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ICC Docket No. 18-1652Star Direct TestimonyPUBLIC VERSIONDIRECT TESTIMONYofEmily CipesVice President of OperationsStar Energy Partners, LLCIllinois Commerce CommissionStar Energy Partners LLCCitation for Failure to Comply with 83 Ill. Adm. Code Part 412/Investigation intoSales, Solicitation, Marketing, Enrollment Policies, Practices, Procedures andMaterialsPUBLIC VERSIONConfidential Information is marked as***BEGIN CONFIDENTIAL [XXXXX] *** END CONFIDENTIALICC Docket No. 18-1652January 31, 2020601552768.1
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC VERSION1I.INTRODUCTION2Q.What is your name and business address?3A.My name is Emily Cipes. My business address is 3340 West Market Street, Akron, Ohio444333.5Q.By whom and in what position are you employed?6A.I am the Vice President of Operations for Star Energy Partners LLC. Throughout my7testimony I will refer to Star Energy Partners LLC as simply “Star.” I am authorized to8provide testimony on behalf of Star in this matter.9II.PURPOSE OF TESTIMONY10Q.What is the purpose of your direct testimony?11A.Throughout my testimony, I will provide information about Star’s business and12operations in the State of Illinois.13penalties in Staff’s Direct Testimony.I will also respond to the allegations and proposed14III.ITEMIZED ATTACHMENTS15Q.Are there any exhibits to your direct testimony?16A.Yes. I have attached 13 exhibits to my direct testimony:17a.Star Energy Partners Terms and Conditions for Illinois18b.Star Energy Partners’ Uniform Disclosure Statement19c.Star Energy Partners’ Letter of Agency20d.***BEGIN21CONFIDENTIAL22e.TPV questionnaire23f.Citizens’ Utility Board Guide to Renewable Energy PlanningCONFIDENTIAL1[XXXXXXXXXXXXXX]***END
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC ONFIDENTIAL30j.83 Ill. Admin Code 412 – Appendix 7IV.EXPERIENCE38Q.What is your educational background?39A.I graduated from University of California Santa Cruz in 2010 with a Bachelor’s of40Science Degree in Linguistics. I later graduated from Loyola Law School in Los Angeles41California with a Juris Doctor degree in 2014.42Q.Ms. Cipes, can you detail your work history with Star?43A.I have worked in my current role for approximately 2 years. In my role as Vice President44of Operations, I direct strategy for day to day operations and oversee compliance. Prior45to my role as Vice President of Operations, I was the Director of Compliance and46Customer Service for approximately two years. During that time, I was the direct contact2
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC VERSION47point for two of our outside vendors, Cydcor, LLC and Summit Advantage LLC. I refer48to these entities as Cydcor and Summit, respectively, throughout the remainder of my49testimony. I was also in charge of compliance for day to day issues in this role.50V.OVERVIEW OF STAR51Q.What is Star’s business?52A.Star was founded in 2012 and is a retail electric supplier, known as an ARES in Illinois,53which means that Star sources and provides electricity to small commercial and to54residential users.55and Washington, D.C.56experience in the energy space and 35 years of combined experience in the ARES spaceStar operates in Illinois, Ohio, New Jersey, Maryland, Pennsylvania,Star’s management team has over 65 years of combined57Q.Can you please describe the corporate structure of Star Energy Partners, AL.***END62Q.Did Star maintain a vendor relationship with Cydcor after Star May XXXXXXXX,]64***END CONFIDENTIAL Cydcor continued as a contractual door to door sales vendor65to Star.66corporate distributors, who provide the door to door sales agents. These sales agents67were independent contractors working through these independent corporate distributors;68although the training and training materials for these agents were provided by Star and69Cydcor.Cydcor’s practice is to subcontract out this function to various independent***BEGIN3CONFIDENTIAL
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC XXXXXXXX]71***END CONFIDENTIAL. Since March 27, 2019, Star has been restructuring its door72to door sales program.73Q.74A.75How is a sale from Star to a new customer completed?Throughout my tenure at Star, a sale has been final only after a third-party verification,also known as a TPV, was successfully completed.76Q.What information is provided to educate a potential customer prior to the TPV?77A.During each door to door solicitation, Star’s sales agents explain Star’s XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX4
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC XXXXXX]96***END CONFIDENTIAL.97Q.Please detail the TPV D CONFIDENTIAL.106Q.What occurred after the TPV XXXXXXXXXXXXXXXXXXXXXXXXX5
