Lifenergy, LLC v. Illinois Commerce Comm'n

2021 IL App (2d) 200411No. 2-20-0411
Opinion filed December 14, 2021
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
______________________________________________________________________________
LIFEENERGY, LLC, ) On Petition for Administrative Review
) from The Illinois Commerce Commission.
Petitioner, )
)
v. ) ICC Docket No. 18-1540
)
THE ILLINOIS COMMERCE COMMISSION )
and THE CITIZENS UTILITY BOARD, )
)
Respondents. )
______________________________________________________________________________
JUSTICE ZENOFF delivered the judgment of the court, with opinion.
Justices Birkett and Brennan concurred in the judgment and opinion.
OPINION
¶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.
¶2 I. BACKGROUND
¶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
2021 IL App (2d) 200411of 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) (regulations must be implemented by ARES “on the first day of
the month following 6 months from the date of the Commission’s final order”).
¶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
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2021 IL App (2d) 200411agent 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.
¶8 A. Testimony of Jim Agnew
¶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
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2021 IL App (2d) 200411Commission 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
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2021 IL App (2d) 200411day 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.”
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2021 IL App (2d) 200411¶ 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 of 24 hours unless
contacted by the customer.” 83 Ill. Adm. Code 412.120(g) (2017). Agnew believed that
LifeEnergy violated both the third-party-verification requirement of this section and the
reapproach rule. With respect to the third-party-verification requirement, Agnew determined that
LifeEnergy “allow[ed] in-person solicitation enrollments to occur without proper verification.”
Agnew identified five customer enrollments that violated section 412.120(g) because such
enrollments “were not appropriately verified as required by the rule.”
¶ 17 With respect to the reapproach rule, Agnew determined that LifeEnergy “allow[ed] and
encourage[ed] by written procedure that in-person sales agents immediately re-approach a
customer after a failed TPV.” Agnew testified that LifeEnergy’s agents improperly attempted
multiple third-party verifications with the same customers in a 24-hour period on 20 occasions, 15
of which resulted in sales. On one occasion, an agent of LifeEnergy initiated a second third-party
verification just 12 minutes after the first one resulted in a “no sale.”
¶ 18 According to Agnew, LifeEnergy “appears to have instituted a practice for all in-person
sales agents that by its design contravenes” the reapproach rule. Agnew believed that this was a
“managerially sanctioned practice” that “calls into question the validity of the in-person sales
enrollments made by Life Energy.” Agnew drew his conclusion on this point based on the
following written response that LifeEnergy provided when questioned by the Commission’s staff
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2021 IL App (2d) 200411as to why some customers’ names appeared multiple times on a spreadsheet detailing customer
enrollments:
“If the sale was classified as a ‘No Sale’, [sic] the sales agent is notified of the failed TPV
in real time via their enrollment tablet, and depending on the No Sale disposition reason,
will attempt to revisit and re-educate the customer allowing them to attempt the TPV
process again. As a result, the customer’s name *** is listed more than once, with
ultimately one ‘good sale’ disposition identified under column ‘status_txt.’ ”
Agnew testified that LifeEnergy violated the reapproach rule of section 412.120(g) over a 146-day
period.
¶ 19 Agnew further testified that he “found several items of concern within LifeEnergy’s
discovery responses.” These concerns never directly resulted in sanctions against LifeEnergy, so
it is unnecessary to relate the specifics here. We merely note that one of the concerns related to
LifeEnergy’s method of internally tracking consumer complaints.
¶ 20 Agnew testified that, despite receiving a NOAV in June 2018, LifeEnergy continued in-
person solicitations and enrollments until October 1, 2018—one week after the Commission
initiated these investigative proceedings. Although Agnew would have preferred that LifeEnergy
immediately stop behavior that violated regulations, he saw it as a “positive development” that
LifeEnergy ceased in-person marketing within a week of the Commission initiating proceedings.
¶ 21 Ultimately, Agnew recommended that the Commission impose “appropriate penalties” for
LifeEnergy’s violations of sections 412.170(e), 412.120(g), and 412.210 of Title 83 of the Code.
Furthermore, he proposed that LifeEnergy be required to contact all customers that it enrolled
between May 1 and October 1, 2018, to offer them the options of (1) canceling their contracts
without penalty and (2) seeking refunds if they paid more for electricity than they would have had
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2021 IL App (2d) 200411they stayed with their previous suppliers. Finally, Agnew recommended that LifeEnergy be
ordered to “cease all sales and marketing in Illinois” until it collaborated with the Commission’s
staff and the CUB to alter its procedures and marketing materials and thereafter demonstrated
compliance.
¶ 22 B. Edwin Dearman’s Testimony
¶ 23 Edwin Dearman, a former employee of LifeEnergy, testified on LifeEnergy’s behalf.
Dearman testified that, on October 1, 2018, LifeEnergy voluntarily suspended all residential sales
of electricity in Illinois, pending the resolution of these proceedings. As of June 7, 2019,
LifeEnergy had sold substantially all its customer contracts to a company called NRG Retail, Inc.
(NRG).
¶ 24 Dearman testified that LifeEnergy hired him in April 2018 as its regulatory and compliance
director. He managed a staff of two and reported directly to LifeEnergy’s general counsel. He was
charged with “immediately auditing all aspects of the company’s regulatory compliance in each
of the 6 states in which LifeEnergy served customers.” That entailed, for example, “reviewing the
complaint and quality control process, marketing collateral, and customer care and vendor training
materials.” Dearman explained that his regulatory team “focused intensely on bringing all aspects
of billing, operations, and customer care into 100% compliance in each of the states in which
LifeEnergy was operating as quickly as possible.”
¶ 25 Dearman testified that “LifeEnergy acted in good faith to achieve timely compliance with
the revised Part 412 training enhancements and certification requirements.” He stated that, when
he arrived at LifeEnergy in April 2018, he was aware of Illinois’s May 1, 2018, compliance
deadline. He thus created a checklist “to assist in project managing all departments with reaching
compliance by the May 1st deadline or shortly thereafter.” On May 10, 2018, Dearman created an
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2021 IL App (2d) 200411e-filing account with the Commission. On May 10 and May 18, 2018, he submitted filings to the
Commission relating to regulations that are not at issue in these proceedings. LifeEnergy then
trained its customer service representatives between May 18 and May 25, 2018. Dearman was
further delayed in filing the required training certification, because he was revising LifeEnergy’s
training materials “per the Part 412 specifications.” At some point in May 2018, he attempted to
certify LifeEnergy’s customer service representatives’ training, but he was unable to do so due to
a technological issue. Dearman claimed that he completed that certification “at a later date in May”
with the assistance of the Commission’s technology department. On June 21, 2018, LifeEnergy
“successfully filed” the required certifications regarding “training for both LifeEnergy’s customer
service representatives and door-to-door sales agents.”
¶ 26 According to Dearman, a “variety of factors” delayed his ability to make timely filings and
complete the necessary tasks to comply with the revised regulations. He acknowledged that he
“simply was overwhelmed by the amount of work” that he was asked to complete in his first full
month of employment with LifeEnergy, upon his predecessor’s “abrupt departure.” This work
included, for example, conducting an audit of regulatory reporting and compliance, implementing
improvements to complaint response procedures, retraining staff, and reviewing marketing
campaigns. Dearman said that he understood that it was a priority to achieve compliance with part
412, and he insisted that he “did not intentionally seek to delay or refuse to attempt compliance.”
¶ 27 Addressing the gravity of LifeEnergy’s regulatory violations, Dearman emphasized that
the period of noncompliance with section 412.170(e) was only 55 days. Additionally, LifeEnergy
ended up billing only 936 of the customers who were enrolled during that period. LifeEnergy was
willing to refund those customers the difference between what they paid LifeEnergy and what they
would have paid for electricity absent their contracts with LifeEnergy. Dearman calculated that
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2021 IL App (2d) 200411amount to be “approximately $34,000.” LifeEnergy was also willing to allow the 223 remaining
customers that it had as of July 8, 2019, to cancel their contracts without incurring an early-
termination penalty.
¶ 28 Dearman testified that, in his experience, when regulators implement new rules, there is an
“initial grace period” or a “shake-out period,” during which the regulators and the suppliers
collaborate to achieve “best in class” practices. In this period, regulators typically do not
immediately impose penalties for noncompliance or open enforcement proceedings. Instead, in
Dearman’s view, “[f]airness dictates appropriate notice and warnings before imposing penalties
(beyond a requirement to reimburse customers for any losses they might have experienced as a
result of non-compliance).”
¶ 29 Dearman testified that he never received a warning that LifeEnergy was out of compliance
with regulations. Instead, on or about May 17, 2018, Jean Gibson, the director of the office of retail
market development for the Commission, advised him that LifeEnergy would be receiving
interrogatories. Gibson left Dearman with the impression that the interrogatories “were
informational and should not be of concern to LifeEnergy.” Dearman testified that he would have
expected Gibson to warn him if the Commission’s staff “considered the delayed filings to be a
significant issue.” Dearman explained that, had the Commission informed him that the delayed
filings were a significant concern, he “could have dropped all of [his] other regulatory compliance
projects and focused on that one project.”
¶ 30 Moreover, Dearman did not expect that delayed filings in and of themselves would “raise
serious concerns.” On this point, Dearman mentioned that “LifeEnergy had always made timely
filings in the past” and, to his knowledge, “had never received a formal or informal complaint”
from the Commission’s staff about noncompliance with rules. In his experience, if a report is filed
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2021 IL App (2d) 200411late, the regulator will contact the company to request the filings as soon as possible. According
to Dearman, “[t]he typical goal is compliance, not punishment.” Only when a company repeatedly
files reports late, ignores the regulator’s request, or has a history of past violations will the regulator
issue a NOAV “without further discussion.” Dearman believed that none of those circumstances
existed here. Nor did LifeEnergy intentionally or repeatedly ignore rules or act with reckless
disregard for compliance to warrant enforcement hearings and penalties.
¶ 31 Furthermore, according to Dearman, after the May 1, 2018, certification deadline, the
Commission’s staff was “still investigating what constituted ‘best in class’ in terms of training
materials and programs.” This included the Commission’s staff holding a workshop on June 12,
2018, which Dearman attended and found beneficial as he was revising LifeEnergy’s training
materials. Accordingly, Dearman was surprised when, three days later, LifeEnergy received a
NOAV related to agent training.
