Market Surveillance Administrator (MSA) - Application for Approval of a Settlement Agreement August 30, 2018 - Alberta Utilities Commission
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Decision 23535-D01-2018 Market Surveillance Administrator (MSA) Application for Approval of a Settlement Agreement August 30, 2018
Alberta Utilities Commission Decision 23535-D01-2018 Market Surveillance Administrator Application for Approval of a Settlement Agreement Proceeding 23535 Application 23535-A001 August 30, 2018 Published by the: Alberta Utilities Commission Eau Claire Tower, 1400, 600 Third Avenue S.W. Calgary, Alberta T2P 0G5 Telephone: 403-592-8845 Fax: 403-592-4406 Website: www.auc.ab.ca
Contents
1 Introduction ........................................................................................................................... 1
2 Application............................................................................................................................. 1
2.1 The investigation and contraventions............................................................................. 1
2.2 The proposed settlement ................................................................................................ 2
3 The statutory scheme ............................................................................................................ 3
4 Commission findings ............................................................................................................. 5
5 Order ...................................................................................................................................... 8
Decision 23535-D01-2018 (August 30, 2018) • iAlberta Utilities Commission
Calgary, Alberta
Decision 23535-D01-2018
Market Surveillance Administrator Proceeding 23535
Application for Approval of a Settlement Agreement Application 23535-A001
1 Introduction
On May 4, 2018, the Market Surveillance Administrator (MSA) filed an application with
the Alberta Utilities Commission for approval of a settlement agreement1 between the MSA,
ENMAX Energy Corporation and ENMAX Encompass Inc. (the latter two companies are
collectively referred to as ENMAX), pursuant to sections 44 and 51(1)(b) of the Alberta Utilities
Commission Act and sections 7, 15, and 16 of the Code of Conduct Regulation.2 The settlement
agreement was reached after the MSA’s investigation of conduct related to gas and electric
service calls processed through ENMAX’s Customer Care Centre that occurred in
November 2016.
The Commission issued a notice on May 22, 2018, advising parties about the details of
the application. In the notice, the Commission limited standing in the proceeding to the MSA and
ENMAX. Any interested parties not named in the notice could request standing by showing that
they could be directly and adversely affected by the decision.
On May 29, 2018, the Office of the Utilities Consumer Advocate (UCA) requested
standing, stating that some of the customers it represents were affected or may have been directly
affected by the settlement agreement. In a June 7, 2018 letter, the UCA withdrew its request for
standing.
The Commission considers June 7, 2018, to be the close of record for this proceeding.
In reaching the determinations contained within this decision, the Commission has
considered all relevant materials comprising the record of this proceeding. Accordingly,
references in this decision to specific parts of the record are intended to assist the reader in
understanding the Commission’s reasoning relating to a particular matter and should not be taken
as an indication that the Commission did not consider all relevant portions of the record with
respect to that matter.
2 Application
2.1 The investigation and contraventions
The MSA investigation was prompted by a referral to the MSA by the Commission after
it received an inquiry. The matter at issue in the investigation was whether ENMAX contravened
the Code of Conduct Regulation in the provision of service to customers, specifically related to
calls and customer assistance from the Customer Care Centre.
1
In Exhibit 23535-X0002, Submission of MSA re Approval of a Settlement Agreement, May 4, 2018,
paragraph 59, the MSA confirmed that the application to the Commission constituted the settlement agreement
between the MSA, ENMAX Energy Corporation and ENMAX Encompass Inc.
2
The Code of Conduct Regulation is a single regulation under the Electric Utilities Act and Gas Utilities Act.
Decision 23535-D01-2018 (August 30, 2018) • 1Application for Approval of a Settlement Agreement Market Surveillance Administrator
The contraventions of the ENMAX customer service representatives were identified in
the application as: soliciting on behalf of the competitive retail business, providing advice with
respect to competitive retail services, proposing to add gas service to customers when gas is not a
service subject to the Regulated Rate Option Regulation and a failure to refer callers to a source
where the callers could obtain the current list of retailers about competitive retail products and
pricing.3
In its intitial investigation the MSA learned that the ENMAX call system receives
incoming calls to the Customer Care Center that are directed through an Interactive Voice
Response (IVR) system, before reaching a customer service representative. The IVR system
records call-specific data from the customer’s selection, including the type of service about
which the customer is inquiring. Certain information is then displayed on the customer service
representative’s screen4 at the beginning of a call to assist them in determining whether a caller is
inquiring about regulated or retail services. The MSA discovered that in some cases, because of a
software issue, the representative did not know which services the caller was inquiring about.
