STATE OF CONNECTICUT

PUBLIC UTILITIES REGULATORY AUTHORITYTEN FRANKLIN SQUARENEW BRITAIN, CT 06051

DOCKET NO. PURA INVESTIGATION INTO PUBLIC POWER, LLC'STRADE PRACTICES

December 14, 2015

By the following Commissioners:

Arthur H. HouseJohn W. Betkoski, IIIMichael A. Caron

Lead Staff: Error: Reference source not foundLegal Advisor: Error: Reference source not found

PROPOSED FINAL DECISION

This proposed final Decision is being distributed to the parties in this proceeding for comment. The proposed Decision is not final. The Authority will consider the parties’ arguments and exceptions before reaching a final Decision, which may differ from the proposed Decision. Therefore, this proposed Decision does not establish any precedent and does not necessarily represent the Authority’s final conclusion.

PROPOSED FINAL DECISION

I. INTRODUCTION

A. SUMMARY

In this Decision, the Public Utilities Regulatory Authority determines that since 2013, Public Power, LLC has initiated a series of protocols and policies to improve and better monitor its operations as well as the actions of its third-party vendors and sales agents in Connecticut. The Public Utilities Regulatory Authority also determines that for the most part, Public Power, LLC complied with applicable statutes and regulations regarding the enrollment and switching of customers.

However, in a small number of instances, policies and requirements failed and customers were enrolled in violation of Section 16-245o(f)(2) of the General Statutes of Connecticut. Further, the Public Utilities Regulatory Authority has determined that Public Power, LLC was not complying with the record keeping requirements mandated by Section 16-245-2 of the Regulations of Connecticut State Agencies. Accordingly, the Public Utilities Regulatory Authority will impose a fourteen thousand dollar ($14,000) civil penalty on Public Power for these violations.

B. BACKGROUND OF THE PROCEEDING

On February 19, 2013, pursuant to Sections 16-245o, 16-41 and 16-245u of the General Statutes of Connecticut (Conn. Gen. Stat.), the Public Utilities Regulatory Authority (Authority or PURA) established, on its own motion, the above-referenced docket to investigate Public Power, LLC’s (Public Power or Company) trade practices. Specifically, the number of customer complaints filed against Public Power increased significantly and notably during calendar years 2012 and 2013. Complaints included allegations of unauthorized switching of a customer’s electric generation supplier (slamming), misleading or aggressive solicitation tactics, and excessive electric generation rate increases. As a result, the Authority initiated this proceeding to investigate whether Public Power had been engaged in any unfair or deceptive trade practices in violation of Conn. Gen. Stat. §§16-245o, 42-110b(a) or any terms and conditions of its electric supplier license.

C. CONDUCT OF THE PROCEEDING

Pursuant to Conn. Gen. Stat. § 16-245o, 16-41 and a Notice of Hearing dated June 23, 2015, the Authority conducted a hearing at its offices, Ten Franklin Square, New Britain, Connecticut, on July 16, 2015. A Late Filed Exhibit Hearing was scheduled for July 30, 2015. That hearing was cancelled and the Authority issued a Notice of Close of Hearing for this proceeding on August 12, 2015. The Authority issued a proposed final Decision on this matter on December 14, 2015.

Docket No. Page 2

D. PARTIES AND INTERVENORS

The Authority recognized the following as Parties to this proceeding: Public Power, LLC, 1055 Washington Boulevard, 7th Floor, Stamford, CT 06901; Office of Consumer Counsel, Ten Franklin Square, New Britain, CT 06051. The Authority granted Intervenor status to the following: The Connecticut Light and Power Company d/b/a Eversource Energy (Eversource); The United Illuminating Company (UI); and the Commissioner of the Department of Energy and Environmental Protection.

II. AUTHORITY INVESTIGATION

A. PUBLIC POWER’S CUSTOMER COMPLAINT RECORD

Public Power was licensed to operate as an electric supplier to serve residential, commercial and industrial customers throughout Connecticut. See the Authority’s Decision dated September 17, 2007, in Docket No. 07-06-13, Application of Public Power & Utility for an Electric Supplier License. In August of 2012, Public Power informed the Authority of changes to its corporate structure resulting in the Company becoming an affiliate of a newly formed holding company, Crius Energy, LLC (Crius). Public Power stated that this change in corporate structure would result in no change to the Company’s authorized scope of service throughout Connecticut.1

Complaints filed against Public Power in 2012 increased as compared to the previous year and continued to increase in 2013. Complaint types included allegations of slamming, excessive price increases, and misrepresentation.

Customer Complaints Against Public Power, 2010 through 2014

Total

Billing General Complaint Quality of Service

Slamming

2010 27 1 5 7 142011 31 8 11 1 112012 144 18 69 34 232013 170 55 49 27 392014 175 137 20 7 11

For point of reference, the following table lists Public Power’s customer count for the same time period (2010-2014).2

Total Connecticut Customers

2010 63,0382011 60,5302012 116,264

1 August 13, 2012 correspondence from Public Power in Docket No. 07-06-13, regarding changes in corporate structure and scope of service.

2 Docket No. 06-10-22, DPUC Monitoring of the State of Competition in the Electric Industry – Monthly Competition Report, compliance filings. Data displayed is as of December 31st for each year listed.

