LifeEnergy, LLC v. Ill. Commerce Comm'n
| Decision Date | 14 December 2021 |
| Docket Number | 2-20-0411 |
| Citation | 2021 IL App (2d) 200411,193 N.E.3d 771,456 Ill.Dec. 531 |
| Parties | LIFEENERGY, LLC, Petitioner, v. The ILLINOIS COMMERCE COMMISSION and the Citizens Utility Board, Respondents. |
| Court | United States Appellate Court of Illinois |
Clifford W. Berlow, E. Glenn Rippie, and Marjorie R. Kennedy, of Jenner & Block LLP, of Chicago, for petitioner.
Robert W. Funk, Thomas R. Stanton, and Rebecca L. Segal, Special Assistant Attorneys General, of Chicago, for respondent Illinois Commerce Commission.
No brief filed for other respondent.
¶ 1 The Illinois Commerce Commission (Commission) assessed a $1 million penalty against LifeEnergy, LLC (LifeEnergy), for violating multiple regulations relating to sales practices. LifeEnergy appeals. For the reasons that follow, we affirm the penalty but vacate certain other provisions in the Commission's order.
¶ 3 In August 2016, the Commission issued LifeEnergy a certificate to operate as an alternative retail electric supplier (ARES). An ARES is an "entity that offers for sale or lease, or delivers or furnishes, electric power or energy to retail customers." (Emphases omitted.) 83 Ill. Adm. Code 412.10 (2017). In October 2017, the Commission made numerous changes to part 412 of Title 83 of the Illinois Administrative Code (Code) that affected each ARES. One of the new regulations required that, on or before May 1, 2018, all agents marketing or selling electricity for an ARES were required to complete a training program; each ARES also had to certify by that date to the Commission that its agents completed that program. 83 Ill. Adm. Code 412.170(e) (2017) ; see also 83 Ill. Adm. Code 412.15 (2017) ().
¶ 4 LifeEnergy failed to file the training certification required by section 412.170(e) before the May 1, 2018, deadline. On May 25, 2018, the Commission's staff requested information from LifeEnergy pertaining to its "possible underperformance in the Illinois retail electric choice market." On June 15, 2018, the Commission's staff sent LifeEnergy a notice of apparent violation (NOAV). In the NOAV, the Commission's staff explained that it received information that at least three of LifeEnergy's agents had been marketing and/or selling electricity in Illinois since May 1, 2018, even though LifeEnergy had not yet certified its agents’ training.
¶ 5 On August 17, 2018, the Commission's staff prepared a report recommending that the Commission enter an initiating order to investigate LifeEnergy for violating part 412 of Title 83 of the Code. See 220 ILCS 5/10-101 (West 2018) (authorizing the Commission "to hold investigations, inquiries and hearings concerning any matters covered by" the Public Utilities Act (Act) ( 220 ILCS 5/1-101 et seq. (West 2018)). In this report, the Commission's staff explained why it believed that LifeEnergy had violated the agent training and certification requirements of section 412.170(e).
¶ 6 On September 24, 2018, the Commission entered an order initiating proceedings against LifeEnergy to investigate and determine whether it complied with part 412 of Title 83 of the Code. Like the staff report, the Commission's initiating order detailed LifeEnergy's violations of the agent training and certification requirements of section 412.170(e). An administrative law judge (ALJ) allowed the Citizens Utility Board (CUB) to intervene in the proceedings.
¶ 7 On September 25, 2019, the matter proceeded to a "paper hearing" before an ALJ pursuant to section 200.525 of Title 83 of the Code ( 83 Ill. Adm. Code 200.525 (1996) ). The parties entered into evidence the transcripts of pre-prepared witness testimony, along with exhibits, without any cross-examination. The following is a summary of that testimony.
¶ 9 Jim Agnew worked as the director of the Commission's consumer services division (CSD). He testified that this proceeding was "initiated specifically for, but not limited to, investigating whether LifeEnergy had complied with the training and certification requirements of Part 412" of Title 83 of the Code. Agnew explained that the impetus for the 2017 amendments to part 412 was "persistent consumer complaints received by CSD involving either confusion or alleged deception about the offers and/or the nature of the transactions." Two "key elements" of the amendments were the requirements in section 412.170(e) for each ARES to "ensure that [its] sales agents are fully knowledgeable" about the regulations and to certify its agents’ training to the Commission. Agnew testified that "both of these must happen before an ARES allows an agent to solicit Illinois consumers on its behalf." The "two broad purposes" of the certification requirement were (1) to demonstrate "an ARES’ continuing compliance with its managerial duty to oversee that the actions of sales agents fully comply with the Commission's rules" and (2) to "allow the Commission and its Staff to more efficiently ensure that agent training and oversight is occurring, along with taking action when deficiencies are noted."
