STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
At a session of the Public Service
Commission held in the City of
Albany on January 24, 2017
COMMISSIONERS PRESENT:
Audrey Zibelman, Chair
Patricia L. Acampora
Gregg C. Sayre
Diane X. Burman
CASE 16-M-0468 - Proceeding on Motion of the Commission to Seek
Consequences against Spark Energy, LLC and
Spark Energy Gas, LLC for Violations of the
Uniform Business Practices.
ORDER INSTITUTING PROCEEDING
AND TO SHOW CAUSE
(Issued and Effective January 25, 2017)
BY THE COMMISSION:
INTRODUCTION
The Department of Public Service (DPS, Department) has
received multiple customer complaints that Spark Energy, LLC and
Spark Energy Gas, LLC, operated jointly as Spark Energy, Inc.
(the ESCO, Spark), an energy services company (ESCO) that has
moved customers to the ESCO from another service provider
without customer authorization (slamming) and has used deceptive
marketing practices when signing up new customers, which is
prohibited by the Commission-adopted Uniform Business Practices
(UBP).

Based upon these complaints, on April 11, 2016, the DPS

issued a Notice of Apparent Failure (NOAF) to Spark informing
the ESCO that DPS Staff was commencing an investigation into the
ESCO’s marketing practices.

Spark responded to the NOAF on

 CASE 16-M-0468
May 11, 2016 (Spark response).

On June 30, 2016 Staff requested

additional information from Spark to further the Department’s
investigation.

Spark responded to the follow up request on

July 29, 2016.
The Department’s investigation and review of the
documentation Spark provided in its NOAF response revealed
Spark’s non-compliance with several of the marketing
requirements in the UBP.

Subsequent to issuing the April 2016

NOAF, the Department received 66 additional complaints against
Spark for the period of late February 2016 through December
2016.

Of the 66 newer complaints, 35 alleged slamming and 11

others alleged deceptive marketing.

Spark confirmed 17 of the

35 additional slamming complaints were, in fact, invalid
enrollments.
By this Order, Spark must show cause within seven (7)
days why it should not be precluded from enrolling new
customers.

Further, Spark is ordered to show cause within 30

days why its eligibility to act as an ESCO in New York State
should not be revoked or, alternatively, why other consequences
as set forth in the Commission’s UBP should not be imposed.
BACKGROUND
By letter dated February 3, 2005, the Department
deemed Spark Energy, LLC, eligible to serve non-residential
electric customers as an ESCO. In April 2006 Spark Energy, LLC,
updated its application to offer electric commodity to
residential customers.
Also in February 2005, the Department issued
eligibility to Utility Resource Solutions, LP (which later
changed its name to Spark Energy Gas, LLC) to serve natural gas
non-residential customers.

In April 2006, Utility Resource

Solutions updated its application to offer natural gas to

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residential customers.

By letter dated May 3, 2007, the

Department acknowledged Utility Resource Solutions’ corporate
name change to Spark Energy Gas, LLC.

Spark Energy, LLC and

Spark Energy Gas LLC currently serve residential and nonresidential electric and gas customers in the Consolidated Edison
Company of New York, Niagara Mohawk Power Company d/b/a National
Grid, and Brooklyn Union Gas Company d/b/a National Grid NY
service territories.
Between October 1, 2015 and February 22, 2016 the
Department received 45 complaints against Spark through the
Department’s customer complaint procedures.1

The majority of the

complaints allege that the customer was slammed or was subject
to misleading marketing practices.

Given the number of

complaints, the Department began to investigate Spark’s business
practices.

In response to DPS inquiries, Spark routinely

responded that the customer had been contacted and the complaint
had been resolved to the customer’s satisfaction.

Such

responses, however, did not provide Staff with sufficient
information to determine whether or not Spark’s enrollments had
been valid and complied with the UBP; neither did Spark’s
summary responses confirm that the complaints had in fact been
fully resolved.
Therefore, on April 11, 2016, Staff sent an NOAF to
Spark requesting additional documentation pertaining to the
complaints.

Staff sought copies of calculations and the

corollary refund checks or proof of customer credit(s),
statements from agents regarding each complaint, a report of any
employee disciplinary action taken as a result of each valid

1

Such complaints are referred to in this order as “QRS” cases.
These are complaints dealt with through the Commission’s
consumer complaint process set forth in 16 NYCRR Part 12.
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complaint, details on how Spark addressed deceptive marketing
complaints, and how Spark followed its internal procedures
pertaining to cancellations.

Staff instructed Spark to provide

the documentation for each complaint listed in the NOAF within
30 days of the date of the NOAF.

On May 11, 2016, Spark

responded with some, but not all, of the documentation Staff
sought.

Staff sent a follow up letter to Spark on June 30, 2016

and requested additional information.

