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Re:   Settlement Agreement And Report To The Commission Regarding Value Based Brands, LLC’s Violations Of 16 TAC § 25.475, Related To General Retail Electric Provider Requirements And Information Disclosures To Residential And Small Commercial Customers

Commission Staff recommends, and VBB agrees to pay, an administrative penalty of $93,007 in resolution of the violations discussed in this agreement and the attached proposed order.
The Staff of the Public Utility Commission of Texas (Commission) and Value Based Brands LLC dba 4Change Energy (VBB) (collectively, the parties) enter into this settlement agreement and file this report to the Commission under 16 Texas Administrative Code (TAC) § 22.246(h)(1). The agreement resolves and concludes Commission Staff’s investigation of VBB concerning violations of 16 TAC § 25.475, related to requirements for issuing contract expiration. 

As part of the settlement Commission Staff recommends, and VBB agrees to pay, an administrative penalty of $93,007 in resolution of the violations discussed in this agreement and iii the attached proposed order, which is in addition to 1.4 million refunds already issued to customers.

From the Settlement Agreement:
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Violations related to contracts entered before September 1, 2021 

7. Under 16 TAC § 25.475(e), for contracts entered prior to September 1, 2021, the REP shall send a written notice of contract expiration at least 30 days or one billing cycle prior to the date of contract expiration, but no more than 60 days or two billing cycles in advance of contract expiration, for a residential customer, and at least 14 days but no more than 60 days or two billing cycles in advance of contract expiration for a small commercial customer. 
8. Between May 14, 2022, and August 11, 2022, VBB violated 16 TAC § 25.475(e), 9,947 times by failing to timely issue a contract expiration notice for customer contracts entered prior to September 1., 2021. 

Violations related to contracts entered on or after September 1, 2021 

9. Under 16 TAC § 25.475(e)(1)(A), for fixed rate contracts entered after September 1, 2021, the REP must provide the customer with at least three written notices of the date the fixed rate product will expire. The notices must be provided during the last third of the fixed rate contract period and in intervals that allow for, as practicable, even distribution of the notices throughout the last third of the fixed rate contract period. 

10, Between May 14, 2022, and August 11, 2022, VBB violated 16 TAC § 25.475(e)(1)(A), 995 times by failing to timely issue contract expiration notices for customer contracts entered on or after September 1,2021. notices.

Corrective Action
11. VBB asserts that the violations resulted from the suppression of contract expiration notices from a cohort of customers who consented to receive notices electronically. The suppression of these notices was not intentional and occurred due to an IT project with a customer service focus. Specifically, VBB maintains that the code change was intended to improve the customer experience and to suppress any emailed contract expiration notices for only those customers who had proactively renewed on a new plan during the current renewal window. The code changes initially had an unintended broader scope that included in the suppression any customer who had renewed at any point in the customer life cycle instead of only including those proactive renewals during the current expiration window. 

12. VBB asserts that it exceeded the requirements of 16 TAC § 25.475(e)(1)(C) for impacted customers who rolled onto a default renewal product at contract expiration. First, VBB issued five contract expiration notices when 16 TAC § 25.475(e)(1)(C) and (e)(1)(A) require that customers be sent three contract expiration notices. Second, 16 TAC § 25.475(e)(2)(C)(v and vi) provides that only the final notice is required to provide the TOS, EFL and YRAC for the month-to-month default renewal product while VBB provided these contract documents with all five notices. Next, 16 TAC § 25.475(e)(2)(C)(vi) provides that only the final notice is required to disclose that if the customer takes no action, service will continue on the default renewal month-to-month product. VBB included this disclosure in all five notices. Finally, 16 TAC § 25.475(e)(2)(C)(vii) provides that only the final notice is required to include a statement that the default service is month-to-month and may be cancelled at any time with no fee.4 VBB included this disclosure in all five notices. 
13. VBB issued over $1.4 million in credits and refunds to affected customers whose contracts expired and were charged a higher variable rate as a result. VBB identified the issue itself and initiated efforts to make customers whole through these refunds in compliance with 16 TAC § 25.475(e)(1)(C) on its own initiative prior to any outreach by Commission Staff. 14. VBB asserts it has implemented the following measures to prevent future violations of 16 TAC §§ 25.475(e) and 25.475(e)(1.)(A) from occurring, and will continuously work to implement measures designed to prevent errors going forward:

1. Processing of contract expiration notices has been moved to a more robust and reliable SaaS platform that identifies real-time anomalies between customers that are expected to receive a contract expiration notice and notices that are actually sent.  
2. In addition to the more robust system controls, a manual weekly audit is also conducted as a redundancy to verify that the emails sent match the targeted segment. If there is any discrepancy further investigation is initiated. 
3. Expiration segments (i.e., the group of customers whose contracts are expiring within each month) along with detailed email activities (sends, deliveries, opens, clicks, bounces, etc.) are consolidated into a comprehensive Tableau Dashboard that provides a detailed view of performance metrics that can be viewed down to the customer level which assist in identifying suppression of notices. {***}

Settlement Agreement And Report To The Commission  (02/28/2024)
56248  (02/28/2024)