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2013 89,3342014 60,815

As the first table above indicates, the volume of Public Power customer complaints began to dramatically increase in 2012 and continued throughout 2013 and into 2014. In addition to the increase in the number of customer complaints, the nature of the allegations was unsettling. Along with complaints of slamming or objections to excessive price increases to variable rate-based products, customers alleged that Public Power agents had misrepresented themselves as employees of their electric distribution company and stated that customers' electric account would be closed unless they provided billing information. Customers alleged that Public Power representatives misrepresented themselves as distribution company employees and stated that the customers would be eligible for bill adjustments or credits if they switched to Public Power. Customers stated that they repeatedly requested to be placed on Public Power’s “do not call” list,” yet would continue to receive solicitation calls from the Company. Based upon the significant increase in the number of customer complaints, as well as the nature of the allegations raised by customers, the Authority initiated this proceeding and investigation into Public Power.

B. CUSTOMER COMPLAINT INVESTIGATION

1. Enrollment and Slamming Issues

During the course of this proceeding, the Authority queried Public Power on nearly 100 customer complaints that had been filed directly to PURA or received directly by the Company. Response to Interrogatories CS-8 through CS-10, CS-29 through CS-41, and CS-44 through CS-47. These complaints involved allegations of slamming, solicitation improprieties, or other billing issues.

The majority of the complaints reviewed during this investigation pertain to customer allegations of slamming or other enrollment issues. Conn. Gen. Stat. §16-245o(f)(2) states, in pertinent parts, that:

No electric supplier shall provide electric generation services unless the customer has signed a service contract or consents to such services by one of the following: (A) An independent third-party telephone verification; (B) receipt of a written confirmation received in the mail from the customer after the customer has received an information package confirming any telephone agreement; (C) the customer signs a contract that conforms with the provisions of this section; or (D) the customer’s consent is obtained through electronic means, including, but not limited to, a computer transaction.

Accordingly, the Authority sought from Public Power documentation to verity that the requirements of Conn. Gen. Stat. §16-245o were met. Generally, Public Power was able to provide the requisite verification necessary for the proper enrollment of the customers in question. However, there were a number of transcations that the Authority found to be troubling.

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As described above, one of the methods that a licensed electric supplier utilizes to authenticate a customer enrollment is an independent third-party telephone verification (TPV). Public Power utilizes the service of an automated TPV system known as “Trusted TPV.” During this process, a third-party vendor will conference the customer into the Trusted TPV system. The customer answers recorded prompts verifying his enrollment with Public Power. Response to Interrogatory CS-26. Public Power began using the Trusted TPV system on March 4, 2011. Response to Interrogatory CS-71. The Trusted TPV system is a series of automated questions posed to potential customers, utilizing a script provided by Public Power, with questions that a customer must answer to verify enrollment. Response to Interrogatory CS-73. After a customer completes the verification process, Trusted TPV reviews the recorded transaction to determine whether it has been satisfactorily completed. According to Public Power, the customer is not enrolled until the TPV transaction has been deemed complete. Response to Interrogatory CS-26.

According to Public Power’s policy, the sales agent cannot coach the customer during the Trusted TPV process. Response to Interrogatory CS-73. The Trusted TPV process can also be halted by the customer if the customer so chooses. Should the Trusted TPV transaction not produce a valid result, Public Power will reject the pending enrollment. Response to Interrogatory CS-75. The Company testified that while the sales agent may speak during the process so as to receive clarifications from the customer, any coaching by the sales agent will cause the transaction to fail. Further, Public Power testified that if the customer seems confused, or if he does not provide a clear yes or no answer, the Trusted TPV process automatically fails. Tr. 7/16/15, p. 95.

While these policies have been established by Public Power to authenticate the enrollment of customers, the Authority found instances where the Company’s procedures were not followed. The first instance was a complaint submitted to the Authority in October of 2013 (Chabot Complaint). Public Power provided an audio recording and a written transcript of a Trusted TPV transaction in support of the customer’s enrollment. Responses to Interrogatories CS-44 and CS-84. During the verification process, the following discussion transpired:

Trusted TPV: Customer, you understand that you have chosen the variable rate plan, your new monthly variable rate will be effective following the first meter read date after CL&P successfully enrolls your account with Public Power, which can take up to 90 days, correct?

Chabot: I guess so.Response to Interrogatory CS-84.

Also, during the Trusted TPV process for the Chabot complaint, the customer expressed confusion and received coaching from the Company Agent in response to one of the Trusted TPV queries:

Trusted TPV: Customer, please note...

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Chabot: I…

Trusted TPV: ...that you will continue to receive one bill each month from CL&P just like you always have and you will continue to pay CL&P’s delivery costs that you have always paid, correct?

Chabot: Yes…I

Agent: The remaining three questions are simply yes or no, we’ll be all done, you’re doing great.

Chabot: But I don’t want to go off the budget account…

Agent: Oh no, you’re not ma’am.

Id.

As stated previously, Public Power stated that any coaching of a customer during the Trusted TPV process would cause that verification to fail. However, in response to a complaint (Stebar Complaint), the Company provided an audio recording of the verification process during which the customer was asked to verify his knowledge of the three-day right to cancel his Public Power contract:

Trusted TPV: Customer, you understand that you are now enrolling with Public Power LLC as your electricity supplier in the energy choice program and you will receive the terms and conditions reconfirming everything we’ve discussed here today. You understand that you will have three days to opt out of enrollment, correct?