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC XXXXXXXX]116****END CONFIDENTIAL.117Q.Is the sales agent present during the TPV?118A.No. Star prohibits the sales agent from being present during the TPV. Star confirms119that the sales agent is not present in this process through ***BEGIN CONFIDENTIAL120[XXXXXXXXXXXXXXXXXXXXXXXX] ***END CONFIDENTIAL.121122Q.What procedures did Star have in place to monitor its door to door sales agentsfrom May 2018 to March 2019?123A.Throughout my tenure at Star, we have constantly looked to improve the sales process to124ensure that potential customers were fully informed before choosing to purchase125electricity from Star, including monitoring the sales agents to ensure that they were126following Star’s Code of Conduct and complying with all applicable laws.127procedures implemented by Star include:128129130 Providing all potential customers with signed copies of the Letter of Agency, aUniform Disclosure Statement, after August 15, 2018, and a copy of the Terms andConditions before the TPV process occurred and thus before a sale was complete.131132 Requiring that an independently operated third party verification process besatisfactorily completed before a sale was final.133134135 A strict agent discipline policy. A first complaint resulted in deactivation for 24hours and retraining; a second complaint resulted in deactivation for 72 hours andretraining; and a third complaint resulted in termination.136137138139140141142143144 e
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC XXXXXXXXX]***END CONFIDENTIAL.162In short, Star implemented numerous monitoring systems and checks and balances in163place to make sure that potential customers were fully informed before purchasing a Star164product.165VII.RESPONSE TO DIRECT TESTIMONY OF STAFF WITNESS SHEA FELDE166Q.What is your understanding of why Staff initiated the current investigation?167A.Star was initially served with the Staff Report recommending an investigation of Star’s168practices in October 2018.169other than the allegations in the Report.170had received very few customer complaints.Star was unaware of why Staff initiated the investigationAt the time Staff initiated its Report, Star171172Q.At any point in time, did you come to understand the circumstances that led to theinitiation of the investigation?173A.Yes. In December 2019, Staff responded to Star’s First Set of Data Requests. At IDENTIAL
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC XXXXXXXXXXXXXXX180XXXXXXXXXXXXXXXXXXXXXXX]***END CONFIDENTIAL.181182Q.Are you familiar with the documents that Staff produced in response to Star’s datarequests?183A.Yes, but I am not aware of those documents being used for marketing D CONFIDENTIAL.CONFIDENTIAL190Q.At any point in time was the welcome e-mail used for marketing XXXXXXXXXXXXXXXXXXXXXXXX]**END CONFIDENTIAL.197Q.Did you ever witness any door to door solicitations first hand?8
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC VERSION198A.Yes. During my frequent visits to the independent corporate distributors’ offices,199including several trips to Illinois offices, I would spend afternoons walking the field with200two agents per day.201202Q.Did you ever witness a door to door sales agent using a marketing material withComEd’s logo on it?203A.No.204205Q.Have you read Ms. Felde’s direct testimony which details the allegations againstStar?206A.Yes.207208Q.Do you understand the purpose behind the regulations set forth in 83 Ill. Adm. Code412?209A.Yes. Per Ms. Felde’s testimony on Page 4-5, Lines 87-95, the Regulations at 83 Illinois210Administrative Code Part 412, which I refer to hereafter as the Part 412 Regulations,211are designed to ensure that potential customers of an ARES are: 1) fully and accurately212informed about the material provisions of a prospective offer in a solicitation; and 2)213understand the true nature of the transaction as an attempt to switch the provider of their214electric supply.215216Q.Is Star’s sales process designed to ensure that the purposes behind the Part 412Regulations are met?217A.Yes. As set forth previously in my testimony, Star has implemented a system of checks218and balances to insure that any potential customers are fully and accurately informed219about and understand the true nature of any proposed transaction with Star. This system220includes an independent TPV process, agent training and discipline, the constant review221and revision of customer facing documents such as the Letter of Agency, Terms and222ConditionsandUniformDisclosureStatement, ***BEGIN9CONFIDENTIAL
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC XXXXXXXXXX224XXXXXXXXXXXXXX]***END CONFIDENTIAL.225process provides the protections required by and, in fact, provides more protection to226Illinois consumers than the Part 412 Regulations.I believe that Star’s sales227RESPONSES TO SPECIFIC ALLEGATIONS228Response to Allegations Regarding Part 412.115 – Uniform Disclosure Statement229230Q.Ms. Felde first alleges that Star failed to provide a UDS to its customers from May1, 2018 through August 15, 2018. Do you have a response to that allegation?231A.Yes. Ms. Felde is correct that Star did not provide a Uniform Disclosure Statement232from May 1, 2018 through August 15, 2018.233Q.When did Star begin to circulate a UDS to its customers?234A.Star provided a UDS to all potential customers beginning on August 16, 2018.235236Q.Do you understand Ms. Felde also alleges that Star’s UDS did not include all of theinformation required by Part 412.115?237A.Yes.238Q.Do you have a response to that allegation?239A.Yes. Star used the sample UDS in Appendix A of Rule 412 as the model for its UDS.Star’s UDS is attached as Exhibit B. A comparison240Appendix A is attached as Exhibit J.241between Star’s UDS and Appendix A reveals that the only difference between the two242documents is that Star’s UDS did not include notice of a 10-day cancellation period. Star243allows a customer to cancel at any time and thus excluded the shorter 10-day period in244favor of the more consumer friendly provision.245246Q.Do you understand the underlying purpose behind the requirement in Part 412.115that a UDS containing certain information be provided to potential customers?10