¶ 32 Dearman believed that “the rule implementation was a work in progress and that getting it
right was more important than completing the filings by May 1, 2018.” Although Dearman
acknowledged that “LifeEnergy received all of the notices of the rule adoptions and workshops”
before he started working there, in his experience, “the pre-implementation process only provides
limited insights as to what ultimately the state commission and its staff will deem sufficient
training materials.” Thus, “[c]ompliance really begins when the retail energy providers begin
producing the training materials post-implementation for commission staff’s review and informal
approval.” As an example of this, Dearman noted that Agnew identified in his testimony some
issues about LifeEnergy’s processes and training materials that were concerning but not directly
violative of the regulations.
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2021 IL App (2d) 200411¶ 33 Dearman testified that Agnew made an unfair characterization in his testimony by saying
that LifeEnergy acquired customers using “untrained agents.” To support his conclusion, Dearman
testified that LifeEnergy had trained its sales agents on the regulations that existed before May 1,
2018, and the revised regulations merely “added to the base training requirements” that were
already in place.
¶ 34 Dearman agreed with Agnew that LifeEnergy should refund customers the difference
between what they paid LifeEnergy and what they would have paid their previous providers for
electricity. Dearman proposed that the refunds should be limited to the 55-day period of
noncompliance rather than extended to October 1, 2018. Dearman also indicated that LifeEnergy
did not object to Agnew’s recommendations regarding certain “behavioral requirements” for
LifeEnergy moving forward. But Dearman asserted that additional financial penalties were
unwarranted, given that “the rule violations lasted for a relatively short duration, had limited
impact on a small group of customers, and were not made intentionally or with complete disregard
for the importance of timely compliance.”
¶ 35 C. Agnew’s Rebuttal Testimony
¶ 36 After reviewing Dearman’s testimony, Agnew had “more concerns about LifeEnergy’s
operations in Illinois” than before. One concern was that, contrary to what Dearman testified, the
Commission’s staff “has had previous discussions with LifeEnergy regarding compliance concerns
stemming from complaints in 2017.” Specifically, the Commission’s staff communicated with
LifeEnergy’s representatives and discussed concerns about LifeEnergy’s marketing practices,
sales scripts, and misinformation to consumers about the amount of the early-termination fee. In
response to the Commission’s staff’s concerns, LifeEnergy altered its marketing method, rewrote
its sales scripts, and sent information to customers about the accurate early-termination fee.
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2021 IL App (2d) 200411Subsequently, the Commission’s staff “continued to work with LifeEnergy to address the informal
complaints it was receiving.” The volume of such complaints “placed LifeEnergy among the
poorest performers.” Thus, although Agnew acknowledged that Dearman may not have known all
this information, Dearman’s testimony did not support LifeEnergy’s grievances about the fairness
of the Commission initiating proceedings based on violations of new regulations.
¶ 37 Another one of Agnew’s concerns was that Dearman’s testimony “strongly conveys that
LifeEnergy’s compliance with Commission rules and regulations rested exclusively with one
person.” According to Agnew, the fact that LifeEnergy gave Dearman such responsibility without
informing him of the company’s previous issues with the Commission was a “clear failure of
[LifeEnergy] to properly manage its operations in Illinois.” Moreover, LifeEnergy should have
been aware of its obligation to comply with the amended regulations by May 1, 2018. Agnew
asserted that Dearman, too, was aware of the amendments by virtue of his work for a different
company prior to his employment with LifeEnergy.
¶ 38 Agnew further testified that Dearman incorrectly asserted that LifeEnergy’s compliance
failures were minor. Agnew noted that Dearman failed to address LifeEnergy’s alleged violations
of sections 412.120(g) and 412.210, which the Commission’s staff deemed to be “extremely
serious” violations. The full extent of LifeEnergy’s violations of section 412.120(g) was unknown,
however, because LifeEnergy “inexplicably stopped tracking direct complaints it received from
consumers on June 15, 2018,” in contravention of section 410.40 of Title 83 of the Code (83 Ill.
Adm. Code 410.40 (2004)).
¶ 39 Agnew also disagreed with Dearman’s claim that LifeEnergy’s violations affected only a
small number of customers. According to Agnew:
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2021 IL App (2d) 200411“An improperly managed sales team going door-to-door, equipped with confusing
marketing materials, untrained on the amended Part 412, and directed by LifeEnergy to
return to consumers’ houses immediately after a failed TPV in violation of Part 412.120(g)
impacts not only every consumer enrolled, but also every consumer with whom they come
in contact. The ‘gravity’ of this impact is also felt by LifeEnergy’s peers in the retail market
that had structured their sales campaigns to be fully compliant. In addition to enjoying the
unfair competitive advantage of acquiring customers in violation of the amended Part 412,
LifeEnergy’s practices negatively impact the public’s overall perception of the retail
energy market.”
¶ 40 Responding to Dearman’s testimony that LifeEnergy had no warning of the Commission’s
staff’s concerns about noncompliance, Agnew pointed to “three concrete instances which put
LifeEnergy on notice that Staff had serious concerns regarding its marketing practices prior to the
initiation of this docket.” First, on May 25, 2018, the Commission sent LifeEnergy interrogatories
for the stated purpose of investigating LifeEnergy’s “possible underperformance in the Illinois
retail electric choice market.” According to Agnew, one purpose of those interrogatories was to
put companies like LifeEnergy “on notice that Staff was watching them as the amended Part 412
rule was taking effect.” Second, on June 15, 2018, the Commission’s staff sent LifeEnergy a
NOAV. Third, on July 11, 2018, the Commission’s staff recommended denying LifeEnergy’s
unrelated application for a certificate to operate as an alternative gas supplier, due to LifeEnergy’s
“poor performance record” as an ARES.
¶ 41 Agnew also noted that Dearman’s testimony contained factual inaccuracies. Although
Dearman testified that he began working for LifeEnergy in April 2018, Dearman made certain
filings with the Commission on behalf of LifeEnergy as early as March 9, 2018. Additionally,
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2021 IL App (2d) 200411although Dearman portrayed himself as being “singularly focused upon compliance with Part 412”
when he started working for LifeEnergy, Dearman sent the Commission’s staff an e-mail on April
2, 2018, pertaining to matters that were unrelated to regulatory compliance. Addressing Dearman’s
testimony regarding his conversation with Gibson preceding the May 2018 interrogatories, Agnew
deemed it “highly unlikely that Ms. Gibson would contradict the goal” of the interrogatories in her
communications with Dearman.
¶ 42 Agnew also believed that Dearman downplayed the importance of the agent training and
certification requirements. Contrary to what Dearman asserted, there was no “grace period” for
compliance, apart from the six months between November 1, 2017, and April 30, 2018. Full
compliance with the amended part 412 was required on May 1, 2018, “and at no time did Staff
convey anything different to ARES[es].” The workshop that the Commission’s staff held in June
2018 to discuss best practices in training was “meant to facilitate the flow of different ideas on the
subject, not [to] create a set of standards for Staff to impose on all ARES[es].” In Agnew’s view,
LifeEnergy should have chosen to suspend marketing to Illinois consumers on May 1, 2018, and
not resumed until it was fully compliant.
¶ 43 Agnew testified that his recommendations to the Commission changed as a result of
Dearman’s testimony. If LifeEnergy planned to resume operating in Illinois as an ARES, Agnew
believed that all the recommendations that he outlined in his direct testimony were appropriate. If,
however, LifeEnergy planned to withdraw permanently from the Illinois market, it should be
required to refund affected customers, pay penalties imposed by the Commission, and surrender
its certificate as an ARES.
¶ 44 D. LifeEnergy’s Surrender of Its Certificate
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2021 IL App (2d) 200411¶ 45 In September 2019, after the witnesses had prepared their testimony but before the parties
submitted the transcripts of that testimony to the ALJ, LifeEnergy notified the Commission that it
intended to surrender its certificate authorizing it to operate as an ARES. LifeEnergy indicated that
it sold its assets to NRG on June 7, 2019, at which time it ceased marketing to new Illinois
consumers.
¶ 46 E. The Parties’ Arguments
¶ 47 The Commission’s staff argued that LifeEnergy violated sections 412.170(e), 412.120(g),
and 412.210 of Title 83 of the Code. The Commission’s staff recommended that the Commission
impose financial penalties on LifeEnergy. Section 16-115B(b)(2) of the Act authorizes the
Commission to impose financial penalties “not to exceed (i) $10,000 per occurrence or (ii) $30,000
per day for those violations or non-conformances which continue after the Commission issues a
cease and desist order.” 220 ILCS 5/16-115B(b)(2) (West 2018). Relying on Agnew’s testimony,
the Commission’s staff calculated a maximum penalty of $2.13 million under this statute, broken
down as follows:
55 days of violating section 412.170(e) by failing to train agents and certify such
training. Each day constituted an “occurrence,” for a total of $550,000 ($10,000 x 55).
146 days of violating the reapproach rule of section 412.120(g) through a
managerially sanctioned practice. Each day constituted an “occurrence,” for a total of
$1,460,000 ($10,000 x 146).
5 enrollments that violated the verification requirements of section 412.120(g).
Each enrollment constituted an “occurrence,” for a total of $50,000 ($10,000 x 5).
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2021 IL App (2d) 2004117 enrollments that violated section 412.210 because LifeEnergy failed to complete
customers’ requests to rescind sales contracts. Each enrollment constituted an
“occurrence,” for a total of $70,000 ($10,000 x 7).
The Commission’s staff then considered two other portions of the Act as “guidance in
recommending appropriate penalties”: section 4-203(a) and 5-202 (220 ILCS 5/4-203(a), 5-202
(West 2018)). According to the Commission’s staff, pursuant to section 4-203(a) of the Act, when
assessing a penalty, the Commission should consider LifeEnergy’s size as a business, the gravity
of the violations, other mitigating or aggravating factors, and whether LifeEnergy acted in good
faith to achieve compliance after notification of a violation. See 220 ILCS 5/4-203(a) (West 2018).
Additionally, the Commission’s staff noted that section 5-202 of the Act established that, in
circumstances involving continuing violations of a regulation, the cumulative penalty for such
violations cannot exceed $500,000. See 220 ILCS 5/5-202 (West 2018). The Commission’s staff
believed that LifeEnergy’s violation of section 412.170(e) of Title 83 of the Code was an ongoing
violation, as was LifeEnergy’s violation of section 412.120(g) based on its policy of reapproaching
customers. Thus, the Commission’s staff argued, LifeEnergy should not be fined more than
$500,000 for either of those violations. After examining various mitigating and aggravating
factors, the Commission’s staff ultimately recommended penalties against LifeEnergy of between
$350,000 and $1 million.