Stebar: Yes.

Agent: Now Richard, this question, I just want you to be aware that this is what the State requires us to inform you. Anytime you do anything over the phone the State allows you three days to opt out. I want you to understand that you can opt out at any time. Sometimes customers get leery and they think, oh wait a minute, you said I could do it at anytime…

Response to Interrogatory CS-43.

In April 2013, the Authority received a complaint (Medina Complaint) concerning a Public Power enrollment. In the translated written transcript of the Trusted TPV process, the following discussion occurred;

Trusted TPV: Customer, do you understand you have selected our variable rate, 100% Renewable Energy, following

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your introductory rate of .0699/kwh. Your variable rate will be determined on a monthly basis. Your introductory variable rate will take affective following your first meter read date after CL&P successfully enrolls your account with Public Power, which can take up to 90 days, correct?

Medina: I don’t understand.

Consultant: Ok Mrs. Medina what they are saying here is that as of your next meter read you will have the program…you will receive the program on your next bill. Okay, that can…

Medina: Aren’t they speaking of variable rates?

Consultant: No, the variable rate is what you will receive, one rate right now of 0.0699, which is lower than what you are paying.

Medina: Ah, that is what I wasn’t understanding.

Late Filed Exhibit No. 5, Attachment B.

As stated previously, Public Power’s policies for the Trusted TPV process was that if a customer did not provide a clear yes or no, or if there was any coaching involved, the TPV process would fail automatically.

Finally, in January of 2013, the Authority received a complaint regarding an allegation of slamming on behalf of Paul Doucette (Doucette Complaint) filed by his spouse, Judith. At the end of the Trusted TPV process, the following exchange occurred:

Trusted TPV: Customer, please remember that you will soon receive a Welcome Package in the mail consisting of your Terms and Conditions and the details of your enrollment with Public Power, LLC. The package will also include a summary of any customer rewards you may qualify for, for switching to Public Power, LLC with instructions for redeeming the benefits. Public Power LLC strongly encourages you to review all of the information. Your verification ID number is 39523420. Press * to hear that again or press # to continue.

Judith Doucette: Ok, yes, I guess. I don’t know. I don’t know any of this.

Revised Late Filed Exhibit No. 1.

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According to Public Power's TPV process policies, the customer in this verification did not provide a clear yes or no answer.

The Authority finds these instances troubling, especially based upon the measures that Public Power stated are employed to review the Trusted TPV process. The Company testified that the independent third-party company that conducts the TPV process is responsible for listening to 100% of all verifications to ensure they are accurate and comply with all regulations. Tr. 7/16/15, p. 96. This process requires the vendor to listen and review the TPV recording to verify that the customer has affirmatively answered all questions with a “yes” or “no” as appropriate, and that the customer does not appear to be confused. Response to Interrogatory CS-74. According to Public Power, the third-party company that is conducting the Trusted TPV process is compensated for every verification transaction whether or not the verification is deemed successful. Tr. 7/16/15, p. 102.

Public Power does not listen to 100% of the TPV recordings, and reviews only some of the failed TPVs. Tr. 7/16/15, p. 99. However, the Company stated that it has a fairly strict regimen of quality control, where weekly reviews of both sales calls and TPVs are conducted to ensure that all agents and those contracted companies conducting the calls are in compliance. Tr. 7/16/15, p. 98.

2. Solicitation Issues

Along with the slamming and enrollment issues, the Authority also sought responses to complaints from customers who claimed that Company agents and salespersons misrepresented themselves while promoting Public Power’s products. These complaints are troubling. For example, one customer stated that a Public Power agent initiated a sales call by stating that he was hired by the Authority to contact Connecticut residents and inform them how they could reduce their rates by 10%. Another complaint alleged that a Company agent stated to the customer that he needed to reinstate service with Public Power or his service would be dropped. Another complainant claimed that the Public Power agent led the customer to believe she would receive credit for recent storms if she provided information from her electric bill. Response to Interrogatories CS-7, CS-9, and CS-32.

Based on these complaints, the Authority sought more insight into the conduct and oversight of Public Power’s solicitation activities. Public Power submitted to the Authority its Sales Consultant Code of Conduct and Compliance. The document, which must be signed by a sales consultant, states that any failure to abide by the code of conduct can lead to the termination of a sales consultant’s agreement with the Company. Response to Interrogatory CS-23, Attachment CS-23. Public Power’s code of conduct contains many requirements for its sales consultants. For example, all sales consultants may only use marketing materials approved by the Company; all sales consultants must never make false representations about Public Power’s product, price, or term; and all sales consultants must state they are not with the local utility and make sure the customer understands. Id.

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Unfortunately, prior to March 25, 2013, the Company’s third-party telemarketing vendors were not required to record all sales calls made to customers. Response to Interrogatories CS-18 and CS-29. Public Power stated that its Trusted TPV system was not utilized to authenticate door-to-door sales. Response to Interrogatory CS-76.

Besides its code of conduct, Public Power stated that it employs a number of methods to control the service quality of its brokers, telemarketers and door-to-door sales agents. The first method is through contractual obligations imposed upon vendors conducting solicitation. Public Power stated that its contracts require that the vendor complies with all federal, state and local laws and regulations, uses only Company approved scripts and marketing materials, and fulfills certain contractual obligations such as recording all telemarketing calls and providing those records to Public Power upon request. Any modifications that the vendor wishes to make to an approved marketing script must be pre-approved by Public Power. Responses to Interrogatories CS-22 and CS-25.