Following the assessment of the initial complaint, the MSA broadened its investigation to
customer calls received from November 14, 2016, to November 18, 2016, inclusively. ENMAX
provided the records of 1,100 calls made during this period, 275 of which the MSA reviewed in
detail. It determined that the calls, in whole or in part, confirmed the contraventions of sections
15 and 16 of the Code of Conduct Regulation.
The MSA also concluded that Section 7 of the Code of Conduct Regulation was
contravened by having the IVR system configured to play the fair competition statement after the
customer had selected to hear more about the competitive retailer or the regulated rate services.
The MSA indicated that the statement should be before the selection is made because the
purpose of the fair competition statement is to educate customers on the choice of options
between regulated and retail services.5
The MSA found that a relatively significant percentage of calls contravened sections 15
and 16 of the Code of Conduct Regulation. For the purpose of the settlement, ENMAX agreed
with the MSA’s conclusion that some of the calls contravened the regulation.
2.2 The proposed settlement
The MSA submitted that the settlement agreement, which requires that ENMAX pay an
all-inclusive administrative penalty of $150,000 and $100,000 towards the MSA’s legal,
administration and investigation costs, is fair, reasonable and in the public interest, and should be
approved. Due to the nature of the contraventions, the terms of settlement do not specify a
discrete administrative penalty for each contravention or category of contravention.
The MSA considered that the administrative penalty is a substantial but non-punitive
penalty that takes into account the contraventions of the Code of Conduct Regulation on an
integrated basis. In assessing the administrative penalty, it considered AUC Rule 013: Rules on
3
Exhibit 23535-X0002, Submission of MSA re Approval of a Settlement Agreement, May 4, 2018,
paragraph 25.
4
Exhibit 23535-X0002, Submission of MSA re Approval of a Settlement Agreement, May 4, 2018,
paragraph 19.
5
Exhibit 23535-X0002, Submission of MSA re Approval of a Settlement Agreement, May 4, 2018,
paragraph 26.
2 • Decision 23535-D01-2018 (August 30, 2018)Application for Approval of a Settlement Agreement Market Surveillance Administrator
Criteria Relating to the Imposition of Administrative Penalties (AUC Rule 013) factors,
including the seriousness of the contravention, the cooperation of the party(ies) and the economic
benefit resulting from the contravention. The MSA submitted that given all of the circumstances,
an administrative penalty is fair and reasonable and acknowledged that ENMAX has already
implemented remedial steps to ensure similar contraventions will not occur in the future.6
With regard to the seriousness of the contraventions and certain considerations from
Section 4 of AUC Rule 013, the MSA was satisfied that:7
a. The conduct did not cause loss of life or injury or endangerment of persons;
b. The conduct did not damage property or the environment;
c. The conduct did not impact the safe, reliable and economic operation of the bulk
electric system;
d. ENMAX was not deceitful, or fraudulent, nor was the contravention the result of
deceit or artifice;
e. ENMAX was not reckless or deliberately indifferent to the conduct;
f. ENMAX does not have a history of contraventions of this nature, nor is this a repeat
offence; and
g. ENMAX did not engage in any sort of cover-up.
The MSA stated that because of the contraventions, ENMAX potentially gained access to
customers as a result of its position as a regulated rate option provider that may have benefited it
as a competitive retailer,8 and that ENMAX may have received some economic benefit from the
contraventions. The MSA indicated that “attempting to confirm and quantify an economic
benefit would be a fruitless effort, as any counterfactual analysis would contain a number of
assumptions and speculations and would be of little assistance to the Commission.”9 It did,
however, factor in ENMAX’s potential economic benefit when assessing an appropriate penalty.
The MSA referenced ENMAX’s cooperation and quick action to implement the remedial steps.
It also considered that the process and system changes already implemented to address many of
the issues identified will support improved compliance with the Code of Conduct Regulation.10
3 The statutory scheme
ENMAX is governed by, and required to comply with, the Code of Conduct Regulation.
ENMAX Energy Corporation is a “regulated rate supplier” as defined in the regulation. It is also
6
Exhibit 23535-X0002, Submission of MSA re Approval of a Settlement Agreement, May 4, 2018,
PDF page 14, paragraph 58
7
Exhibit 23535-X0002, Submission of MSA re Approval of a Settlement Agreement, May 4, 2018,
PDF page 9, paragraph 45.