On July 29, 2016 Spark

responded with the additional requested information.
INVESTIGATIVE FINDINGS
The documents received in Spark’s response to the NOAF
on May 11, 2016 and follow up on July 29, 2016 revealed that for
eight (8) of the 24 complaints being investigated, Spark
indicated that it issued refunds as a result of the slamming
complaint.

Although the complaints were initiated during the

October 2015 to January 2016 timeframe, it appeared that Spark
did not issue the refunds until after it received the NOAF on
April 11, 2016.

Staff requested more information as to why the

refunds were not handled in a timely manner.

In seven (7) of

the cases, Spark replied that the “Agent failed to submit the
refund check request.” In turn, Spark stated “Thorough complaint
handling and full complaint resolution are essential components
to working in Spark’s CA [Customer Affairs] department, and
failure to do so can lead to suspension and/or termination.
Spark has taken appropriate actions to remedy the oversight of
this CA agent to ensure such delays do not reoccur.”

Despite

our requests, it remains unclear if the agent was disciplined or
terminated as a result of the Department’s investigation.

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Based upon the documentation Spark provided in its
NOAF response, the Department determined that Spark has violated
a number of sections of the UBP as explained below.
Unauthorized Customer Transfers – “Slamming”
UBP Section 5.K.1 prohibits slamming, which is the
“change of a customer to another energy provider without the
customer’s authorization.”

To enable DPS Staff and this

Commission to evaluate slamming allegations, UBP Section 5.K.3
requires that ESCOs retain, for at least the length of the term
of the sales agreement, documentation of the customer’s
authorization to change providers.

In the case of telemarketing

sales, the retained documentation consists of a recording of the
independent third party verification (TPV) and proof that a copy
of the sales agreement and Customer Disclosure Statement was
sent to the customer.
In the Spark NOAF DPS Staff sought documentation from
Spark related to 21 customer complaints.
recordings for only 9 of those complaints.

Spark provided TPV
In five of the 9 TPV

recordings, Staff believes that the customers did not understand
the terms of the sale nor to whom they were speaking.

That is,

many of the customers asked questions regarding the specific
terms of service during the TPV.

Once it was apparent the

customer did not understand what they were being told, Spark
should have terminated the call and ended the enrollment
process.

Moreover, the TPV recordings that Spark provided do

not meet the UBP requirements for telephonic authorizations
because the TPV did not include an affirmative response to all
the questions contained in UBP Section 5, Attachment 1.

In

addition, Spark did not provide proof that a sales agreement was
sent to prospective customers within three days.

Such non-

compliant documentation undermines any conclusion that Spark

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ever had proper customer authorization to transfer such
customers.
Spark’s failure and/or inability to provide each of
the documents or confirmations, required when transferring
customer accounts to an ESCO, is a violation of the UBP.
False and Misleading Marketing
UBP Section 10.C.2 outlines the required process ESCOs
must follow when marketing to customers for the purpose of
selling any product or service.

Spark’s NOAF response included

two recorded sales calls along with the related TPVs.

Upon

review of Spark’s sales calls, Staff concluded that Spark used
misleading marketing tactics when soliciting to customers.
Specifically, the marketer stated “My name is . . . and I am
calling in regards to your National Grid bill from Spark Energy.
Your account has been qualified to receive a discount, so from
the next billing cycle you’ll find a discount on the gas bill,
OK.

The discount is up to 10 percent for 2 months on the supply

portion of your bill from Spark Energy.”

At no time did the

marketer clearly state that they were representing an ESCO; nor
did the ESCO marketer state that, as a condition of receiving
the discount offered, the customer would be switching to Spark
from the utility for their energy supply service.

Given the

high number of slamming complaints filed with the Department
against Spark, it is apparent Spark did not provide customers
sufficient information to make them aware that they were
agreeing to switch service providers.
Furthermore, Staff’s review of the 66 additional
complaints since February 2016 alleging slamming and deceptive
marketing leads Staff to conclude that Spark slammed customers
in 17 of the 35 slamming allegations and also violated other UBP
provisions.

Attachment 1 identifies the complaint case numbers

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for the customers that Staff confirms were slammed since
February 2016 including the eight (8) complaints for which Spark
issued refunds after the April NOAF and the nine (9) complaints
for which adequate documentation apparently does not exist to
support an authorized switch.
Consequently, as evidenced by the above examples,
Staff’s investigation found that Spark’s actions represent a
pattern of conduct that is in violation of the UBP, and warrants
Commission action.
LEGAL AUTHORITY
The Commission has broad legal authority to oversee
ESCOs pursuant to its jurisdiction in Articles 1 and 2 of the
Public Service Law (PSL).2

To maintain their eligibility to

operate in New York, every ESCO deemed eligible to provide
service in New York State is required to abide by the UBP,
applicable portions of the Commission’s regulations, and all
applicable Commission orders.3

The UBP contains specific

provisions governing ESCO marketing activities, including
marketing practices each ESCO must follow when enrolling

2

See PSL §5 (Commission’s broad statutory grant of authority
over the sale of natural gas and electricity); see also Case
98-M-1343, supra, Order Adopting Amendments to the Uniform
Business Practices, Granting in Part Petition on Behalf of
Customers and Rejecting National Fuel Gas Distribution
Corporation’s Tariff Filing (issued October 27, 2008) at 10;
PSL §53 (stating Article 2 of the PSL applies to any entity
that, in any manner, sells or facilitates the sale or
furnishing of gas or electricity to residential customers”).