¶ 48 The CUB largely echoed the positions articulated by the Commission’s staff. However,
instead of recommending a penalty range, the CUB urged the Commission to “impose the full
penalty of $10,000 per occurrence upon LifeEnergy.”
¶ 49 LifeEnergy conceded that it violated the Commission’s rules, but it denied that its agents’
violations of the reapproach rule was managerially sanctioned behavior. LifeEnergy also disagreed
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2021 IL App (2d) 200411with some of Agnew’s specific criticisms about its practices, such as its method of tracking
customer complaints. Although LifeEnergy argued that the Commission’s staff’s methodology for
calculating potential penalties lacked a basis in the evidence, LifeEnergy did not provide any
alternative calculations. LifeEnergy maintained that, because it agreed to surrender its ARES
certificate and refund its customers approximately $34,000, additional financial penalties in any
amount were unwarranted.
¶ 50 In its initial brief, the Commission’s staff did not contest LifeEnergy’s calculation of
customer refunds. In its reply brief, however, the Commission’s staff asserted that potential
“inadvertent errors” in LifeEnergy’s documentation gave rise to concerns regarding the accuracy
of LifeEnergy’s calculations. Accordingly, the Commission’s staff recommended that the
Commission request clarification from LifeEnergy on these points and direct LifeEnergy to submit
updated calculations. Specifically, in its position statement, the Commission’s staff recommended
that LifeEnergy be required to (1) “file the customer list and the proposed refunds for those
customers identified”; (2) “specify in this filing how the customer was identified, the amount the
customer will be refunded, how it was calculated, and the timeframe the customer was enrolled
with LifeEnergy”; (3) refund customers within 90 days, assuming that the Commission and the
CUB did not object to the calculations; and (4) “file proof of the distribution of refunds within this
docket once completed.”
¶ 51 F. The ALJ’s Proposed Order
¶ 52 On February 3, 2020, the ALJ submitted a proposed order to the Commission. She
determined that LifeEnergy violated sections 412.170(e), 412.210, and 412.120(g) of Title 83 of
the Code. Nevertheless, she recommended imposing no financial penalties, apart from LifeEnergy
having to refund customers and surrender its ARES certificate.
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2021 IL App (2d) 200411¶ 53 G. The Commission’s Order
¶ 54 On May 27, 2020, the Commission issued its order. The Commission found as follows.
¶ 55 The purpose of amending part 412 in 2017 was to strengthen rules and consumer
protections. The Commission must ensure that customers receive accurate information about each
ARES, and part 412 was “vital to the Commission’s mission of ensuring this takes place and
ultimately protecting Illinois consumers and the retail market.” It was also “paramount” and “of
the utmost importance” to ensure that ARES agents are trained and properly inform customers so
that customers understand the terms of sales contracts.
¶ 56 The Commission recognized that LifeEnergy admitted to violating sections 412.170(e),
412.210, and 412.120(g) of Title 83 of the Code. Nevertheless, LifeEnergy’s acknowledgement of
responsibility and agreement to exit the Illinois retail energy market permanently did not make
additional penalties unwarranted. To that end, it was concerning to the Commission that
“LifeEnergy engaged in marketing to Illinois consumers while out of compliance with the rules,
especially since LifeEnergy offers no reasonable basis or excuse for its conduct.” The Commission
also determined that LifeEnergy “not only harmed Illinois consumers and benefitted from the
individuals enrolled using methods contrary to Illinois rules and regulation [sic], but also harmed
the Illinois retail market.” In a similar vein, the Commission reasoned that LifeEnergy’s lack of
compliance “not only affect[ed] its own customers but the entire electric supplier marketplace.” In
the Commission’s view, companies “of any size” that do not comply with rules have a competitive
advantage over other companies. According to the Commission, if an ARES fails to comply with
rules, “the Act calls upon the Commission to apply a penalty to ensure that the market is adequately
protected for both consumers” and other companies that operate lawfully.
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2021 IL App (2d) 200411¶ 57 Moreover, the Commission concluded that LifeEnergy employed “intentional, deceptive,
and misleading behavior” in its marketing and sales practices. The Commission stated that “[s]uch
practices harm LifeEnergy’s competitors by giving [LifeEnergy] an unfair advantage in acquiring
customers and also harm the public’s perception of the retail energy market as a whole.”
¶ 58 The Commission believed that its staff’s calculation of penalties was “reasonable and
supported by the record.” The Commission’s staff’s recommendation regarding the range of
penalties ($350,000 to $1 million) likewise was “appropriate, reasonable, based on the evidence
in the record and warranted by the Act.” The Commission agreed with its staff’s consideration of
the mitigating and aggravating circumstances presented. Nevertheless, contrary to what the
Commission’s staff suggested, the Commission asserted that the $500,000 cumulative limit for
continuing violations outlined in section 5-202 of the Act did not apply.
¶ 59 The Commission explained that section 16-115B of the Act gave it discretion to interpret
the word “occurrence.” In this respect, the Commission determined that its staff’s approach was
“reasonable in calculating the penalty based upon each day of no-compliance [sic] or each
enrollment as an individual occurrence.” On this point, the Commission explained:
“With respect to violations of Sections 412.170(e) and 412.120(g), a day of non-
compliance appears to capture the violation of the Act more effectively and true to the
intent of the Act in terms of penalizing the prohibited behavior (e.g. marketing without
proper training, or improper managerial practices), rather than the consequences of such
prohibited behavior (enrolled customers). During such day, an untrained agent may market
to multiple customers, and regardless of whether any particular customer is enrolled, the
marketing and solicitation to a customer without proper training is a violation of itself [sic].
Similarly, improper managerial practices can have multiple consequences, that can
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2021 IL App (2d) 200411manifest in many different ways, whether on a day such practices persisted or later.
Whether any specific result of such practice can be captured, a sanctioned managerial
practice of disregarding the Act and Commission Rules is of itself a prohibited behavior
that calls for penalties.”
¶ 60 In considering the mitigating and aggravating circumstances, the Commission recognized
that LifeEnergy was willing to refund customers and reasonably commenced training its agents
within six days of receiving the NOAV. Nevertheless, the Commission was “not persuaded that
such behavior was entirely a good faith effort to mitigate violations, rather than a business decision
in the effort to make its assets more marketable and less exposed to liability in its sales negotiations
with NRG.” The Commission also was “not convinced by LifeEnergy’s argument that it has taken
responsibility for all of the alleged violations and acted in good faith by agreeing to refund
customers and by surrendering its certificate.”
¶ 61 The Commission concluded that, on top of reimbursing customers, a monetary penalty was
“necessary” here. The Commission imposed a $1 million penalty, explaining its rationale as
follows:
“Based on the evidence in the record, the appropriateness of the penalty to the size of the
business and the gravity of violations, the Commission assesses a penalty of $1,000,000
(one million), on the highest end of the range suggested by Staff. The Commission finds
such penalty justified, considering the harm caused to the Illinois consumers and the retail
electric market as a whole. In determining the appropriateness of the penalty to the size of
the business, the Commission takes into account not just the customers that LifeEnergy
was able to enroll, but also all the customers that were marketed to in Illinois, as well as
all other customers in Illinois that the Company could have marketed to under its
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2021 IL App (2d) 200411Certificate of Service Authority. This penalty is not to ‘punish’ or ‘make an example of’
LifeEnergy. The penalty enforces the Act and the Commission’s Part 412 rules, which
envision an efficient and fair operation of the retail market, protection of Illinois consumers
and fair competition. No market can exist without a fair competition. When the General
Assembly restructured the Illinois power industry, it entrusted the Commission with an
important task of safeguarding Illinois customers against precisely the behaviors that gave
rise to this docket. The Act calls upon the Commission to establish rules and enforce them
in a way that ensures that customer protection and fair competition safeguards are in place.
Thus, it is the duty of the Commission in this docket to make sure that these safeguards are
functioning properly.”
¶ 62 The Commission accepted LifeEnergy’s representation that it would refund customers
enrolled between May 1 and July 2, 2018, “in an amount which is equal to the difference between
what the customers actually paid and the amount that they would have paid on default service.”
The Commission indicated in various places in the order that LifeEnergy “should” and
“shall” refund its customers $34,178.20 (the amount calculated by LifeEnergy) within 45 days of
the order and make a compliance filing within 30 days thereafter to prove that the refunds were
distributed. Nevertheless, because the Commission’s staff identified potential inaccuracies in
LifeEnergy’s calculations, the Commission imposed the following requirements in conjunction
with the refund:
“LifeEnergy shall file within this docket both confidential and public redacted versions of
the customer list and the proposed voluntary refunds for the identified customers within
ten (10) days of the date of this Order. [LifeEnergy] shall specify in its filing how the
customer was identified, the amount the customer is refunded, how the refund amount was
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2021 IL App (2d) 200411calculated, and the timeframe during which the customer was enrolled with LifeEnergy.
Any party may file an objection identifying inaccuracies in [LifeEnergy’s] calculations, if
any, within thirty (30) days of the date of this Order. If any party files an objection, the
Commission Staff shall file a recommendation on how to proceed with any such
discrepancies within forty (40) days of the date of this Order.”
¶ 63 Finally, the Commission ordered that LifeEnergy’s certificate to operate as an ARES was
“hereby cancelled,” consistent with LifeEnergy’s notice that it surrendered its certificate.
¶ 64 H. The Dissent
¶ 65 Two commissioners filed a “dissent” that would more accurately be characterized as a
partial concurrence and partial dissent.
¶ 66 The dissenting commissioners believed that LifeEnergy should have been penalized
separately for two distinct violations of section 412.170(e) of Title 83 of the Code: (1) failing to
train agents and (2) failing to certify the agents’ training. However, the dissenting commissioners
believed that LifeEnergy did not violate sections 412.210 and 412.120(g), as LifeEnergy was not
provided “due process and notice of such alleged violations” (this was an issue that the dissenting
commissioners raised sua sponte). Furthermore, the dissenting commissioners believed that
sections 4-203 and 5-202 of the Act were not applicable when assessing penalties pursuant to
section 16-115B of the Act. Moreover, the dissenting commissioners argued that it would violate
due process to apply sections 4-203 and 5-202 of the Act to LifeEnergy, as such sections were not
mentioned in the NOAV, the staff report, or the initiating order.
