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The PUC order found that Direct Energy is not subject to 66 Pa.C.S. § 1501 and is not subject to any minimum service standards contained therein, since Direct is not a public utility.  66 Pa.C.S. § 1501 provides that every public utility shall furnish and maintain, “adequate, efficient, safe, and reasonable service and facilities…”

As background, a Pennsylvania PUC Administrative Law Judge (ALJ) issued an initial decision concluding that retail natural gas suppliers are subject to 66 Pa.C.S. § 1501, which sets forth certain service standards and obligations for public utilities, including a requirement that service be “reasonable.”

The matter originated from a customer complaint filed against Direct Energy, as well as PECO over an inadvertent switch away from Direct Energy as the customer’s gas supplier.

Excerpts from Motion Of Vice Chair Kimberly Barrow

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This matter presents unique facts. The Commission’s supplier regulations protect consumers from switching performed by persons not authorized to act on the account, a practice known as slamming. Here, Mr. Nabom had authority to take action on the account although the prompts that he selected on PECO’s IVR program were incorrect. However, Mr. Nabom immediately notified both Direct Energy and PECO of the inadvertent selection to cancel his account with Direct Energy before the transfer request had even been processed. For these reasons, I disagree that the NGS change occurred with Mr. Nabom’s consent. 

Nevertheless, I agree that no civil penalty imposed upon Direct Energy is justified in this case. Our regulations on customer switching do not neatly fit this situation. Direct Energy acted in accordance with a reasonable reading of the standards governing its conduct as an NGS in the unique situation where the customer initiated the switch, albeit inadvertently, which was then processed by the natural gas distribution company. Yet, a commonsense business practice would have been for Direct Energy to offer the original terms and conditions at the outset – and not several months later. Mr. Nabom immediately notified Direct Energy of his mistaken selection on PECO’s automated system and asked that Direct Energy note the issue in the event that it received an order from PECO to cancel Direct Energy’s service. Providing Mr. Nabom with the same terms and conditions that he previously received could have avoided the time and expense of litigation as it relates to Direct Energy’s involvement in this matter. 

It is my hope that the spotlight placed on this case will be sufficient to deter the mindlessly mechanistic application of switching processes in future cases where customers clearly do not intend to switch their service. {***}

From Commissioner John F. Coleman’s Statement:
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I agree with the Motion that, as an NGS, Direct Energy is not a public utility and, therefore, is not subject to Section 1501 of the Code. I also believe that, based on the evidentiary record in this case, Direct Energy did not breach any consumer service and protection duties owed to the Complainants.1 Regarding the Complainants’ cancelation order, there is nothing in the record to support that Direct Energy failed to comply with the Commission’s regulations applicable to NGSs.2 

Because Section 1501 does not apply to Direct Energy and because Direct Energy did not breach any consumer service and protection duties owed to the Complainants, I also agree with the Motion not to assess a civil penalty against Direct Energy in this case.

However, I do not agree with the Motion that the customer did not consent to the switch of his natural gas supply service from Direct Energy to PECO. 3 Rather, I believe the event at issue was caused by the Complainants’ own cancelation of their account with Direct Energy. Indeed, the NGS change, albeit inadvertent, was initiated by the Complainants. Consequently, the change occurred with their consent. In any event, I concede the inadvertent switch here is a unique circumstance that is not specifically addressed in our regulations. The record evidence is clear though that Direct Energy did not slam the Complainants.

The Motion opines that a commonsense business practice with re-enrollment here would have been for Direct Energy to offer the original terms and conditions to the Complainants at the outset – and not several months later. I note that Direct Energy did take prompt action after the inadvertent switch and repeatedly attempted to help the Complainants re-enroll with the company. 4 Moreover, I do not believe the Commission should be micromanaging what ultimately was a business decision of the company. {***}

3037611-OSA – NABORN & PRONKO V PECO & DIRECT ENERGY (JFC) STATEMENT – 2-22-24.PDF  (02/22/2024)
VC BARROW MOTION NABORN 3037611-OSA  (02/22/2024)
Interim Order  (03/17/2023)
F-2023-3037611