The Company stated that it controls service quality through training provided to its vendors and their employees. Vendors and their employees must be trained by a Company Compliance Manager through in-person sessions. Third-party vendors are required, by contract, to follow Public Power’s approved training and are subject to quarterly reviews and follow-up training. Response to Interrogatory CS-22. Public Power stated that the last quarterly review of a third-party vendor was completed in mid-year 2014. Also, Public Power does not generate a written report as part of the quarterly review process; a Compliance Manager verbally discusses any issues or retraining needs with the vendor in person or via conference call. Response to Interrogatory CS-68.

Public Power explained that its third-party vendors are also subject to ongoing oversight as the Company tracks customer complaints filed against each vendor. The Company’s Compliance Manager completes a weekly compliance report detailing consumer complaints received against each vendor in the previous week. Along with this weekly report, the Company addresses any sales and marketing complaints with each vendor as they arise. Public Power requires all of its vendors to cooperate with the Company in complaint investigation and any failure to do so or failure to demonstrate improved compliance will result in termination of that vendor. Response to Interrogatory CS-22.

In addition to these methods, Public Power also monitors third-party vendors through its Quality Control (QC) department. The QC department performs tasks such as reviewing applications for accuracy and completion as well as following an enrollment verification checklist. This checklist includes a review of items such as the customer name, account number, address, signature confirmation, third-party vendor name and identification and confirmation that the customer was provided a copy of the Company’s terms and conditions. Id. Public Power has established a policy that includes five (5) zero-tolerance offenses. If a third-party vendor’s employee commits any one of these offenses, the agent is immediately terminated. Zero-tolerance offenses include slamming, deceptive or unlawful marketing practices, abusive tactics, non-compliance with the Company’s marketing standards, and the use of improper sales channels. Id. If a vendor’s employee commits one of these five offenses, he is

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immediately terminated. If a vendor’s employee is disciplined for committing a less serious offense, that employee is required to undergo retraining. Response to Interrogatory CS-24.

If the QC department notices a trend with a third-party vendor’s enrollments not meeting the verification checklist, that vendor is added to Public Power’s watch list. A vendor on the watch list would have its enrollments examined with greater scrutiny, including individually contacting each customer enrolled by that vendor to confirm that the enrollment was properly authorized. Response to Interrogatory CS-22. After communicating required corrective actions to a vendor, the vendor is given opportunity to remove non-compliant agents and/or to correct issues. Response to Interrogatory CS-69. In addition, Public Power stated that it will refuse to process enrollment of a customer whose enrollment cannot be confirmed, whether or not the submitting vendor is on the watch list. Response to Interrogatory CS-70.

Public Power indicated that it has terminated third-party vendors for failure to comply with Company standards. Response to Interrogatory CS-20. Seven (7) vendors have had services terminated for reasons such as non-compliance with terms and conditions or non-compliance with provisions of the national Do-Not-Call registry. Responses to Interrogatories CS-64 and CS-65. Once a third-party vendor’s services have been terminated, Public Power no longer makes payments to that vendor. Response to Interrogatory CS-24.

As stated previously, Public Power did not require its vendors to record all telemarketing calls until March 25, 2013. It has since initiated a program where a random number of outbound telemarketing calls are reviewed by the Company’s legal, compliance, marketing and sales departments along with the third-party vendor that conducted the call. These review sessions were conducted weekly and the random calls are reviewed to identify any indications that the customer was confused or if the sales agent had violated Company standards. Any telemarketing call failing to meet Company standards would be rejected and Public Power would discuss with that vendor how to prevent recurrent of similar instances. Response to Interrogatory CS-62.

Public Power acknowledged that its prior owner did oversee operations to the level of standards instituted by Crius. Public Power Brief, p. 2. The Company maintains that since January 2013, Crius began a process of identifying areas of improvement, which process led to Company adopting full-time legal, regulatory and compliance resources for sales and customer management, establishing a whistleblower hotline for employees and third-party vendors to anonymously report any violations of law, and requiring the recording of all sales calls made to customers. Tr. 7/16/15, pp. 8 and 9. Other areas noted by Public Power whereby Crius sought to improve Public Power’s operations include tracking and analysis of customer complaints, creation of a watch list for vendors and agents that have had multiple complaints or violated Company policies, new vendor agreements with third-parties that required strict compliance with applicable laws, and real-time monitoring and access to vendor records. Response to Interrogatory CS-63.

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3. Price Protection Plan

While reviewing complaints filed against Public Power, the Authority found a number of solicitation and TPV references to the Company’s price protection plan. Public Power initiated this offering in January of 2012 and discontinued it in December of 2012. The premise of the offer was a variable-rate product that could fluctuate on a month-to-month basis, but would never exceed 15% of the original introductory rate over a twelve-month period. Tr. 7/16/15, pp. 59 and 60. According to Public Power, the price protection plan was not offered after December 2012, however customers enrolled onto the plan during that month were still subject to the terms and conditions of the price protection guarantee for a full twelve-month period. Id., p. 65. Public Power did not offer the price protection guarantee to every customer that it marketed to during 2012, but presented it to various customers through different marketing channels. For example, the plan was offered to some customers solicited via telemarketing and some customers solicited via door-to-door sales. Id., 7/16/15, pp. 68 and 69. Eventually, approximately 24,000 customers were enrolled under the price protection plan. Late Filed Exhibit No. 3.