¶ 67 The dissenting commissioners opined that LifeEnergy violated section 412.170(e) of Title
83 of the Code in two separate ways for 55 days. The dissenting commissioners determined that
the evidence warranted the maximum penalty of $10,000 per occurrence, with each day
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2021 IL App (2d) 200411constituting an occurrence of two separate violations. Accordingly, the dissenting commissioners
would have penalized LifeEnergy in the amount of $1.1 million ($10,000 x 55 x 2). In this respect,
the dissenting commissioners agreed with the majority that LifeEnergy’s conduct was serious and
had “a significant negative impact upon the entire retail electric market.”
¶ 68 Finally, the dissenting commissioners accepted LifeEnergy’s calculation of customer
refunds. Although the dissenting commissioners agreed to order LifeEnergy to submit proof to the
Commission when it refunds customers, the dissenting commissioners questioned the
Commission’s authority to require LifeEnergy to submit its calculations for vetting and
confirmation at this stage in the proceedings.
¶ 69 I. Subsequent Proceedings and Appeal
¶ 70 On June 8, 2020, LifeEnergy filed an application for rehearing. On June 18, 2020, the
Commission denied LifeEnergy’s application. The Commission later granted LifeEnergy’s motion
to stay enforcement of the final order pending appeal. LifeEnergy timely appealed. By statute, the
appeal proceeds directly to this court. 220 ILCS 5/10-201 (West 2018). The CUB did not file a
brief in this court.
¶ 71 II. ANALYSIS
¶ 72 On appeal, LifeEnergy argues that the Commission exceeded its jurisdiction by failing to
provide adequate notice of some of the regulatory violations for which LifeEnergy was penalized
and imposing a financial penalty greater than the maximum allowed by statute. LifeEnergy also
argues that the $1 million penalty is arbitrary and capricious and that the Commission erroneously
ordered postdecisional evidence and submissions.
¶ 73 According to section 10-201(d) of the Act:
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2021 IL App (2d) 200411“The findings and conclusions of the Commission on questions of fact shall be held
prima facie to be true and as found by the Commission; rules, regulations, orders or
decisions of the Commission shall be held to be prima facie reasonable, and the burden of
proof upon all issues raised by the appeal shall be upon the person or corporation appealing
from such rules, regulations, orders or decisions.” 220 ILCS 5/10-201(d) (West 2018).
We may reverse an order entered by the Commission in four circumstances: (1) if the
Commission’s findings were “not supported by substantial evidence,” (2) if the Commission acted
without jurisdiction, (3) if the challenged order violated “the State or federal constitution or laws,”
or (4) if the proceedings violated “the State or federal constitution or laws, to the prejudice of the
appellant.” 220 ILCS 5/10-201(e)(iv) (West 2018).
¶ 74 A. Notice of Violations
¶ 75 LifeEnergy first argues that it lacked adequate notice of its purported violations of sections
412.120(g) and 412.210 of Title 83 of the Code, as such violations were not identified in the
NOAV, the staff report, or the order initiating proceedings. According to LifeEnergy, this lack of
notice violated statutory requirements (see 220 ILCS 5/10-101 (West 2018) and 5 ILCS 100/10-
25(a)(3) (West 2018)) and procedural due process. The Commission responds, inter alia, that the
invited-error doctrine prohibits LifeEnergy from prevailing on these arguments.
¶ 76 Invited error is a form of estoppel that bars a party from complaining on appeal about “error
which that party induced the court to make or to which that party consented.” In re Detention of
Swope, 213 Ill. 2d 210, 217 (2004). The rationale for the doctrine is that “ ‘ “[i]t would be
manifestly unfair to allow one party a second trial upon the basis of error which he injected into
the proceedings.” ’ ” McMath v. Katholi, 191 Ill. 2d 251, 255 (2000) (quoting Auton v. Logan
Landfill, Inc., 105 Ill. 2d 537, 543 (1984)). The doctrine is applied strictly, as “a party’s ‘active
- 25 -
2021 IL App (2d) 200411participation in the direction of proceedings *** goes beyond mere waiver’ such that the traditional
exceptions to the waiver rule do not apply.” Swope, 213 Ill. 2d at 218 (quoting People v. Villarreal,
198 Ill. 2d 209, 227 (2001)). The invited-error doctrine can apply to a party’s conduct before an
administrative tribunal. See Crittenden v. Cook County Comm’n on Human Rights, 2012 IL App
(1st) 112437, ¶ 61, aff’d, 2013 IL 114876.
¶ 77 We hold that LifeEnergy’s arguments are barred by the invited-error doctrine. In its reply
brief before the Commission, LifeEnergy acknowledged violating sections 412.120(g) and
412.210 of Title 83 of the Code but argued that no financial penalty was warranted under the
circumstances (“[A]lthough Staff and CUB chastise LifeEnergy for allegedly refusing to take
responsibility for violations of Section 412.120(g) and Section 412.210 ***, LifeEnergy has
acknowledged those violations by agreeing to surrender its Certificate.”). The ALJ found that
LifeEnergy violated multiple regulations, including sections 412.120(g) and 412.210, but that such
violations did not warrant a financial penalty. LifeEnergy urged the Commission to enter the ALJ’s
proposed order as drafted. The Commission nevertheless determined that the circumstances
justified imposing a financial penalty. LifeEnergy thus invited the Commission to pass judgment
on whether its violations of sections 412.120(g) and 412.210 warranted a financial penalty. Having
done so, it would be manifestly unfair to allow LifeEnergy to complain on appeal that it lacked
notice that it faced potential penalties for its violations of those sections. The invited-error doctrine
applies.
¶ 78 Even if the invited-error doctrine did not apply, LifeEnergy’s arguments would fail on the
merits. With respect to LifeEnergy’s constitutional analysis, “[p]rocedural due process does not
require that the charges or complaint in an administrative proceeding be drawn with the same
precision, refinements, or subtleties as pleadings in a judicial proceeding.” Siddiqui v. Department
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2021 IL App (2d) 200411of Professional Regulation, 307 Ill. App. 3d 753, 759 (1999). Instead, “the charge need only
reasonably advise the respondent as to the charges so that he or she will intelligently be able to
prepare a defense.” Siddiqui, 307 Ill. App. 3d at 759-60. To that end, “[d]ue process is a flexible
concept and requires only such procedural protections as fundamental principles of justice and the
particular situation demand.” Siddiqui, 307 Ill. App. 3d at 760.
¶ 79 Here, although the Commission’s order initiating the proceedings focused on LifeEnergy’s
violations of section 412.170 of Title 83 of the Code, some language in the order suggested that
the scope of the proceedings was much broader. Specifically, the Commission ordered “that a
proceeding be initiated to investigate and determine whether LifeEnergy, LLC has complied with
the requirements of 83 Ill. Adm. Code 412, Obligations of Retail Electric Suppliers, and, if
LifeEnergy, LLC has not so complied, to impose an appropriate penalty for its noncompliance.”
We need not decide whether the initiating order was sufficient, in itself, to put LifeEnergy on
notice that it was charged with violating sections 412.120(g) and 412.210 of Title 83 of the Code.
That is because, “[i]n determining whether the respondent has adequate notice, the court may
consider the discovery and other materials available to the respondent.” Siddiqui, 307 Ill. App. 3d
at 760.
¶ 80 Agnew provided his direct testimony on April 9, 2019. In his testimony, Agnew detailed
LifeEnergy’s violations of sections 412.170(e), 412.120(g), and 412.210, and he recommended
that the Commission assess “appropriate penalties.” LifeEnergy then had three months to prepare
its direct evidence. The record gives rise to the inference that LifeEnergy strategically chose to
defend against the Commission’s staff’s allegations by conceding the violations while emphasizing
that the circumstances did not warrant a financial penalty. Although LifeEnergy argues on appeal
that it did not have sufficient notice of its alleged violations of sections 412.120(g) and 412.210,
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2021 IL App (2d) 200411it made no such claim when it urged the Commission to adopt the ALJ’s findings, which included
findings that LifeEnergy violated these sections. Rather, LifeEnergy did not claim surprise until
after the Commission found that a financial penalty was warranted and after the dissent raised the
notice issue. Under these circumstances, LifeEnergy had sufficient notice of the charges to comply
with due process.
¶ 81 In support of its argument that it was denied due process, LifeEnergy relies on Quantum
Pipeline Co. v. Illinois Commerce Comm’n, 304 Ill. App. 3d 310 (1999). Quantum Pipeline is
factually distinguishable, because it involved a situation where the Commission improperly
revoked a company’s certificate to operate when the Commission neither alleged nor found that
(1) the company violated the previous final order granting the certificate or (2) the previous final
order was erroneous. Quantum Pipeline, 304 Ill. App. 3d at 320.
¶ 82 LifeEnergy’s statutory-notice argument fails for similar reasons. The Commission initiated
investigative proceedings against LifeEnergy pursuant to section 10-101 of the Act (220 ILCS
5/10-101 (West 2018)). That statute incorporates by reference section 10-25 of the Illinois
Administrative Procedure Act (5 ILCS 100/10-25 (West 2018)). In turn, section 10-25(a)(3) of the
Illinois Administrative Procedure Act provides that notice to a respondent must include “[a]
reference to the particular Sections of the substantive and procedural statutes and rules involved.”
5 ILCS 100/10-25(a)(3) (West 2018). Here, the Commission’s initiating order did not specifically
mention violations of sections 412.120(g) and 412.210 of Title 83 of the Code.
¶ 83 However, not every failure to comply with section 10-25(a)(3) of the Illinois
Administrative Procedure Act voids the judgment or commands reversal. To the contrary, section
10-101 of the Act states that “[n]o violation of this Section or the Illinois Administrative Procedure
Act and no informality in any proceeding or in the manner of taking testimony before the
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2021 IL App (2d) 200411Commission *** shall invalidate any order, decision, rule or regulation made, approved, or
confirmed by the Commission in the absence of prejudice.” 220 ILCS 5/10-101 (West 2018).
Additionally, pursuant to section 10-201(d) of the Act, LifeEnergy, as the appellant, bears the
burden of proof on all issues in this appeal. 220 ILCS 5/10-201(d) (West 2018). Thus, the question
is whether LifeEnergy has demonstrated prejudice in connection with the fact that the order
initiating these proceedings did not specifically mention violations of sections 412.120(g) and
412.210 of Title 83 of the Code.