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC VERSION247A.Yes, per Ms. Felde’s testimony on Pages 10-11, Lines 215- 217, the UDS is designed to248provide potential customers with the necessary information to make an informed249decision.250251Q.Was all information necessary for potential customers to make an informed decisionconcisely provided to consumers by Star?252A.Absolutely. During each door to door solicitation, Star’s door to door agents XX]***END CONFIDENTIAL.264deprive a potential customer of information necessary to an informed decision, since that265information was provided in multiple other locations in the sales process.***BEGINCONFIDENTIALAny omissions from the UDS did notResponse to Allegations Regarding Part 412.120 – Agent Badge266267268Q.Ms. Felde alleges that Star failed to include the agent identification number on theagent’s badge. Do you have a response to that allegation?269A.Star concedes that the agent identification number was not included on the agent’s badge270provided to Staff.11
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC VERSION271272Q.What is the purpose of requiring that an Agent’s identification number be includedon a badge ?273A.Per Ms. Felde’s testimony at Page 11, Lines 234 to 241, an identification number allows274a potential customer to know with whom they are interacting should that potential275customer need to communicate with the Company or the Commission about their276solicitation experience.277278Q.Did Star’s sales process make it clear to the potential customer with whom theywere interacting?279A.Yes.The Agent’s name and photo were included on the identification badge.280Additionally, the potential customers received multiple documents with the agent’s name281and identification number to review prior to completing the TPV. The potential customer282received an LOA and, after August 15, 2018, a UDS. The LOA and UDS included the283agent identification number.284hotline where potential customers could call and verify that the agent was a legitimate285agent. Moreover, while Star received minimal complaints from potential customers and286actual customers, to the extent Star did receive a complaint about an agent, Star did not287have any issues identifying the agent, due, in part, to its digital geolocation platform.The agent identification badges also included an agentResponse to Allegations Regarding Part 412.120(e) – Sales Script288289290291Q.Ms. Felde alleges that Star’s door to door sales script does not contain informationon the term of the product being offered and how to contact the company to rescindthe contract. Do you have a response ?292A.Yes. Each customer was able to choose their own term. The door to door sales agent293provided multiple options to the potential customers while they were GINCONFIDENTIAL
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC XXXXXXXXX297XXXXXXXXXXXXXXX] ***END CONFIDENTIAL.298provides the contact information for the Customer Service Department. These documents299also state that there is no cancellation fee.Each of these documents300301Q.Was the potential customer fully informed of the term of the product being offeredand how to contact the company to rescind the contract?302A.Yes. The purpose of these requirements is to provide a potential customer with the term303and cancellation information. This information was provided in multiple locations before304the sale was completed.305Response to Allegations Regarding Part 412.170 (e)306307Q.Are you aware of Ms. Felde’s allegations that Star violated Part 412.170(e) byhaving misleading statements in its sales scripts?308A.Yes, it is alleged that the script is misleading in that the sales agents requested to view the309potential customer’s energy bill “just to see” if they could qualify for Star’s products and310stated that they could price protect the potential customer. It is further alleged that the311language about qualifying for 100% green renewable energy is misleading because it312does not explain that Star is offsetting with green technology.313Q.Are these statements misleading?314A.No.First, the statement “just to see” in the sales script is simply not a misleading315statement.316eligible for Star’s products. Therefore, every door to door sales agent was required to317preview the individual’s utility bill to determine if they were eligible for Star’s XXXXXXXXXXXXXXXXXXXXXXXMoreover, not every individual paying for energy from a public utility isCONFIDENTIAL13