Public Power indicated that it assigned an employee to monitor the price protection plan to insure that the guarantee was honored. However, that person is no longer employed with the Company, so details on how monitoring was conducted are unavailable. Tr. 7/16/15, pp. 83 and 84. Further, the Company was unsure if any reports regarding price protection guarantee monitoring were available. Id., p. 85. Accordingly, the Authority sought this information from Public Power. The Company provided a report on three separate product offerings made during 2012. According to Public Power, these three particular product offerings registered the most customer enrollments. Based upon extensive review of the the report Public Power submitted, the Authority found that of the approximately 21,000 customers examined, the Company’s price protection guarantee was fulfilled. In more than half of the customer records reviewed, customers under the price protection guarantee experienced either no change in their generation rate or a rate decrease. Late Filed Exhibit No. 4. Based upon this information, the Authority finds that Public Power honored the terms and conditions of its price protection guarantee.

C. CUSTOMER RECORD KEEPING

In its Brief, the OCC asserted that Public Power failed to maintain customer records in compliance with applicable regulations. OCC Brief, p. 2. Section 16-245-2(g) of the Regulations of State Agencies (Conn. Agencies Regs.) requires, in pertinent parts, that an electric supplier shall:

1. Maintain all records of customer complaints for a minimum of three (3) years from the date of complaint;

2. Make customer complaint records available to the Authority upon its request; and

3. Cooperate with the Authority in its investigations of consumer complaints and comply with any resulting order

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The OCC contends that Public Power has not complied in several instances with the aforementioned regulation. For example, the OCC cited the Company’s response to a customer complaint (Olivieri). In its response, Public Power stated that a former employee did not provide adequate and timely responses to customer complaints and failed to keep adequate records regarding customer complaint investigations and responses. Response to Interrogatory CS-37. Given the customer’s allegation of misrepresentation by Public Power’s sales agents, the OCC states that this example is particularly troubling. OCC Brief, p. 3. The OCC also noted Public Power’s response to another customer complaint regarding misrepresentation by a sales agent. The OCC contends that the Company’s inability to provide detailed information surrounding the specifics of the customer’s allegation seriously hindered the Authority’s investigation into Public Power’s marketing practices. OCC Brief, p. 4. In addition to these examples, the OCC cited other instances where Public Power failed to provide records to the Authority. It argued that the Company’s record retention policies were legally deficient under Conn. Agencies Regs. § 16-245-2. As a result, the OCC urged the Authority to impose a meaningful penalty against Public Power. OCC Brief, pp. 4 and 5. In addition to this penalty, the OCC also recommended that Public Power report on its record management policies and practices, including retention of customer complaints and responses, on a quarterly basis. The OCC further recommended that the Company submit quarterly reports on quality control efforts enforced with its third party vendors. OCC Brief, p. 7.

The OCC also questioned the delivery and adequacy of Public Power’s customer notices when the Company acquired customers from other licensed electric suppliers. The OCC claimed that Public Power’s inability to obtain records of a customer complaint may be indicative of glitches with the Company’s information systems training. Further, the OCC noted a number of complaints where customers alleged that they never received notification of account transfer to Public Power. The OCC questioned Public Power’s diligence in maintaining updated, active customer lists from the distribution companies when purchasing the assets of another licensed electric supplier. OCC Brief, pp. 5-7.

Public Power acknowledged that its record keeping practices may not have satisfied a best practices standard, but that its policies and procedures were not, as the OCC claimed, legally deficient. Public Power Reply Brief, p. 2. In response to the OCC's claims, Public Power referred to its licensing proceeding, Docket No. 07-06-13, wherein the Authority required the Company to maintain customer complaint records to indicate the following:

1. The date of the complaint;2. The name and address of the complainant;3. The address or location of the complaint;4. A description of the complaint; and5. A description of the resolution of the complaint.

Public Power asserts that its complaint records met the Authority's standards. In addition, when asked for complaint records in response to this investigation, Public Power provided them to the Authority. Id., pp. 2 and 3. Pubic Power maintains that its inability to provide a TPV recording for certain customers is not a basis for non-

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compliance with Conn. Agencies Regs. § 16-245-2. The Company argued that the subject customers had enrolled with Public Power prior to the revision to state statutes which mandated this requirement. Id., pp. 3 and 4. With regard to a separate OCC recod keeping claim, the Company maintains that for two specific customer complaints, there is no evidence in the record that Public Power ever received the subject complaints. Id., p. 4. Public Power claims that there was no violation of the aforementioned record keeping statutes, and thus no basis for a civil penalty as recommended by the OCC. Id., p. 9.

Public Power also disputed the OCC’s claims regarding the Company’s customer notice procedures and coordination of information systems during two major business transactions. The Company contends that the four customers cited in the OCC’s allegation were transferred to Public Power prior to Crius assuming management control. Public Power also maintains that the existence of a complaint does not necessarily establish that something improper occurred, especially considering that the OCC’s claim is based upon four complaints within a transaction that affected approximately 70,000 customers. Id., p. 5.