3

Case 98-M-1343 - In the Matter of Retail Access Business
Rules, Opinion 99-3, Opinion and Order Concerning Uniform
Business Practices (issued and effective February 16,
1999)(Opinion 99-3).

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customers.4

When a Department investigation confirms customer

allegations that an ESCO has failed to comply with the UBP or a
Commission order, UBP Sections 2.D.5 and 2.D.6 provide that the
Commission may impose consequences on the non-compliant ESCO.
As part of its investigation, the Department typically issues an
NOAF to the ESCO.5

The NOAF describes the instances of the

ESCO’s alleged non-compliance and provides the ESCO with an
opportunity to respond and cure any deficiencies, as required in
UBP section 2.d.6.a.1.
DISCUSSION AND CONCLUSION
The Department’s investigation, which included review
of the documents Spark provided in its NOAF response and review
of the additional complaints subsequently received by the
Department demonstrates, among other things, numerous instances
in which Spark did not provide to customers adequate information
about the sales agreement the customer was entering into, and
which the UBP specifically requires be provided.

The TPV

recordings show that customers did not provide Spark with the
required customer authorization to access the customer’s account
information from their utility.

Several customers stated that

Spark failed to provide the customer the sales agreement upon
enrollment.

Further, since the April 17, 2016 NOAF was issued,

the Department has continued to receive new customer complaints
alleging that Spark continues its slamming and deceptive
marketing practices, evidencing that Spark has not taken
adequate steps to prevent slamming or improve its customer
marketing practices to protect any other customers whose

4

See UBP Section 10 “Marketing Standards;” See also See UBP
Section 5 “Changes in Service Providers.”

5

In some instances, the facts warrant proceeding directly to
issuance of an Order to Show Cause.
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enrollments may be invalid but have not filed complaints against
Spark.
Based on Spark’s non-compliance with the UBP and its
failure to rectify its deceptive marketing practices even after
having been put on notice that it was being investigated (via
issuance of the NOAF), it is apparent that further action is
needed to protect consumers in New York State.
UBP Section 2.D.6.b lists the consequences that the
Commission may impose upon an ESCO for the ESCO’s non-compliance
in one or more categories set forth in UBP Section 2.D.5.

Among

them are suspension of an ESCO’s ability to enroll new
customers, suspension of an ESCO’s participation in any retail
access program, and revocation of an ESCO’s eligibility to
operate as an ESCO in New York.

Further, UBP Section 2.D.6.b.7,

authorizes the Commission to take “[a]ny other measures that the
Commission may deem appropriate” as a consequence of the ESCO’s
non-compliance.
In light of Spark’s serious failure to comply with the
UBP in Spark’s marketing and enrollment activities, Spark is
directed to show cause, within seven days of the date of this
order, why the Commission should not preclude Spark from
enrolling new customers until the Commission orders otherwise.
Further, the Commission hereby orders Spark to show cause,
within 30 days of the date of this order, why, based upon the
allegations and findings described herein, the Commission should
not revoke Spark’s eligibility to operate as an ESCO in New
York, or impose other consequences.

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The Commission orders:
1.

A proceeding is instituted and Spark Energy, LLC/

Spark Energy Gas, LLC is ordered to show cause, within seven
days of the date of this order, why it should not be precluded
from enrolling new customers until the Commission orders
otherwise.
2.

Spark Energy, LLC/Spark Energy Gas, LLC is ordered

to show cause, within 30 days of the date of this order, why the
Commission should not revoke its eligibility to operate as an
Energy Services Company in the State of New York, or impose
other consequences, as described in UBP Section 2.D.6.
3.

In the Secretary’s sole discretion, the deadlines

set forth in this order may be extended.

Any request for an

extension must be in writing, must include a justification for
the extension, and must be filed at least one day prior to the
affected deadline.
4.

This proceeding is continued.
By the Commission,

(SIGNED)

KATHLEEN H. BURGESS
Secretary

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Attachment 1

Alleged slamming complaints for Spark Energy from February 24,
2016 to present.

618626
618896
620326
618623
633478
636540
622223
640322
642940
643096
628429
628743
644306
629735
630967
631243
648198

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