8
Exhibit 23535-X0002, Submission of MSA re Approval of a Settlement Agreement, May 4, 2018,
PDF page 8, paragraph 41.
9
Exhibit 23535-X0002, Submission of MSA re Approval of a Settlement Agreement, May 4, 2018,
PDF page 8, paragraph 43.
10
Exhibit 23535-X0002, Submission of MSA re Approval of a Settlement Agreement, May 4, 2018,
PDF page 6, paragraph 28, and PDF page 9, paragraph 49-50.
Decision 23535-D01-2018 (August 30, 2018) • 3Application for Approval of a Settlement Agreement Market Surveillance Administrator
an “affiliated provider” because it offers competitive retail electricity and natural gas services
across Alberta. ENMAX Encompass Inc. provides billing and customer care to both regulated
rate option customers and competitive retail customers on behalf of ENMAX Energy
Corporation; it is therefore acting as a “regulated rate supplier” and “affiliated provider” as
defined in Section 1(1), and as permitted in Section 1(2), of the Code of Conduct Regulation.
Section 44 of the Alberta Utilities Commission Act allows the MSA to resolve any matter
that relates to its mandate through a settlement agreement. If the MSA enters into a settlement
agreement, it must file that agreement with the Commission for approval under Section 51(1)(b).
Subsection 56(3) of the Alberta Utilities Commission Act allows the Commission to make
an order in respect of a matter that the MSA has brought before it under Section 51(1)(b).
Subsection 56(4) states that the Commission may provide direction, or make any order it
considers appropriate, in respect of such matter.
The administrative penalty provision is found in Section 63 of the Alberta Utilities
Commission Act. This section states that if the Commission determines in a hearing, or other
proceeding that a person has contravened or failed to comply with one of its decisions or orders,
it can impose on that person an administrative penalty and any terms or conditions the
Commission considers appropriate. An administrative penalty under Section 63 may be
composed of: (a) an amount of up to one million dollars for each day or part of a day on which
the contravention occurred, and (b) a one-time amount to address economic benefit, if the
Commission believes that the person derived an economic benefit from the contravention.
The Commission has found that the reference to “other proceeding” in sections 56 and 63
of the Alberta Utilities Commission Act includes a settlement process pursuant to Section 44.11
A portion of the alleged contraventions relates to the Code of Conduct Regulation
sections on advertising, prohibitions, and information provided to customers about retail energy
services through the ENMAX Customer Care Centre. The advertising provisions in Section 7(1)
of the Code of Conduct Regulation require a regulated rate supplier or its affiliate to include the
following statement on its website and in any advertising that markets energy services:
All customers are free to purchase natural gas services from the default supply provider
or from a retailer of their choice and to purchase electricity services from the regulated
rate provider or from a retailer of their choice. The delivery of natural gas and electricity
to you is not affected by your choice. If you change who you purchase natural gas
services or electricity services from, you will continue receiving natural gas and
electricity from the distribution company in your service area. For a current list of
retailers you may choose from, visit www.ucahelps.gov.ab.ca or call 310-4822 (toll free
in Alberta).
11
See, for example, Decision 23013-D01-2018: Application for Approval of a Settlement Agreement Between the
Market Surveillance Administrator, TransAlta Corporation and Capital Power Generation Services Inc.,
January 30, 2018, paragraph 20.; and Decision 23013-D01-2018: Application for Approval of a Settlement
Agreement Between the Market Surveillance Administrator, TransAlta Corporation and Capital Power Generation
Services Inc., January 30, 2018, paragraph 20.