Public Power also argued that the OCC’s recommendation that the Company submit quarterly reports on its record management policies as well as its quality control efforts with third-party vendors is unwarranted. As stated previously, the Company asserts that its record keeping policies were in compliance with Conn. Agencies Regs. § 16-245-2. In addition, Public Power states that the OCC’s claim does not take into account the ongoing benefits of the quality control measures Crius instituted. Therefore, Public Power contends that the OCC’s quarterly reporting requirement is also unwarranted. Id., p. 9.

III. VIOLATION DETAILS

Conn. Gen. Stat. § 16-41 provides that an electric supplier must obey, observe and comply with all applicable provisions of Conn. Gen. Stat. Title 16 and each applicable order made, or applicable regulations adopted by, the Authority. Section 16-41 further provides that any such electric supplier which the Authority finds has failed to obey or comply with any such provision of Conn. Gen. Stat. Title 16 order or regulation, shall be fined by order of the Authority, and that each distinct violation of any such provision of the title, order or regulation shall be a separate offense.

The Authority finds that the following violations have occurred for which a civil penalty is authorized to be assessed against Public Power pursuant to Conn. Gen. Stat. § 16-41:

1. Conn. Gen. Stat. § 16-245o(f)(2):

Conn. Gen. Stat. § 16-245o(f)(2) states, in pertinent parts, that:

No electric supplier shall provide electric generation services unless the customer has signed a service contract or consents to such services by one of the following: (A) An independent third-party telephone verification; (B) receipt of a written confirmation received in the mail from the customer

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after the customer has received an information package confirming any telephone agreement; (C) the customer signs a contract that conforms with the provisions of this section; or (D) the customer’s consent is obtained through electronic means, including, but not limited to, a computer transaction.

Chabot Complaint

As discussed in Section II.B.1, Public Power’s internal policies require the TPV process to automatically fail if that customer appears confused or does not provide a clear yes or no response. During the TPV process for the Chabot Complaint, the customer was confused and did not provide a clear yes or no answer when asked to confirm her enrollment with the Company. The TPV used to enroll this customer should have failed and should not have been utilized by Public Power to satisfy the requirements of Conn. Gen. Stat. § 16-245o(f)(2). Based upon the foregoing, the Authority finds that Public Power violated the provisions of Conn. Gen. Stat. § 16-245o(f)(2) in the case of the Chabot Complaint

Doucette Complaint

During the TPV process for the Doucette Complaint, the customer did not provide a clear yes response when asked to verify the enrollment. The customer also demonstrated confusion over the process. The TPV used to enroll this customer should have failed and should not have been utilized by Public Power to satisfy the requirements of Conn. Gen. Stat. § 16-245o(f)(2). Based upon the foregoing, the Authority finds that Public Power violated the provisions of Conn. Gen. Stat. § 16-245o(f)(2) in the case of the Doucette Complaint.

Medina Complaint

During the TPV process for the Medina Complaint, the customer was confused when asked to verify the offer from the Company. The TPV used to enroll this customer should have failed and should not have been utilized by Public Power to satisfy the requirements of Conn. Gen. Stat. § 16-245o(f)(2). Based upon the foregoing, the Authority finds that Public Power violated the provisions of Conn. Gen. Stat. § 16-245o(f)(2) in the case of the Medina Complaint.

Stebar Complaint

As discussed in Section II.B.1, Public Power’s internal policy prohibits the sales agent from coaching the customer during the TPV, other than providing the customer with clarification. The Stebar Complaint demonstrates that Public Power's agent coached the customer regarding the three-day right to rescind period when the customer did not seek clarification or explanation of the item. The TPV used to enroll this customer should have failed and should not have been utilized by Public Power to satisfy the requirements of Conn. Gen. Stat. § 16-245o(f)(2). Based upon the foregoing, the Authority finds that Public Power violated the provisions of Conn. Gen. Stat. § 16-245o(f)(2).

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The Authority recognizes that since the change in corporate structure resutling from Crius's management control of Public Power, initiatives have been put in place to improve and monitor the Company’s overall operations. While there may be no direct correlation with this, the Authority has noticed that complaints against Public Power for 2015 are much lower than the previous three years.

However, as described previously, policies and procedures established to insure service quality failed, primarily involving the Trusted TPV system. A customer failing to provide a clear yes or no answer to a question should cause the verification process to fail. The Trusted TPV system also required that any coaching of a prospective customer would cause the verification to fail. The Authority found four clear instances of failure among the many slamming and enrollment complaints that were the focus of this investigation. While these four cases may not be an indicator of systemic problems, Public Power’s Trusted TPV system has been in place since March of 2011, well before the introduction of Crius’ management control. According to the Company’s internal policies and procedures for the Trusted TPV system, none of these four customers should have been enrolled with Public Power.

2. Conn. Agencies Regs. § 16-245-2(g)(1):

Conn. Agencies Regs. § 16-245-2(g) provids in pertienent part:

An electric supplier shall:(1) Maintain all records of customer complaints for a minimum of three (3) years from the date of complaint...

In Order No. 5 of its Decision dated September 17, 2007, in Docket No. 07-06-13, the Authority stated:

Public Power & Utility shall maintain its customer complaint records to indicate: (1) the date of the complaint; (2) the name and address of the complainant; (3) the address or location of the complaint; (4) a description of the complaint; and (5) a description of the resolution of the complaint.