¶ 84 In its reply brief, LifeEnergy submits that it suffered prejudice based on what it “could”
have done, “might” have done, or “would” have done if the initiating order mentioned violations
of sections 412.120(g) and 412.210. According to LifeEnergy, this includes presenting unspecified
“exculpatory evidence” or other evidence “contextualizing its conduct.” During oral argument,
LifeEnergy’s counsel added that, had the Commission amended the initiating order to provide
notice of violations of sections 412.120(g) and 412.210, LifeEnergy would have chosen to cross-
examine Agnew rather than agree to a paper hearing and “probably” would have presented
unspecified witnesses to testify that LifeEnergy did not have a managerial policy of violating the
reapproach rule. LifeEnergy further maintains that, when determining whether it received proper
notice, we should look to the Commission’s initiating order, not the testimony or arguments
presented by the Commission’s staff.
¶ 85 These arguments are unpersuasive. LifeEnergy’s contention that we should confine our
inquiry to the initiating order is at odds with case law establishing that, “[i]n determining whether
the respondent has adequate notice, the court may consider the discovery and other materials
available to the respondent.” Siddiqui, 307 Ill. App. 3d at 760. It is also at odds with the provision
in section 10-101 of the Act that only prejudicial defects in notice justify reversal. As explained
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2021 IL App (2d) 200411above, Agnew’s direct testimony put LifeEnergy on notice of its violations of sections 412.120(g)
and 412.210, and LifeEnergy had three months to prepare its response to that testimony or raise
an objection to proceeding in that manner. LifeEnergy now insists that it could have, might have,
or would have litigated the case differently had the Commission amended the initiating order in
response to Agnew’s testimony. But the record gives rise to the inference that LifeEnergy knew
that it faced penalties for its violations of sections 412.120(g) and 412.210 and that it strategically
chose to concede those violations. Under these circumstances, LifeEnergy has not demonstrated
that it was prejudiced by any deviation from the statutory requirements governing notice.
¶ 86 LifeEnergy briefly notes that section 10-108 of the Act authorizes the Commission to file
complaints “setting forth any act or things done or omitted to be done in violation, or claimed to
be in violation, of any provision of this Act, or of any order or rule of the Commission.” 220 ILCS
5/10-108 (West 2018). Although the Commission disputes whether this statute applies to a
proceeding initiated pursuant to section 10-101 of the Act, we need not resolve that issue. That is
because LifeEnergy appears to concede that section 10-108 of the Act does not impose any
additional requirements with respect to notice that could impact the result of this case. Specifically,
in its opening brief, LifeEnergy asserts that section 10-108 of the Act “accords with” section 10-
101 of the Act. In its reply brief, LifeEnergy proposes that “nothing turns” on whether this action
is governed by section 10-108 of the Act.
¶ 87 LifeEnergy instead relies on Black Hawk Motor Transit Co. v. Illinois Commerce Comm’n,
398 Ill. 542 (1947), where our supreme court explained:
“ ‘[H]earings of the [C]ommission and orders entered in such matters shall be limited and
circumscribed by the complaint filed. While the [C]ommission should be liberal in
construing the pleadings before it, the statute requires that carriers shall be notified of the
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2021 IL App (2d) 200411complaint which they are required to answer, and though no particular form is prescribed
there must be a statement of the thing which is claimed to be wrong, sufficiently plain to
put the carrier upon its defense. The evidence should be limited by the issue made. The
Commerce Commission cannot enter a valid order which is broader than the written
complaint filed in the case.’ ” Black Hawk, 398 Ill. at 561 (quoting Alton & Southern R.R.
v. Illinois Commerce Comm’n, 316 Ill. 625, 630 (1925)).
This language from Black Hawk does not compel reversal of the Commission’s order. Liberally
construing the initiating order, the Commission declared its intent to evaluate LifeEnergy’s
compliance with the totality of part 412 of Title 83 of the Code. The problem is not that the
Commission ultimately entered a sanctions order that was broader than the initiating order, but
rather that the very broad initiating order lacked specificity in some respects. As explained above,
however, under the totality of the circumstances, any defects in the initiating order did not violate
LifeEnergy’s right to due process and do not otherwise demand reversal for failure to comply with
the statutory scheme.
¶ 88 B. Calculation of the Maximum Penalty
¶ 89 LifeEnergy next argues that the Commission imposed a penalty exceeding the maximum
allowed by section 16-115B(b)(2) of the Act. The Commission responds, preliminarily, that
LifeEnergy forfeited its arguments by failing to raise them in its application for rehearing.
¶ 90 Section 10-113(a) of the Act establishes that filing an application for rehearing before the
Commission is a prerequisite to taking an appeal. 220 ILCS 5/10-113(a) (West 2018). To that end,
“[n]o person or corporation in any appeal shall urge or rely upon any grounds not set forth in such
application for a rehearing before the Commission.” 220 ILCS 5/10-113(a) (West 2018). The
purpose of this requirement is to make parties “point out mistakes of fact or law so that the
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2021 IL App (2d) 200411Commission will have an opportunity to correct any errors and, perhaps, avoid the need for judicial
review.” Citizens Utility Board v. Illinois Commerce Comm’n, 2015 IL App (2d) 130817, ¶ 44.
“The allegations in an application for rehearing must be stated in unequivocal terms and be
sufficiently specific to apprise the Commission and the opposing parties of the actual points relied
upon.” Citizens Utility Board, 2015 IL App (2d) 130817, ¶ 44.
¶ 91 When a party fails to raise an argument in its application for rehearing, that argument is
forfeited for purposes of appeal. Citizens Utility Board, 2015 IL App (2d) 130817, ¶ 44. This is
true even where a party alleges that the Commission acted beyond its statutory authority. See
Citizens Utility Board v. Illinois Commerce Comm’n, 166 Ill. 2d 111, 136 (1995) (“Because CUB’s
petition for rehearing did not argue a lack of statutory authority as grounds for finding the rider
illegal, this contention is also waived in the present appeal.”); Abbott Laboratories, Inc. v. Illinois
Commerce Comm’n, 289 Ill. App. 3d 705, 710 (1997) (“[W]here a petitioner, in its application for
rehearing, asserts only that the Commission erred as a matter of law, but does not expressly
challenge the Commission’s decision as beyond its statutory authority, such argument will be
deemed waived for purposes of review.”).
¶ 92 In a case that did not involve allegations that the Commission acted beyond its authority,
our supreme court explained that, because parties failed to “strictly comply” with section 10-113(a)
of the Act by including a particular argument in their applications for rehearing, the appellate court
lacked jurisdiction to overlook the forfeiture and consider that argument. People ex rel. Madigan
v. Illinois Commerce Comm’n, 2015 IL 116005, ¶ 46. According to the court, appeals of orders
entered by the Commission are matters of “special statutory jurisdiction,” so the oft-repeated
maxim that “forfeiture is a limitation on the parties” does not apply. Madigan, 2015 IL 116005,
¶ 46.
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2021 IL App (2d) 200411¶ 93 The jurisdictional impediment to overlooking forfeiture that the supreme court identified
in Madigan would not seem to apply, however, where a party argues that the Commission acted
beyond its authority. To the contrary, it seems we are obligated to consider the argument because,
“to the extent an agency acts outside its statutory authority, it acts without jurisdiction.” Business
& Professional People for the Public Interest v. Illinois Commerce Comm’n, 136 Ill. 2d 192, 243
(1989). Where an agency “ ‘ “lacks the inherent power to make or enter the particular order
involved,” ’ ” the order is void and “ ‘ “may be attacked at any time or in any court, either directly
or collaterally.” ’ ” (Emphasis omitted.) Business & Professional People, 136 Ill. 2d at 243-44
(quoting City of Chicago v. Fair Employment Practices Comm’n, 65 Ill. 2d 108, 112-13 (1976),
quoting Barnard v. Michael, 392 Ill. 130, 135 (1945)).
¶ 94 LifeEnergy did not argue in its application for rehearing that the $1 million penalty
exceeded the maximum authorized by section 16-115B(b)(2) of the Act. Although LifeEnergy
forfeited this argument, LifeEnergy frames its argument as a challenge to the Commission’s
jurisdiction. The Commission accuses LifeEnergy of “styling its run-of-the-mill statutory
interpretation argument as jurisdictional.” We disagree. If the Commission imposed a financial
penalty that exceeded the maximum allowed by statute, then it acted “outside its statutory
authority” and its order would be void. See Business & Professional People, 136 Ill. 2d at 243.
Unlike the cases that the Commission cites, LifeEnergy is challenging the scope of the agency’s
power to act, not just identifying irregularities or defects in the process of exercising its power.
See Newkirk v. Bigard, 109 Ill. 2d 28, 40 (1985) (an agency’s failure to include a required provision
in an order rendered that order voidable, not void); Illini Coach Co. v. Illinois Commerce Comm’n,
408 Ill. 104, 110 (1951) (the Commission’s alleged failure to review the record before entering its
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2021 IL App (2d) 200411judgment did not render the judgment void). Accordingly, we will consider the merits of
LifeEnergy’s argument to determine whether the order was void.
¶ 95 LifeEnergy’s argument presents issues of statutory interpretation. Interpreting a statute
involves a question of law, which we review de novo. Commonwealth Edison Co. v. Illinois
Commerce Comm’n, 398 Ill. App. 3d 510, 522 (2009). In reviewing a statute, our primary goal is
“to ascertain and implement the will of the legislature.” Commonwealth Edison, 398 Ill. App. 3d
at 522. If a statute is ambiguous, meaning that “it may be reasonably read as expressing multiple
meanings,” then we will accord “considerable deference to an agency charged with implementing
it.” Commonwealth Edison, 398 Ill. App. 3d at 523.
¶ 96 Section 16-115B(b)(2) of the Act allows the Commission to impose penalties “not to
exceed (i) $10,000 per occurrence or (ii) $30,000 per day for those violations or non-conformances
which continue after the Commission issues a cease and desist order.” 220 ILCS 5/16-115B(b)(2)
(West 2018). In calculating the maximum penalty, the Commission determined that the approach
advocated by its staff was reasonable, except for the staff’s suggestion that section 5-202 of the
Act established a $500,000 cumulative-penalty limit for continuing violations of the rules. The
Commission’s staff, in turn, calculated the maximum penalties against LifeEnergy as follows:
55 days of violating section 412.170(e) of Title 83 of the Code by failing to train
agents and certify such training. Each day constituted an “occurrence,” for a total of
$550,000 ($10,000 x 55).
