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PUC Tentatively Approves $6.75 Million Settlement With Retail Supplier Concerning Polar Vortex Complaint
The Pennsylvania PUC issued a tentative order proposing to adopt a settlement among IDT Energy and the Pennsylvania Attorney General, the Office of Consumer Advocate (OCA), and the Office of Small Business Advocate, under which IDT Energy would provide certain Pennsylvania customers with an additional $2.4 million in refunds, to resolve a complaint brought by the AG and OCA concerning IDT's variable rates and trade practices in the wake of the polar vortex.
The settlement was first reported by EnergyChoiceMatters.com last year
As summarized by the PUC, the AG/OCA complaint had alleged that IDT misled customers with deceptive promises of savings; engaged in slamming; mishandled customer complaints; failed to provide accurate pricing information; charged different prices than listed in customer disclosure statements; and failed to comply with Pennsylvania’s Telemarketer Registration Act (click here for background).
The settlement that the PUC proposes to adopt provides for a total refund pool of $6.577 million, which takes into account $4.177 million in refunds IDT Energy already voluntarily provided to customers, resulting in additional refunds of $2.4 million.
Refunds shall be provided to IDT customers on variable rate plans and billed for usage in January, February or March 2014. The AG and OCA shall determine the refund amount to offer eligible IDT customers based on the individual customer's usage, price charged and refund amounts already received directly from IDT
No customer shall be paid any funds from the Refund Pool without executing a "Release of Claims" pursuant to which the customer agrees, in exchange for payment of the funds, to release, acquit, and forever discharge the company and all of its current and former officers, shareholders, and employees from any and all claims related to the conduct alleged in the joint complaint over which the PUC has jurisdiction, including but not limited to, claims regarding the company's prices not conforming to its disclosure statement or marketing statements.
Consistent with a similar recent settlement with another supplier, the PUC proposes to modify one aspect of the settlement, to more explicitly inform the customer of this release of claims provision, and its potential impacts
Specifically, customer notices regarding the settlement shall include the language that, "Signing the Release of Claims and receipt of payment from the Refund Pool may affect your right to recover amounts for the same conduct of IDT Energy, Inc. that could result from legal proceedings against this supplier in a court of law."
Also under the settlement, IDT shall pay a civil penalty in the amount of $25,000 and shall make a contribution of $75,000 to the utilities' hardship funds
IDT Energy also agrees to several provisions regarding its marketing under the settlement, as follows:
• For a period of 21 months, IDT will not sell variable rate electricity products in Pennsylvania and will offer only fixed rate products pursuant to which the customer's price is fixed for six months or longer. This restriction will not apply to IDT's plans with existing customers.
• IDT, its agents, employees and representatives shall not make representations, either directly or by implication, about savings that consumers may realize by switching to IDT except when comparing the rate offered by IDT to the customer's current Price to Compare (PTC), or any published future PTC or when referencing an explicit, affirmative guaranteed savings program. If the IDT agent, employee or representative compares the rate offered by IDT to the customer's current PTC or a published PTC, the IDT agent, employee or representative shall also provide the term that the referenced PTC will be in effect to the consumer and inform the consumer that savings beyond that period are not guaranteed.
• If IDT later offers variable rate products to residential or small business consumers in the Commonwealth, IDT, its agents, employees and representatives shall refrain from using terms in their variable rate marketing campaigns, such as "risk free," "competitive," "guaranteed," or any other terminology that represents, explicitly or by implication, that the price offered will be lower than the EDC's Price to Compare, except when referencing an explicit, affirmative guaranteed savings program.
• If IDT later offers variable rate products to residential or small business consumers in the Commonwealth, IDT shall refrain from using terms in its variable rate marketing campaigns, such as "trial period" or "introductory rate," without a clear and conspicuous disclosure of the material terms and conditions thereof, including and without limitation to, a full description of the price that will be charged after the expiration of that introductory or trial period, the circumstances under which the consumer can cancel, and the consequences of cancellation.
• IDT, its agents, employees and representatives shall not make representations, either directly or by implication, about "special programs" for which a Pennsylvania consumer qualifies, unless IDT provides documentation to the consumer explaining in detail the "special program," including but not limited to the parameters of the program, term of the program and eligibility requirements for acceptance into the program.
• IDT, its agents, employees and representatives shall not make representations, either directly or by implication, about the Price to Compare increasing or the Price to Compare being a variable rate; notwithstanding the foregoing, nothing shall prohibit IDT, its agents, employees and representatives from making truthful statements about the current level of the EDC's Price to Compare (PTC) or future PTC if that information is publicly available
• If IDT later offers variable rate products to residential or small business consumers in the Commonwealth, the IDT salesperson must state the following during any variable rate sales contacts: "After __ month(s) [if Introductory Price period is applicable], the price you pay under this variable rate contract can change every month. This is not a fixed rate contract. Variable means the price can go up or down. There is no limit on how high the price can go."
• IDT shall not state or represent to customers in the company's variable rate programs that the price IDT will charge will be "market-based" or set on "market conditions" unless IDT also provides a specific explanation by means of a formula, or other explanation immediately following such representation in a manner readily understandable for the customers that specifies with particularity what such "market" may consist of, some representation of what components of the price fluctuate with that market and publicly available sources of information for such market factors so that a customer can calculate the price and any applicable charges in terms of dollars and cents or cents per kWh.
• IDT shall record all telephonic communications between Pennsylvania customers and IDT's customer service representatives. IDT shall require its telemarketers to record all communications with residential and small business consumers in Pennsylvania that result in a sale.
IDT Energy Chief Executive Officer Michael Stein issued the following statement on the settlement:
"This settlement concludes a complex and lengthy investigation, with no finding of wrongdoing by IDT. We took extraordinary steps during and after the extreme and unprecedented 2014 winter Polar Vortex to mitigate the impact of unexpectedly high electricity prices on our customers, providing more than $4.1 million in rebates, refunds and rate adjustments. This settlement provides for an additional $2.4 million in rebates to Pennsylvania customers affected by 2014 higher electricity prices, which were fully accrued when the settlement was initially agreed to. It also allows us to renew our focus on providing quality energy choice options in the markets we serve.
"IDT learned valuable lessons from the winter of 2014, and by the end of 2014 we implemented new safeguards for customers and introduced new pricing plans and programs to help protect customers from unexpected electricity price fluctuations in the future. This settlement acknowledges and reinforces those efforts."
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July 1, 2016
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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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