had been signed up on a flat-rate subscription plan with an introductory rate
PUCO found that the settlement's terms regarding customer notice address OCC's concern.
As more fully discussed in our prior story (details here), under the settlement, Inspire will, at renewal, include in the renewal notice a statement inviting customers to contact Inspire if the customer has any complaints or concerns regarding their prior service, including how the subscription introductory price and flat monthly subscription price were marketed or communicated to the customer (such notices as part of renewal have already been issued). This notice would not inform customers that they may be eligible for a re-rate as discussed below
PUCO also rejected OCC's proposal to require that current customers of Inspire automatically be re-rated, and that former customers automatically be re-rated
The settlement only required that Inspire send to certain former customers -- those who did not complete their full initial term on the product or who were on the product for less than 150 days -- notice that the customer may be eligible for a re-rate (refund)
Re-rates would only be provided to: (1) former customers who respond to such notice or (2) current customers who seek a re-rate in response to their renewal notice (described above).
A re-rate would refund to the customer the difference between the default service rate and Inspire's rate, if the customer paid more under Inspire
PUCO reported that Inspire Energy, pursuant to the settlement, sent a total of 1,211 renewal notices to customers which included the notice language described above, and that none of those customers requested a re-rate. PUCO reported that 18 customers ceased their service with Inspire
Inspire reported that 4,502 notices were sent to the former customers outlined above
PUCO also denied OCC's request that Inspire be assessed a forfeiture of $1.6 million, with PUCO finding that the $160,000 amount under the settlement is appropriate
OCC argued that $160,000 is equal to a forfeiture of only about $10 per customer
PUCO in adopting the settlement did not specifically address OCC's argument that Inspire's plan (or specific marketing thereof) was unlawful, or whether the plan should have been considered a flat-monthly rate offer, or a variable rate offer
PUCO noted that the settlement provides that, to the extent that Inspire wishes to resume the offering of the relevant product (e.g. subscription with an introductory price and another price for the duration), Inspire under the settlement must inform PUCO Staff of such. PUCO said that Staff can act to prevent the resumption of such an offer if such offer is deemed to be unlawful
The settlement stated that it, "should not be construed, as an admission of any fact, allegation, or legal conclusion asserted by Staff in the Initial PNC [probable non-compliance] Letter, the Amended PNC Letter, or otherwise in this proceeding with regard to Ohio Consumers ('Covered Conduct')."
The settlement stated that, "Inspire has fully cooperated with this proceeding and Staff’s inquiry into the alleged violations identified in the Amended PNC Letter[.]"
Case 23-720-GE-UNC, 23-0720-GE-UNC
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Consumer Advocate Had Sought $1.6 Million Forfeiture, Drop Of Customers To Default Service
December 18, 2024
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Reporting by Paul Ring • ring@energychoicematters.com
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