4 • Decision 23535-D01-2018 (August 30, 2018)Application for Approval of a Settlement Agreement Market Surveillance Administrator
The prohibitions found in Section 15 of the Code of Conduct Regulation are enumerated
as follows:
Prohibitions
15 No distributor or regulated rate supplier shall
(a) give information about retail energy services in a manner that encourages a
customer to contact one retailer in preference to other retailers,
(b) solicit business on behalf of a retailer,
(c) include or incorporate any communication for sales or marketing purposes in any
of the distributor’s or regulated rate supplier’s communications to customers
related to billing for regulated energy services,
(d) give the appearance that it is acting on behalf of a retailer or that a retailer is
acting on its behalf,
(e) give a customer advice or assistance with respect to any matter relating to a
particular retailer, except to refer the customer to a source where the customer
may obtain a current list of retailers that are licensed under the Fair Trading Act
to engage in the marketing of electricity business or the marketing of gas
business,
(f) enable users of its website to access web pages relating to retail energy services
from web pages relating to the distributor’s or regulated rate supplier’s regulated
energy services, unless a statement that meets the requirements of section 7 is
displayed immediately when one website is accessed from the other, or
(g) propose adding any services to the services provided under the regulated rate
tariff in addition to the services that are required in the Regulated Rate Option
Regulation (AR 262/2005) or the Default Gas Supply Regulation (AR 184/2003)
Section 16 of the Code of Conduct Regulation addresses customer requests for
information. If a customer requests information about retail energy services from a distributor or
regulated rate supplier the customer shall be referred, “to a source where the customer may
obtain a current list of retailers that are licensed under the Fair Trading Act to engage in the
marketing of electricity business or the marketing of gas business.”12
4 Commission findings
In this application, the MSA requests that the Commission approve a settlement
agreement between the MSA and ENMAX pursuant to Section 44 of the Alberta Utilities
Commission Act. The agreement involves an administrative penalty and an award of costs that
the Commission will consider pursuant to sections 63 and 66 of the Alberta Utilities Commission
Act.
12
Code of Conduct Regulation, AR 58/2015, Section 16, Information about retail energy services.
Decision 23535-D01-2018 (August 30, 2018) • 5Application for Approval of a Settlement Agreement Market Surveillance Administrator
A two-stage process has been established and confirmed in prior Commission decisions13
to assess whether the negotiated settlement and the associated administrative penalties should be
approved. First, the Commission must be satisfied that a contravention occurred. If this criterion
is met, the second step requires the Commission to determine if the settlement falls within a
range of acceptable outcomes. In the second step, the Commission considers the criteria set out
in AUC Rule 013.
Section 3 of AUC Rule 013 states that the Commission shall make its decision based on
the factors relevant to each case, which include but are not limited to, the seriousness of the
contravention and the cooperation of the person named in the contravention. To determine the
seriousness of the contravention, the Commission is guided by the considerations listed in
Section 4 of AUC Rule 013, which include the harm that was caused, possible manipulation,
deceit or artifice that led to the contravention, the persistence and systematic nature of the
contravention, the duration of the contravention and other factors. The sanctions are intended to
be protective and preventative, but not punitive.14
The MSA’s investigation and application to approve the settlement agreement demonstrate
satisfactory consideration of the requirements of AUC Rule 013. Accordingly, there is sufficient
information for the Commission to impose a penalty consistent with the provisions of sections
56(3) and 56(4) of the Alberta Utilities Commission Act. In determining the administrative penalty
to be imposed, the Commission has considered the criteria set out in AUC Rule 013.
The Commission acknowledges that the MSA investigation identified contraventions of
sections 7, 15 and 16 of the Code of Conduct Regulation. Based on the MSA’s submission and
analysis, ENMAX potentially gained access to customers as a result of its position as a regulated
rate option provider to the potential benefit of its competitive retail businesses.
The Commission accepts the MSA’s conclusion that the contraventions do not affect the
safe, reliable and economic operation of the bulk electric system. It is also satisfied that ENMAX
was not deceitful or fraudulent, nor reckless or deliberately indifferent to the conduct, and that it
did not have a history of contraventions of this nature. The Commission also acknowledges that
13
This approach was taken by the Commission in Decision 2012-182: Market Surveillance Administrator,
Application for Approval of a Settlement Agreement between the, Market Surveillance Administrator and
TransAlta Energy Marketing Corp., Application No. 1607868, Proceeding ID No. 1553, July 3, 2012, paragraphs
28 and 35; Decision 2011-430: Application for Approval of a Settlement Agreement between the Market
Surveillance, Administrator and Milner Power Limited Partnership by it General Partner Milner Power Inc.,
Application No. 1607741, Proceeding ID No. 1480, October 27, 2011, paragraph 12; Decision 2010-502:
Application for Approval of a Settlement Agreement between the Market Surveillance Administrator and
Syncrude Canada Ltd., Application No. 1606400, Proceeding ID. 750, October 22, 2010, paragraph 15;
Decision 2010-540: Application for Approval of a Settlement Agreement between the Market Surveillance
Administrator and AltaGas Limited Partnership, Application No. 1606239, Proceeding ID. 670,
November 23, 2010, paragraph 14; and Decision 2010-476: Application for Approval of a Settlement
Agreement Between the Market Surveillance Administrator and TransAlta Energy Marketing Corp.,
Application No. 1606026, Proceeding ID. 563, October 1, 2010, paragraph 18.