146 days of violating the reapproach rule of section 412.120(g) through a
managerially sanctioned practice. Each day constituted an “occurrence,” for a total of
$1,460,000 ($10,000 x 146).
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2021 IL App (2d) 2004115 enrollments that violated the verification requirements of section 412.120(g).
Each enrollment constituted an “occurrence,” for a total of $50,000 ($10,000 x 5).
7 enrollments that violated section 412.210 because LifeEnergy failed to complete
customers’ requests to rescind sales contracts. Each enrollment constituted an
“occurrence,” for a total of $70,000 ($10,000 x 7).
¶ 97 LifeEnergy challenges the way that the Commission calculated the maximum penalties for
its violations of sections 412.170(e) and 412.120(g) of Title 83 of the Code. We will address these
arguments separately.
¶ 98 1. Section 412.170(e)
¶ 99 LifeEnergy argues that the Commission cannot impose per-day penalties for violations of
section 412.170(e) of Title 83 of the Code. According to LifeEnergy, there are four reasons that
“[t]he failure to timely train salespeople and provide a corresponding certification constitutes a
single ‘occurrence.’ ” The first reason is that some dictionaries define “occurrence” as
“[s]omething that happens or takes place” (Black’s Law Dictionary (11th ed. 2019)) or “[a] thing
that occurs, happens, or takes place; an event, an incident” (Oxford English Dictionary (3d ed.
2004)). Thus, by LifeEnergy’s logic, LifeEnergy violated the training and certification
requirements of section 412.170(e) only once: “on May 1, 2018, when it missed the deadline to
train its salespeople and notify the Commission accordingly.” LifeEnergy submits that it would
defy common sense and proper English “to say that every day of an ongoing failure to rectify a
deficiency is actually a series of daily ‘events’ that ‘happen’ over and over again.”
¶ 100 The second reason LifeEnergy proposes for why there was only one “occurrence” here in
relation to its violation of section 412.170(e) of Title 83 of the Code is that it would be
“nonsensical” to rule otherwise in light of the statutory text. LifeEnergy notes that the legislature
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2021 IL App (2d) 200411provided for per-day penalties once the Commission issues a cease-and-desist order; prior to
issuing such order, however, the penalties are “per occurrence.” LifeEnergy submits that, because
the legislature used the phrases “per day” and “per occurrence” in the same statute, it would not
make sense to conclude that “occurrence” means “day.”
¶ 101 For its third reason why there was only one “occurrence” here in relation to its violation of
section 412.170(e) of Title 83 of the Code, LifeEnergy finds guidance in section 5-202 of the Act.
LifeEnergy acknowledges that section 5-202 of the Act does not apply here, as that statute applies
only when penalties are “not otherwise provided for” in the Act. See 220 ILCS 5/5-202 (West
2018). Nevertheless, LifeEnergy deems it significant that section 5-202 allows for per-day
penalties but imposes a $500,000 cumulative-penalty limit for continuing violations. According to
LifeEnergy, section 5-202 of the Act thus “confirms that the General Assembly did not authorize
the Commission to impose a never-ending series of $10,000-per-day fines, even in the rare cases
in which the General Assembly thought it appropriate to allow for per-day penalties.”
¶ 102 The fourth reason LifeEnergy proposes for why there was only one “occurrence” here in
relation to its violation of section 412.170(e) of Title 83 of the Code is that “Illinois law as a whole
confirms that ‘per occurrence’ cannot be read to mean ‘per day.’ ” In support of this contention,
LifeEnergy cites five statutes that are unrelated to the issues in this case but allow for penalties
“per occurrence.” In LifeEnergy’s view, these statutes “illustrate that the General Assembly
considers a continuing violation or failure to be a single occurrence unless otherwise specified.”
¶ 103 Ultimately, LifeEnergy argues that section 16-115B(b)(2) of the Act is unambiguous, so
we need not defer to the Commission’s contrary interpretation.
¶ 104 The Commission responds that “[t]he statute is ambiguous as it pertains to ‘per
occurrence,’ ” as an “occurrence” could be read to mean either (1) each day, (2) each unlawful
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2021 IL App (2d) 200411enrollment, or (3) each ineligible sales agent that LifeEnergy allowed to market or sell electricity.
The Commission argues that it properly interpreted section 16-115B(b)(2) of the Act in the first
manner. According to the Commission, neither section 5-202 of the Act nor the other statutes that
LifeEnergy cites in its brief compel a contrary reading of section 16-115B(b)(2). The Commission
maintains that its interpretation of what constitutes an “occurrence” is reasonable, is consistent
with the legislature’s objectives, and is entitled to substantial deference.
¶ 105 We hold that section 16-115B(b)(2) of the Act is ambiguous as to what constitutes an
“occurrence” when an ARES violates section 412.170(e) of Title 83 of the Code by failing to train
its agents and certify such training to the Commission. There are multiple plausible ways to
construe an “occurrence” as it applies to such facts. At one extreme, one could argue, as
LifeEnergy does, that there is only one occurrence, subject to a single $10,000 penalty, no matter
how many days the violation lasts, how many untrained agents the ARES employs, or how many
customers such agents contact or enroll. At the other extreme, one could argue that there is a
separate occurrence each time that an ARES’s untrained/uncertified agent enrolls or contacts a
customer. Although the record does not reflect the number of customers that LifeEnergy’s agents
contacted during the 55-day period of noncompliance, considering that LifeEnergy’s agents
enrolled more than 1400 customers, either interpretation would leave the door open for
astronomical maximum penalties. One could also reasonably argue that each agent who was not
properly trained or whose training was not certified to the Commission represented an occurrence.
Alternatively, one could reasonably take the position that the Commission advocates—that each
day of noncompliance constitutes a separate occurrence. The dissenting commissioners also
outlined a reasonable argument that LifeEnergy was subject to two separate penalties for its
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2021 IL App (2d) 200411distinct violations of section 412.170(e) of Title 83 of the Code: one for failing to train its agents
and one for failing to certify such training to the Commission.
¶ 106 None of these interpretations are foreclosed by the plain language of section 16-115B(b)(2)
of the Act. The dictionary definitions that LifeEnergy offers do not provide much insight. To say
that an “occurrence” is an event or something that happens does not negate the possibility that
there were multiple occurrences under the facts of this case. LifeEnergy insists that there was a
single event here that merely went unrectified for a period of time. That is one plausible way to
view the case. Another possibility is that there were multiple events when, day after day,
LifeEnergy’s agents contacted and enrolled customers without having received updated training
and without any training having been certified to the Commission.
¶ 107 LifeEnergy argues that the Commission may impose per-day penalties only after issuing a
cease-and-desist order. The statutory text does not require that conclusion. Again, section 16-
115B(b)(2) allows for penalties “not to exceed (i) $10,000 per occurrence or (ii) $30,000 per day
for those violations or non-conformances which continue after the Commission issues a cease and
desist order.” 220 ILCS 5/16-115B(b)(2) (West 2018). In a situation that arguably involves a very
large number of occurrences over a period of weeks or months, it is reasonable to conclude that an
ARES may be fined $10,000 per day before a cease-and-desist order issues and $30,000 per day
thereafter.
¶ 108 Furthermore, section 5-202 of the Act does not compel a conclusion that LifeEnergy’s
interpretation of section 16-115B(b)(2) is the only correct one. Section 5-202 of the Act applies
when penalties are “not otherwise provided for” in the Act. 220 ILCS 5/5-202 (West 2018). As
LifeEnergy acknowledges, section 16-115B(b)(2) of the Act contains its own penalty provision,
so section 5-202 does not apply. Had the legislature intended to limit cumulative per-day penalties
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2021 IL App (2d) 200411assessed pursuant to section 16-115B(b)(2) of the Act, it could have made that explicit in the
statute.
¶ 109 Finally, LifeEnergy’s citation of inapposite statutes is unpersuasive. The statutes do not
support LifeEnergy’s broad contention that “the General Assembly considers a continuing
violation or failure to be a single occurrence unless otherwise specified.”
¶ 110 Because reasonable minds can differ about how many separate “occurrences” were
implicated by the facts of this case, the statute is ambiguous. See Commonwealth Edison Co. v.
Illinois Commerce Comm’n, 2014 IL App (1st) 132011, ¶ 21 (“A statute is ambiguous if its
meaning cannot be interpreted from its plain language or if it is capable of being understood by
reasonably well-informed persons in more than one manner.”). In this situation, we must accord
“substantial weight and deference” to the Commission’s interpretation, as it is “the agency charged
with the administration and enforcement of the statute.” Commonwealth Edison, 2014 IL App (1st)
132011, ¶ 20. Accordingly, we hold that Life Energy has not shown that the Commission exceeded
its authority by imposing a penalty greater than the maximum allowed by law.
¶ 111 2. Section 412.120(g)
¶ 112 LifeEnergy also challenges the way that the Commission dealt with the violations of
section 412.120(g) of Title 83 of the Code.
¶ 113 LifeEnergy first argues that the Commission erroneously assessed penalties on a per-day
basis for the failure to perform third-party verifications. This argument is based on an incorrect
premise. The Commission accepted its staff’s calculations and recommendations regarding
penalties, except for the staff’s suggestion that section 5-202 of the Act established a $500,000
cumulative-penalty limit for continuing violations. LifeEnergy violated section 412.120(g) in two
separate ways. The first was through its managerially sanctioned practice regarding LifeEnergy’s
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2021 IL App (2d) 200411agents reapproaching customers. For this set of violations, the Commission’s staff recommended
per-day penalties. The other set of violations related to agents enrolling customers without proper
verification. Contrary to what LifeEnergy argues, the Commission’s staff did not recommend per-
day penalties for this set of violations. The staff instead recommended penalizing LifeEnergy a
maximum of $50,000 for five enrollments, with each enrollment constituting an occurrence. There
being no indication that the Commission imposed per-day penalties for the violations of the
verification requirements, LifeEnergy’s arguments fail.
¶ 114 LifeEnergy also contends that it did not violate any regulation when it stopped tracking
consumer complaints in a central database on June 15, 2018. This argument is a nonissue, as the
Commission did not penalize LifeEnergy for its failure to track consumer complaints.