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC XXXXXXXXXXXXXXX]324***END CONFIDENTIAL.325consistent with Part 412.190, since Star purchases the appropriate amount of renewable326energy credits.327understanding of what constitutes green energy. For example, the Citizens Utility Board328or CUB has published documents defining “green energy” as including energy created329using non-renewable means that is offset with green energy. See Exhibit F.330Star’s statements about renewable energy are thusStar’s representations are further consistent with the commonResponse to Allegations Regarding Part 412.190(b) - Green Energy331Q.Do you understand that Ms. Felde alleges Star violated Part 412.190(b)?332A.Yes, Ms. Felde alleges that Star failed to provide the details of the renewable electric333power and energy type mix used in supplying electricity to customers as required by334412.190(b) in its sales script and/or failed to produce evidence that this required335information was otherwise provided to customers.336Q.337338Was the information required by Part 412.190(b) provided to potential and currentcustomers?A.Yes. Paragraph 3, entitled “Rate” in the Terms and Conditions details that the .50 daily339fee allows Star “to purchase 100% national wind renewable energy credits based upon340the customer’s usage.” See Exhibit A. ***BEGIN XXXXXXXXXXXXXXX14
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC XXXXXXXXX]343***END CONFIDENTIAL.344Q.Was the information required by Part 412.190(b) previously provided to Staff?345A.Yes. The Terms and Conditions were previously provided to Staff on January 4, 2019 in346Star’s Response to 1.07. Star’s renewable disclosure to customers was not previously347provided to Staff, since it is not a required filing.348Response to Allegations Regarding Agent Certification349350Q.Ms. Felde alleges that Star failed to file its Agent Certification documents. Is thatcorrect?351A.Yes.352Q.Were all the agents properly trained and XXXXXXXXXXXXXXXXX]***END357CONFIDENTIAL. Star would review and then activate the agent and the system would358track both activation and deactivation dates for the agents. Star therefore was able to359ensure that all agents selling its products were trained and certified.360Q.Does Star possess the certification information for its XXXXXXXXXXXXXXXXXXXXX]363Star had difficulty accessing this information after March 2019 when it began15***ENDCONFIDENTIAL.
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC VERSION364restructuring its door to door sales program. Star has recently been able to recreate this365information.366Q.Has Star filed its agent certifications?367A.No.However, Star has the information and attempted to file its agent certifications368beginning on January 22, 2020 but was unable to access the system as it lacked the369requisite permissions.370certifications once they are received.371Star has requested these permissions and will file the agentResponse to Suggested Penalties372373374375Q.Staff recommends that the Commission assess penalties against Star for theviolations alleged in Ms. Felde’s testimony, including revoking Star’s certification tooperate as an Alternative Retail Electric Supplier in Illinois and financial penalties.Do you have a response?376A.Yes. Initially, I believe that the revocation of Star’s certification is not warranted. To the377extent that any provisions of the Part 412 Regulations were violated, these violations did378not result in sales to uninformed consumers. As I have detailed in my testimony, the379purposes behind the Part 412 Regulations, which are to ensure potential customers were380fully and accurately informed about Star’s offerings and understood the nature of the381transaction, were met through Star’s extensive system of checks and balances designed to382fully educate the potential customer and eliminate improper sales. The success of this383system, whose protections are in many ways more rigorous than the Part 412384Regulations, is seen in the acknowledged absence of complaints against Star. As for385financial penalties, while Star acknowledges some technical non-compliance with the386Part 412 Regulations, these omissions were minor and unintentional, have been corrected387or are in the process of being corrected and did not result in an uneducated consumer388purchasing a Star product. Therefore, I believe that a nominal fine is appropriate as a16
ICC Docket No. 18-1652Star Direct TestimonyPUBLIC VERSION389penalty.390by 220 ILCS 5/16B, to ensure future compliance under the Commission’s supervision.391Star’s specific arguments against the imposition of penalties will be set forth in392subsequently filed briefs of counsel.Additionally, Star will consider entering into a compliance plan, as envisioned393Q.Does this conclude your direct testimony?394A.Yes.17
ICC Docket No. 18-1652 Star Direct Testimony PUBLIC VERSION 3 47 point for two of our outside vendors, Cydcor, LLC and Summit Advantage LLC. I refer 48 to these entities as Cydcor and Summit, respectively, throughout the remainder of my 49 testimony. I was also in charge of compliance for day to day issues in this role.
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