¶ 10 Agnew testified that LifeEnergy was on notice of the new training requirements. The process of amending the regulations lasted from 2015 until October 19, 2017, when the Commission issued its final order adopting the amendments. The Commission sent a copy of that final order the same day it was entered to the designated agents for every ARES, including LifeEnergy.
Although the effective date of the amended part 412 was November 1, 2017, an ARES had until May 1, 2018, "to implement the changes and come into compliance with the amended rule." Between October 31, 2017, and June 11, 2018, the Commission's staff held workshops and sent e-mails to interested parties, including LifeEnergy, "to answer questions and discuss compliance strategies." Meanwhile, the Commission's information technology department designed an electronic filing system for each ARES to make its required filings. The Commission's staff sent notice to LifeEnergy once that system was completed on April 19, 2018.
¶ 11 Agnew testified that, on May 10 and 18, 2018, LifeEnergy submitted the filings required by some sections of the new part 412, but not the certification required by section 412.170(e). By the middle of June 2018, the Commission's staff received three informal consumer complaints about LifeEnergy that indicated that LifeEnergy might have enrolled customers after May 1, 2018. LifeEnergy's responses to those informal complaints later showed that its agents were actively soliciting customers without LifeEnergy having filed the certification required by section 412.170(e). Accordingly, on June 15, 2018, the Commission's staff sent a NOAV to LifeEnergy.
¶ 12 Agnew explained that LifeEnergy made a series of filings pursuant to section 412.170(e), starting on June 21, 2018. These filings showed that "a number of the agents" who were selling on LifeEnergy's behalf after May 1, 2018, had not been trained on the amended regulations. Specifically, LifeEnergy's June 21, 2018, filing showed that some of its agents did not complete their training until June 20, 2018. Between May 1 and June 20, 2018, LifeEnergy's "untrained agents" enrolled 1386 customers. Per Agnew's understanding of the regulation, each day that LifeEnergy allowed its agents to enroll Illinois consumers before certifying the agents’ training "represent[ed] a violation" of section 412.170(e).
¶ 13 Agnew testified that LifeEnergy made a second section 412.170(e) filing on June 26, 2018, which certified that additional agents were trained on June 18, 20, and 22, 2018. Those agents enrolled 78 customers during a 55-day period of noncompliance with section 412.170(e).
¶ 14 Agnew testified that LifeEnergy made its last section 412.170(e) filing on July 2, 2018. This filing showed that 11 additional agents completed their training on June 28, 2018. Those agents enrolled six customers during the period in question, all on June 28, 2018. Agnew did not know what time in the day the enrollments occurred versus the training, so he could not say whether these agents enrolled customers before or after being trained. Nevertheless, Agnew believed that LifeEnergy violated section 412.170(e) in connection with these enrollments, because LifeEnergy allowed agents to enroll customers before it certified the agents’ training. Agnew deemed LifeEnergy's violations of section 412.170(e) "gravely concerning" because "untrained agents soliciting to and enrolling customers may be unable to ensure that the customers are fully and accurately informed on the material content of a prospective offer in a solicitation and understand the nature of the transaction."
¶ 15 According to Agnew, while investigating LifeEnergy's compliance with section 412.170(e), the Commission's staff discovered additional violations of part 412. For example, Agnew determined that LifeEnergy violated section 412.210 of Title 83 of the Code ( 83 Ill. Adm. Code 412.210 (2017) ) by failing "to complete customer requests to rescind pending enrollments." To that end, Agnew noted seven instances where LifeEnergy did not timely process customers’ requests to rescind their enrollments. Agnew believed that a customer's right to rescind an enrollment without penalty within 10 days was a "critical consumer protection."
¶ 16 Agnew further determined that LifeEnergy violated section 412.120(g) of Title 83 of the Code ( 83 Ill. Adm. Code 412.120(g) (2017) ). That provision states that "[i]n-person solicitations that lead to an enrollment require a Letter of Agency or a third-party verification." 83 Ill. Adm. Code 412.120(g) (2017). If an agent uses a third party to verify an enrollment, the agent "shall not approach the customer after the TPV [(third-party verification)] for a period...
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