The OCC asserts that Public Power failed to comply with Conn. Agencies Regs. § 16-245-2(g). The Company contests the OCC's claim, stating that it provided responses to customer complaints with the information required in Order No. 5 of its original licensing decision. Also, Public Power maintains that there were instances where the Company never received a complaint from the Authority, or in the cases of missing TPV recordings, there was no regulatory mandate until after the verification process occurred. However, the OCC noted a number of occasions wherein the Company failed to keep adequate records regarding customer complaints, failed to provide adequate resolution to customer complaints or Authority investigation or simply lost complaint records. Response to Interrogatories CS-7, CS-32, CS-37, CS-79; and Supplemental Response to CS-47. In addition, when asked to provide a copy of all customer complaints received by the Company and the resolution of each complaint, Public Power could only provide those complaints that had been forwarded to the Company from either a governmental agency or the Better Business Bureau. Response to Interrogatories CS-7 and CS-55. Further, the Company stated that while all written

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incoming complaints are kept as records, generally, but not at all times, are incoming customer care center calls recorded. Response to Interrogatory CS-56.

Section 16-245-2(g) was adopted in April of 1999 and last amended in October of 2004, long before Crius’ assumed management control of Public Power. Public Power failed to maintain its customer records in accordance with applicable regulations. Based upon the foregoing, the Authority finds that Public Power has violated the provisions of Conn. Agencies Regs. § 16-245-2(g)(1).

Utilizing the same standard as was issued in its Decision dated October 28, 2015, in Docket No. 13-02-06, PURA Investigation Into North American Power & Gas’ Trade Practices, a customer complaint must include complaints that Public Power receives directly from its customers, whether or not the matter has been satisfied or resolved. In addition, to be in compliance with Order No. 5 from Docket No. 07-06-13, Public Power must keep accurate records of all customer complaints known or received by the Company, whether such complaints were registered with the Authority, the Better Business Bureau, the Attorney General’s Office, the OCC, or received direct by Public Power regardless of the method by which the Company received such complaints and regardless of which department within the Company received the complaint(s).

The Authority also notes that Public Power has put into place updated policies and procedures to monitor the service quality of its vendors and sales agents. One of the policies that Public Power established was the watch list for vendors found to be non-compliant with Company procedures and applicable statutes and regulations. In addition, the watch list applies to individual sales agents of those third party vendors. Response to Interrogatory CS-81. In regard to complaints alleging that Public Power’s sales agents misrepresented themselves, the Authority notes that the Company’s investigations into these instances found no evidence to support the customer’s allegations. Responses to Interrogatories CS-9, CS-29, CS-37, and CS-39. In addition, these subject complaints also occurred prior to the time that the Company began requiring vendors to record all outbound telemarketing calls. While the Company contends that it was unable to find evidence of misrepresentation, the Authority finds it troubling to hear similar themes from different customers regarding Public Power solicitors. The Authority acknowledges the procedures re now in place for Public Power to monitor its vendors and sales agents, and that Public Power instructs its vendors and sales agents to properly identify themselves when soliciting a potential customer. Response to Interrogatory CS-77. Nevertheless, preventing misrepresentation by a licensed supplier’s sales agents remains an important task for the Authority. Improving and strengthening policies and procedures to eliminate these occurrences must be a common goal for the Authority and electric suppliers. To that end, the Authority notes that Docket No. 14-07-20RE01, PURA Development and Implementation of Marketing Standards and Sales Practices by Electric Suppliers, is underway. Docket No. 14-07-20RE01 was opened for the purpose of updating, improving or streamlining existing marketing and sales standards. As misrepresentation can affect all electric suppliers in addition to Public Power, the Authority is confident that the policies and procedures enacted by the Company along with the industry-wide protocols resulting from Docket No. 14-07-20RE01 will help to alleviate this concern.

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Furthermore, the Authority agrees with the OCC recommendation that the Company continue with its regimen of quality control protocols over its third-party vendors such as the weekly reviews of sales calls. The Authority also agrees with the OCC recommendation that the Company file quarterly reports on its regimen of quality control protocols. The Company will be directed to file quarterly reports on oversight of its vendors and sales agents, including reporting on instances in which sales agents or vendors have not followed Public Power’s policies or applicable statutes and regulations, along with report on any corrective action taken with said vendor or sales agent.

IV. IMPOSITION OF CIVIL PENALTY

The Authority imposes upon Public Power an aggregate civil penalty of fourteen thousand dollars ($14,000), determined as follows:

Four thousand dollars ($4,000) is imposed for four incidents of failing to comply with the provisions of Conn. Gen. Stat. § 16-245o(f)(2) which prohibits electric suppliers from switching a customer’s service unless the supplier has obtained the customer’s consent to the service through one of four enumerated methods. The Authority will assess a civil penalty of one thousand dollars ($1,000) for each of these four incidents.

Ten thousand dollars ($10,000) is imposed for failing to comply with the provisions of Conn. Agencies Regs. § 16-245-2(g)(1), which mandates that an electric supplier shall maintain all records of customer complaints for a minimum of three (3) years from the date of the complaint.

V. FINDINGS OF FACT

1. Public Power was licensed on September 17, 2007, to operate as an electric supplier serving residential, commercial and industrial customers.

2. Public Power became an affiliate of Crius Energy, LLC in August 2012.

3. During calendar year 2012, there was an increase in customer complaints filed against Public Power.

4. During calendar years 2013 and 2014, customer complaints filed against Public Power continued to increase.

5. Customer complaints filed against Public Power involved allegations of slamming excessive price increases and instances of company misrepresentation.