¶ 115 LifeEnergy raises a new argument in its reply brief—that the word “occurrence” in section
16-115B(b)(2) of the Act does not allow for per-day penalties for managerially sanctioned
violations of the reapproach rule. LifeEnergy forfeited this argument by failing to raise it in its
opening brief. Ill. S. Ct. R. 341(h)(7) (eff. Oct. 1, 2020) (points raised for the first time in a reply
brief are forfeited).
¶ 116 C. Whether the $1 Million Penalty Is Arbitrary and Capricious
¶ 117 LifeEnergy next argues that the $1 million penalty is arbitrary and capricious. LifeEnergy
asserts that four factors must guide the Commission in exercising its discretion when assessing a
penalty: (1) the size of the business involved, (2) the gravity of the violation, (3) mitigating or
aggravating factors, and (4) the good faith of the regulated entity in attempting to achieve
compliance after being notified of a violation. See 220 ILCS 5/4-203(a) (West 2018). LifeEnergy
insists that the Commission may not assess a penalty for purely punitive purposes and that any
penalty must aid in the enforcement of the regulations.
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2021 IL App (2d) 200411¶ 118 Against this backdrop, LifeEnergy argues that three of the Commission’s findings of fact
were against the manifest weight of the evidence. First, LifeEnergy argues that there was no basis
for the Commission’s finding that LifeEnergy harmed both Illinois consumers and the Illinois retail
market. Second, LifeEnergy challenges the evidence supporting the Commission’s finding that
LifeEnergy had a managerially sanctioned practice of violating the reapproach rule of section
412.120(g) of Title 83 of the Code. Third, LifeEnergy criticizes the Commission’s conclusion that
LifeEnergy’s conduct in commencing agent training within six days of receiving the NOAV was
“a business decision in the effort to make its assets more marketable and less exposed to liability
in its sales negotiations with NRG.”
¶ 119 LifeEnergy further argues that the Commission’s application of facts to the controlling
legal standards was clearly erroneous. LifeEnergy asserts that there was no basis for imposing any
financial penalty. Among LifeEnergy’s specific contentions in support of this argument are that
the Commission (1) “did not bother to make an on-the-record examination” of LifeEnergy’s size
as a company, (2) “did not even try to quantify the impact on consumers registered by untrained
agents or on the energy market as a whole,” and (3) failed to consider that, in other dockets
involving an ARES, it had approved settlements that did not include penalties. LifeEnergy
maintains that its agreement to refund customers and exit the Illinois market militates against
imposing a financial penalty. LifeEnergy further argues that it acted in good faith to achieve
compliance quickly once it received notice of the violations.
¶ 120 Finally, LifeEnergy contends that, even if some financial penalty were warranted, there
was no basis for imposing a $1 million penalty. In support of this argument, LifeEnergy asserts
that the only potential harm to consumers was approximately $34,000, and the $1 million penalty
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2021 IL App (2d) 200411was “over twenty-nine times that amount.” Ultimately, LifeEnergy submits that the Commission
meant to “send a message” to other companies, which is impermissible.
¶ 121 LifeEnergy’s arguments challenge whether the Commission’s findings were “supported by
substantial evidence,” which is a proper basis for review. See 220 ILCS 5/10-201(e)(iv)(A) (West
2018). “Substantial evidence is evidence that one would generally accept as sufficient to support
a particular conclusion.” Citizens Utility Board, 2015 IL App (2d) 130817, ¶ 46. This means “more
than a mere scintilla” but “less than a preponderance of the evidence.” Citizens Utility Board, 2015
IL App (2d) 130817, ¶ 46. When determining whether substantial evidence supported the
Commission’s findings of fact, we will uphold the findings unless they are against the manifest
weight of the evidence. Commonwealth Edison Co. v. Illinois Commerce Comm’n, 2016 IL App
(1st) 150425, ¶ 17. “Findings of fact are deemed contrary to the manifest weight of the evidence
only when an opposite conclusion is clearly evident from the record.” Commonwealth Edison,
2016 IL App (1st) 150425, ¶ 17. We may neither reevaluate the credibility or weight of the
evidence nor substitute our judgment for the Commission’s. Commonwealth Edison, 2016 IL App
(1st) 150425, ¶ 17.
¶ 122 When a party argues that a financial penalty imposed by an administrative agency is
excessive, we will reverse the sanction only “if it is arbitrary or capricious or amounts to an abuse
of discretion.” Gruwell v. Department of Financial & Professional Regulation, 406 Ill. App. 3d
283, 295 (2010). A sanction is arbitrary or capricious where “ ‘ “the agency contravenes the
legislature’s intent, fails to consider a crucial aspect of the problem, or offers an explanation which
is so implausible that it runs contrary to agency expertise.” ’ ” Gruwell, 406 Ill. App. 3d at 295
(quoting Deen v. Lustig, 337 Ill. App. 3d 294, 302 (2003)). An abuse of discretion means that the
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2021 IL App (2d) 200411agency reached its decision without employing conscientious judgment or the decision was clearly
against logic. Gruwell, 406 Ill. App. 3d at 295.
¶ 123 One of the premises underlying LifeEnergy’s arguments is that case law prohibits the
Commission from sanctioning an ARES that voluntarily ceases operations in Illinois. According
to LifeEnergy, sanctioning an ARES under such circumstances would be purely punitive and
would not aid in the enforcement of the Act. In support of this argument, LifeEnergy relies
primarily on older cases addressing penalties assessed by the Illinois Pollution Control Board.
Assuming, without deciding, that this body of case law applies to proceedings before the
Commission, none of these cases purported to establish a categorical bar against imposing a
financial penalty on a company that ceases operations. Instead, each of the cases turned on its own
facts.
¶ 124 For example, Southern Illinois Asphalt Co. v. Pollution Control Board, 60 Ill. 2d 204(1975), involved penalties assessed against two different companies. The penalty against Southern
Illinois Asphalt Company, Inc. (Southern), related to its failure to procure a permit before
operating an asphalt plant. Among the reasons why our supreme court vacated this penalty was
that “[t]here was no need to assess a penalty in aid of the enforcement of the [Environmental
Protection] Act because Southern had ceased operating prior to the filing of the complaint.”
Southern Illinois Asphalt, 60 Ill. 2d at 210. Additional reasons that the court cited included that
(1) Southern was not charged with being a polluter, (2) its emissions were well below regulatory
standards, (3) the plant operated for only three months, (4) Southern’s failure to obtain a permit
was “pure inadvertence” because Southern believed that its supplier had applied for the permit,
and (5) Southern promptly applied for a permit when it learned that the supplier had not done so.
Southern Illinois Asphalt, 60 Ill. 2d at 210-11.
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2021 IL App (2d) 200411¶ 125 By contrast, LifeEnergy did not cease operating before the Commission filed its complaint.
LifeEnergy’s regulatory violations also were not inadvertent. We need not unnecessarily prolong
this disposition by addressing each of the cases that LifeEnergy cites where courts reversed
financial penalties imposed by administrative agencies. Again, it will suffice to say that each case
turned on its own facts and none held that it is categorically impermissible to penalize a company
that ceases operations in Illinois.
¶ 126 Furthermore, the case law that LifeEnergy cites does not indicate that deterring similar
misconduct by other companies is an improper consideration. To the contrary, in Southern Illinois
Asphalt, our supreme court said:
“Arguably, the imposition of a civil penalty for each violation may deter further
violations by the one penalized or by others, thus aiding in the administration of the Act.
However, the Pollution Control Board itself has recognized that the arbitrary imposition of
penalties can in fact hinder the fulfillment of the purpose of the Act.” Southern Illinois
Asphalt, 60 Ill. 2d at 209.
In other words, while deterrence is a relevant consideration, an agency’s decision to impose
sanctions may be arbitrary and capricious if the circumstances presented still militate against a
penalty.
¶ 127 LifeEnergy asserts that, because section 4-203(a) of the Act lists factors to consider when
assessing a financial penalty, the Commission was not permitted to consider “extra-statutory
factors,” such as the need to deter future misconduct by other companies. LifeEnergy failed to urge
this point in its application for rehearing, so we will not consider the argument. See 220 ILCS
5/10-113(a) (West 2018) (“No person or corporation in any appeal shall urge or rely upon any
grounds not set forth in such application for a rehearing before the Commission.”).
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2021 IL App (2d) 200411¶ 128 The three specific findings of fact that LifeEnergy challenges were not against the manifest
weight of the evidence. Agnew’s testimony provided a sufficient basis for the Commission’s
conclusion that LifeEnergy harmed Illinois consumers and the retail market. Specifically, Agnew
testified that the impetus for the 2017 amendments to part 412 of Title 83 of the Code was
“persistent consumer complaints received by CSD involving either confusion or alleged deception
about the offers and/or the nature of the transactions.” According to Agnew:
“An improperly managed sales team going door-to-door, equipped with confusing
marketing materials, untrained on the amended Part 412, and directed by LifeEnergy to
return to consumers’ houses immediately after a failed TPV in violation of Part 412.120(g)
impacts not only every consumer enrolled, but also every consumer with whom they come
in contact. The ‘gravity’ of this impact is also felt by LifeEnergy’s peers in the retail market
that had structured their sales campaigns to be fully compliant. In addition to enjoying the
unfair competitive advantage of acquiring customers in violation of the amended Part 412,
LifeEnergy’s practices negatively impact the public’s overall perception of the retail
energy market.”
Accordingly, evidence in the record supports the Commission’s conclusions about the extent of
harm caused by LifeEnergy’s noncompliance with regulations.
¶ 129 Agnew’s testimony likewise supported the Commission’s finding that LifeEnergy had a
managerially sanctioned practice of violating the reapproach rule of section 412.120(g) of Title 83
of the Code. Agnew identified 20 occasions on which LifeEnergy’s agents improperly attempted
multiple third-party verifications with customers within 24 hours. Agnew testified that the
Commission’s staff asked LifeEnergy why some customers’ names appeared multiple times on a
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2021 IL App (2d) 200411spreadsheet detailing customer enrollments. LifeEnergy provided the following response to that
inquiry:
“If the sale was classified as a ‘No Sale’, [sic] the sales agent is notified of the failed TPV
in real time via their enrollment tablet, and depending on the No Sale disposition reason,
will attempt to revisit and re-educate the customer allowing them to attempt the TPV
process again. As a result, the customer’s name *** is listed more than once, with
ultimately one ‘good sale’ disposition identified under column ‘status_txt.’ ”
According to Agnew, this response suggested that LifeEnergy had a managerially sanctioned
practice of violating the reapproach rule. Given that (1) the Commission’s staff identified 20
separate violations of the reapproach rule and (2) LifeEnergy’s response quoted above arguably
conveyed the sentiment that it encouraged its agents to “revisit and re-educate” customers
immediately after a failed third-party verification, the Commission’s conclusion on this point was
not against the manifest weight of the evidence.