14
Decision 23013-D01-2018: Application for Approval of a Settlement Agreement Between the Market
Surveillance Administrator, TransAlta Corporation and Capital Power Generation Services Inc., Proceeding
23013, Application 23013-A001, January 30, 2018, paragraph 30; Decision 3110-D03-2015: Market Surveillance
Administrator allegations against TransAlta et al., Application 1610350-1, Proceeding 3110, Phase 2 – request for
consent order, October 29, 2015, paragraph 22; and Decision 2012-182: Application for Approval of a Settlement
Agreement between the Market Surveillance Administrator and TransAlta Energy Marketing Corp.,
Application No. 1607868, Proceeding ID No. 1553, July 3, 2012, paragraph 67.
6 • Decision 23535-D01-2018 (August 30, 2018)Application for Approval of a Settlement Agreement Market Surveillance Administrator
ENMAX cooperated with the MSA throughout its investigation, and voluntarily offered
additional facts arising from its own internal investigation, to the MSA. ENMAX also
implemented process, audit, and system improvements15 to support compliance with the Code of
Conduct Regulation. These mitigating factors weigh in favour of approval of the proposed
administrative penalty.
The Commission finds that the MSA’s administrative penalty reasonably addresses the
circumstances of the contraventions by customer service representatives that arose in ENMAX’s
Customer Care Centre in November 2016. Having regard to the seriousness of the contraventions
and the mitigating factors acknowledged by the MSA, the Commission is satisfied that the
proposed administrative penalty of $150,000 falls within a range of acceptable outcomes,
especially because any potential economic benefit arising from the contraventions cannot be
accurately quantified.
The settlement agreement also includes a $100,000 payment for the MSA’s legal,
administration and investigation costs. As described in the application, the MSA’s activities in
this regard included the general investigation, as well specific duties such as the auditing of a
sample of the calls to the Customer Care Centre.The Commission’s authority to award costs
related to an investigation after the Commission conducts a proceeding is found in Section 66 of
the Alberta Utilities Commission Act. Section 66 states:
If, in respect of a person whose affairs were the subject of an investigation, the
Commission is satisfied that the person has not complied with, or is not complying with,
this Act or the regulations or any other enactment within the jurisdiction of the
Commission or any order, decision of the Commission, Commission rule, ISO rule or
reliability standard, the Commission may, after conducting a hearing or other proceeding,
order the person to pay the costs of the investigation and the hearing or other proceeding,
subject to the rules under section 76(1)(h).
The Commission is satisfied that the amount of $100,000 associated with the
investigation is reasonable given the investigation and related efforts of the MSA to conduct its
investigation of the contraventions.
For all the reasons outlined above, the Commission finds that the proposed terms of the
settlement are fair, reasonable and fall within a range of acceptable outcomes, and that because
the resulting settlement adequately addresses the contraventions of sections 7, 15 and 16 of the
Code of Conduct Regulation, the approval of the settlement agreement is in the public interest.
The Commission agrees with the MSA that the proposed all-inclusive penalty recognizes the
level of seriousness of the contraventions and the efforts made to mitigate such contraventions on
a go-forward basis. The settlement agreement promotes compliance with the Code of Conduct
Regulation and achieves effective deterrence to curtail future contraventions. Accordingly,
ENMAX shall pay an administrative penalty in the amount of $150,000 and costs in the amount
of $100,000 to the MSA.
15
These changes were listed in the application, Exhibit 23535-X0002, Submission of MSA re Approval of a
Settlement Agreement, May 4, 2018, paragraph 49.
Decision 23535-D01-2018 (August 30, 2018) • 7Application for Approval of a Settlement Agreement Market Surveillance Administrator
5 Order
The Commission orders as follows:
(1) The Commission approves the settlement agreement between the Market Surveillance
Administrator, ENMAX Energy Corporation and ENMAX Encompass Inc.
(2) ENMAX Energy Corporation shall pay an administrative penalty in the amount of
$150,000 in the form of a certified cheque or bank draft, payable to “General Revenue
Fund c/o the Minister of Finance” and delivered to the Alberta Utilities Commission,
within 30 days of the issuance of this decision.
(3) ENMAX Energy Corporation shall pay the amount of $100,000 in costs to the Market
Surveillance Administrator within 30 days of the issuance of this decision.
Dated on August 30, 2018.
Alberta Utilities Commission
(original signed by)
Anne Michaud
Vice-Chair
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