III. CSD's Initial Allegations

CSD alleged that Commonwealth had a growing number of customers (more than 159 as of June 1, 1999) dissatisfied enough to write or call the Commission registering complaints and seeking assistance in resolving their issues. About 40 customers submitted funds for impound at the Commission pending resolution of their complaints.

Specifically, CSD alleged that Commonwealth violated Section 394.5(a), which requires that terms and conditions of service be clearly communicated to prospective customers, by failing to disclose to consumers, among other things, the terms and potential extent of any supplemental billing. CSD also alleged that Commonwealth violated Section 394.25(b)(1), which forbids electricity service providers from making material misrepresentations in the course of soliciting customers and entering into service agreements with them.

CSD represented that a large number of Commonwealth's customers were sent supplemental bills for service provided many months before. CSD stated that these were apparently not initial service start-off or logistical problems between Commonwealth and utility distribution companies (UDCs), instances of UDCs failing to issue bills in a timely manner, or glitches in Commonwealth and the UDCs' computer communications. CSD alleged that most of the complaining customers had expressed concern about Commonwealth's billing practices. The customers claimed that Commonwealth had sent them supplemental bills as long as seven months after the initial billings, and in amounts ranging from just a few cents to over $2,000. CSD alleged that the terms and conditions of service that Commonwealth provided to its customers did not mention authorization for such extensive supplemental billing. Therefore, Commonwealth did not follow the terms it provided when soliciting business from consumers. CSD believed, from preliminary information received in its investigation from Commonwealth, that at least 19,000 customers were sent supplemental bills. CSD also believed that the supplemental bills may not have been calculated using the correct billing rate for the periods in question. The billing calculations were made by Commonwealth, with each UDC simply passing along the amounts to individual customers with the UDC's monthly bills.

CSD also represented that a large number of the customers it interviewed complained that Commonwealth was not delivering the promised savings as compared to the electricity bills they would have received had they been served by their UDC. CSD said that it had copies of letters, sent by Commonwealth to potential customers, guaranteeing savings of as much as 15-25%.

CSD noted that almost all of the written complaints received by the Consumer Affairs Branch (CAB) complain either that efforts to reach someone at Commonwealth about these issues were unsuccessful, or that Commonwealth did not follow through in responding.

CSD raised an additional issue. On August 15, 1997, Commonwealth filed an application for registration as an electricity service provider. The Commission's Energy Division granted the application on August 18, 1997. On June 18, 1998, Commonwealth filed an application to supplement its original application. The supplement was signed by Frederick M. Bloom, Commonwealth's chief executive officer at the time.

The supplement, among other things, stated that no corporate officer had any civil, criminal, or regulatory sanctions against him or her in the last 10 years. CSD alleged that Bloom had regulatory action taken against him several times within the last 10 years. Therefore, CSD alleged that the supplement contained false information.