6. Since March 4, 2011, Public Power has utilized an automated TPV system to verify the consent of customers enrolling with the Company.

7. Public Power's policies mandate that a customer may not be enrolled with Public Power unless the TPV process has been completed.

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8. Public Power’s policies mandate that any coaching of the customer by a sales agent will cause the verification transaction to fail.

9. Public Power’s policies mandate that if the customer does not provide a clear “yes” or “no” answer during the TPV process, the verification transaction would automatically fail.

10. Public Power does not review 100% of the TPV records, and only a portion of failed verification recordings.

11. Public Power’s Code of Conduct mandates that all sales agents must only use Company approved marketing materials; must never make false representations about the Company’s product, price or term; and all sales agents must state that they do not represent the local utility.

12. Prior to March 25, 2013, Public Power’s vendors were not required to record all sales calls made to customers.

13. Public Power does not utilize the TPV system for customer solicited via door-to-door sales.

14. Public Power’s policies require that third-party vendors follow the Company’s approved training and be subject to quarterly reviews and follow-up training.

15. Public Power established five zero-tolerance offenses for sales agents and vendors to follow. These offenses include slamming, deceptive or unlawful marketing practices, abusive tactics, non-compliance with the Company’s marketing standards and the use of improper sales channels.

16. Public Power established a watch list for those third-party vendors and sales agents where the Company notices a trend of enrollments not meeting the verification checklist.

17. Public Power’s policies mandate that it will refuse to process an enrollment of a customer whose enrollment cannot be confirmed, whether or not the submitting vendor is on the watch list.

18. Public Power has terminated the services of seven vendors for failing to comply with the Company’s standards.

19. Public Power enrolled Chabot, Doucette, Medina and Stebar as customers.

20. The TPV for the Chabot Complaint shows that the customer did not provide a clear yes or no answer when requested and demonstrated confusion during the process.

21. The TPV for the Doucette Complaint shows that the customer did not provide a clear yes or no answer when requested and demonstrated confusion during the process.

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22. The TPV for the Medina Complaint shows that the customer demonstrated confusion during the process when asked to verify the Company’s offer.

23. The TPV for the Stebar Complaint shows that Public Power’s agent coached the customer during the process.

24. Public Power did not possess the requisite information to verify the enrollment in the Chabot, Doucette, Medina and Stebar cases.

25. Public Power did not, at all times, keep a record of incoming customer care center calls.

26. Public Power was only able to provide to the Authority customer complaints that had been forwarded to the Company by PURA, other governmental agency, or the Better Business Bureau

VI. CONCLUSION AND ORDERS

A. CONCLUSION

During 2012, 2013, and 2014, approximately 500 customer complaints were filed against Public Power. The Authority has found, for the most part, that Public Power complied with the applicable statues and regulations regarding the enrollment and switching of customers. Public Power has, since 2013, initiated a series of protocols and policies so as to better monitor its operations as well as the actions of its third-party vendors and sales agents.

However, there were a small number of instances where the Company’s policies and requirements for the TPV process failed and customers were enrolled in violation of Conn. Gen. Stat. § 16-245o(f)(2). Further, the Authority has determined that Public Power was not complying with the record keeping requirements as mandated by Conn. Agencies Regs. § 16-245-2(g). Accordingly, the Authority will impose a fourteen thousand dollar ($14,000) civil penalty on Public Power for these violations under Conn. Gen. Stat. § 16-41.

B. ORDERS

For the following Orders, the Company shall submit one original of the required documentation to the Executive Secretary, 10 Franklin Square, New Britain, Connecticut 06051 and file an electronic version through the Authority’s website at www.ct.gov/pura. Submissions filed in compliance with the Authority’s Orders must be identified by all three of the following: Docket Number, Title and Order Number. Compliance with orders shall commence and continue as indicated in each specific Order or until the Company requests and the Authority approves that the Company’s compliance is no longer required after a certain date.

1. No later than thirty (30) days from the date of the receipt of this Decision, Public Power shall submit payment of its civil penalty in the sum of $14,000.00 by

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certified check, bank check or money order. The civil penalty shall be made payable to the order of “Treasurer, State of Connecticut”, and delivered to the offices of the Authority to the attention of: Executive Secretary/13-02-08.

2. No later than January 29, 2016, and every quarter thereafter for a period of twelve (12) months, Public Power shall submit to the Authority a report detailing its oversight and monitoring of its third-party vendors and sales agents. Said report shall include information on issues such as reporting on instances in which sales agents or vendors have not followed applicable regulations or statute, Company policies and procedures, corrective actions taken with sales agents or vendors, or any other information relevant to the Company’s oversight activities.

DOCKET NO. PURA INVESTIGATION INTO PUBLIC POWER, LLC'STRADE PRACTICES

This Decision is adopted by the following Commissioners:

Arthur H. House

John W. Betkoski, III

Michael A. Caron

CERTIFICATE OF SERVICE

The foregoing is a true and correct copy of the Decision issued by the Public Utilities Regulatory Authority, State of Connecticut, and was forwarded by Certified Mail to all parties of record in this proceeding on the date indicated.

Jeffrey R. Gaudiosi, Esq. DateExecutive SecretaryPublic Utilities Regulatory Authority