¶ 130 LifeEnergy emphasizes that its training materials properly identified the reapproach rule.
To the extent that there was a conflict in the evidence regarding whether LifeEnergy had a
managerially sanctioned practice, the Commission resolved that conflict against LifeEnergy. We
remain mindful that LifeEnergy bears the burden of showing that “the opposite conclusion is
clearly evident,” not just that “the evidence presented may support a different conclusion.” Citizens
Utility Board, 2015 IL App (2d) 130817, ¶ 47.
¶ 131 The third factual finding that LifeEnergy challenges relates to its good faith. The
Commission recognized that LifeEnergy was willing to refund its customers and was “reasonable”
in commencing agent training within six days of receiving the NOAV. Nevertheless, the
Commission was “not persuaded that such behavior was entirely a good faith effort to mitigate
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2021 IL App (2d) 200411violations, rather than a business decision in the effort to make its assets more marketable and less
exposed to liability in its sales negotiations with NRG.” The Commission’s skepticism of
LifeEnergy’s motives had a basis in the evidence, as LifeEnergy’s expression of its willingness to
refund its customers came around the time when the company was in the process of selling its
assets.
¶ 132 We also reject LifeEnergy’s argument that the Commission’s order is subject to reversal
for failing to elaborate on some of its reasoning or to consider all factors listed in section 4-203(a)
of the Act. The Commission “is not required to make particular findings as to each evidentiary fact
or claim” but instead “must sufficiently set forth the facts found which form the basis for the order
to enable a court to intelligently review them on appeal.” Lefton Iron & Metal Co. v. Illinois
Commerce Comm’n, 174 Ill. App. 3d 1049, 1055 (1988). Here, the Commission sufficiently set
forth its reasoning and findings of fact. Specifically, the Commission adequately explained its
reasoning as to how LifeEnergy’s conduct affected the broader retail energy market. As noted
above, Agnew’s testimony provided evidentiary support for the Commission’s conclusions on that
point. Moreover, contrary to LifeEnergy’s argument that the Commission failed to consider
LifeEnergy’s size as a business, the Commission explicitly stated in its order: “Based on the
evidence in the record, the appropriateness of the penalty to the size of the business and the gravity
of violations, the Commission assesses a penalty of $1,000,000 (one million).” The Commission
continued:
“In determining the appropriateness of the penalty to the size of the business, the
Commission takes into account not just the customers that LifeEnergy was able to enroll,
but also all the customers that were marketed to in Illinois, as well as all other customers
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2021 IL App (2d) 200411in Illinois that the Company could have marketed to under its Certificate of Service of
Authority.”
Thus, the Commission confirmed that it considered LifeEnergy’s size as a business. 1 In its brief
on appeal, LifeEnergy makes a passing reference to the ALJ’s comment that a penalty should be
commensurate with what a company can pay. To the extent that LifeEnergy is insinuating that it
does not have the means to pay a $1 million penalty, we note that LifeEnergy never raised that
argument before the Commission.
¶ 133 LifeEnergy notes that, in the past, the Commission has approved settlements that did not
include penalties. However, none of those dockets involved violations of the 2017 amendments to
part 412 of Title 83 of the Code. Additionally, the companies in those dockets did not admit to
violating any regulations, and the orders approving the settlements did not include detailed
recitations of the evidence. Thus, it is impossible for us to determine whether those dockets present
fair comparisons to the present one.
¶ 134 The ultimate question, then, is whether the circumstances justified the Commission in
imposing a $1 million penalty against LifeEnergy. We hold that they did. The evidence showed
1
The record provides some context about LifeEnergy’s size as a business, such as its
territorial authority in Illinois and its 2017 revenue from its Illinois operations. The record also
indicates that LifeEnergy did business in other states and that it was “part of LS Power,” which
LifeEnergy claimed in its marketing materials was “one of the leading independent owners and
developers of power plants and transmission infrastructure in the U.S.” Additionally, in one of its
briefs before the Commission, LifeEnergy made a representation about the number of Illinois
customers it had.
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2021 IL App (2d) 200411that, in late 2017, the Commission revised its regulations pertaining to how an ARES may market
and sell electricity in Illinois. These were important consumer-protection measures that sought, in
part, to prevent any ARES from marketing and selling electricity under misleading pretenses.
According to Agnew, prior to the amendments, LifeEnergy’s volume of complaints made it one of
the “poorest performers” in the market in that regard.
¶ 135 LifeEnergy had notice of the 2017 regulatory changes and had six months to prepare for
them before they took effect on May 1, 2018. There is little indication as to what, if anything,
LifeEnergy did to prepare for these regulatory changes prior to Dearman starting his employment
with LifeEnergy in March or April 2018.
¶ 136 LifeEnergy did not comply with the regulatory changes by the May 1, 2018, deadline. If
time constraints made compliance difficult, LifeEnergy could have chosen to pause its marketing
and sales efforts until it had an opportunity to comply with the regulations. LifeEnergy instead
chose to continue its operations on the unfounded hope or expectation that the Commission would
provide some undefined grace period before commencing enforcement efforts. Even after the
Commission’s staff issued a NOAV, LifeEnergy did not pause its marketing and sales efforts
pending compliance with regulations. Instead, LifeEnergy continued to allow its agents to market
and sell energy before the required training and certifications were completed.
¶ 137 Aside from LifeEnergy’s violations of training and certification requirements, the
Commission’s staff unearthed other violations. These included a repeated failure to adhere to the
reapproach rule, allowing in-person solicitation of enrollments to occur without proper
verification, and failing to timely process customers’ requests to rescind their enrollments.
¶ 138 Under these circumstances, the Commission was justified in concluding that LifeEnergy’s
actions warranted a substantial financial penalty. Unlike many of the cases LifeEnergy cites, this
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2021 IL App (2d) 200411is not a situation where the violations were merely technical, inadvertent, unrelated to the core
purposes of the regulation, or isolated incidents. The record shows that the Commission evaluated
the facts carefully and considered how to fashion an appropriate penalty. The $1 million penalty
is justified by substantial evidence and is neither arbitrary, capricious, nor an abuse of discretion.
¶ 139 D. Postdecisional Evidence and Submissions
¶ 140 As its final argument, LifeEnergy maintains that the Commission exceeded its authority by
ordering postdecisional evidence and submissions regarding customer refunds. LifeEnergy
emphasizes that no party sought clarification regarding LifeEnergy’s calculations of customer
refunds until after the evidentiary record was closed. LifeEnergy notes that, if the Commission
wanted clarification, prior to issuing the final order, the Commission could have requested that the
ALJ develop the record in accordance with sections 200.870 and 200.875 of Title 83 of the Code
(83 Ill. Adm. Code 200.870 (1986); 83 Ill. Adm. Code 200.875 (1994)). According to LifeEnergy,
instead of the Commission availing itself of those procedures, the Commission improperly made
a decision on the merits and then directed the parties, in LifeEnergy’s words, “to file information
to retroactively support that decision.” LifeEnergy contends that this violates section 10-103 of the
Act, which states that the Commission’s decision “shall be based exclusively on the record for
decision in the case.” 220 ILCS 5/10-103 (West 2018). Finally, according to LifeEnergy, requiring
postorder evidentiary proceedings cannot be justified by the Commission’s authority to reopen
proceedings pursuant to section 200.900 of Title 83 of the Code (83 Ill. Adm. Code 200.900
(2019)).
¶ 141 The Commission denies that it required postorder evidentiary proceedings. Instead,
according to the Commission, it merely directed LifeEnergy to make a compliance filing, which
purportedly is “an established procedure the Commission uses to, among other things, verify that
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2021 IL App (2d) 200411a company accurately implements what the Commission ordered.” The Commission submits that
LifeEnergy’s filing will “allow the Commission to verify whether the refund amount complied
with the Order and, if not, to take further action, such as order rehearing” pursuant to section 10-
113 of the Act. According to the Commission, its directive was not “for the purpose of resolving
any dispute of material fact regarding the calculation.”
¶ 142 The Commission also maintains that it made its decision based on evidence in the record.
Moreover, the Commission asserts that LifeEnergy forfeited its argument that the Commission
violated sections 200.870 and 200.875 of Title 83 of the Code, as LifeEnergy failed to raise that
specific point in its application for rehearing. Should we deem that argument preserved, the
Commission proposes that, even without invoking the procedures of those sections, it had the
authority to grant a rehearing on its own motion and to take additional evidence.
¶ 143 As an initial matter, we deem LifeEnergy’s arguments preserved for review. Although
LifeEnergy did not cite every regulation in its application for rehearing that it cites on appeal,
LifeEnergy made the same general arguments. As mentioned earlier, “[t]he allegations in an
application for rehearing must be stated in unequivocal terms and be sufficiently specific to apprise
the Commission and the opposing parties of the actual points relied upon.” Citizens Utility Board,
2015 IL App (2d) 130817, ¶ 44. LifeEnergy met this standard.
¶ 144 In its final order, the Commission indicated that LifeEnergy “should” and “shall” refund
its customers $34,178.20 within 45 days of the order. Then, within 30 days of issuing such refunds,
LifeEnergy had to file “proof of the distribution of refunds.” The order also required LifeEnergy
to “file within this docket both confidential and public redacted versions of the customer list and
the proposed voluntary refunds for the identified customers” within 10 days of the order. In such
filing, LifeEnergy would have to explain “how the customer was identified, the amount the
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2021 IL App (2d) 200411customer is refunded, how the refund amount was calculated, and the timeframe during which the
customer was enrolled with LifeEnergy.” The order provided that any party could object to
inaccuracies in LifeEnergy’s calculations within 30 days of the entry of the order. In the event of
an objection, the Commission directed its staff to file, within 40 days of the entry of the order, “a
recommendation on how to proceed.”
¶ 145 The Commission’s directive for LifeEnergy to submit proof of the issuance of refunds
totaling $34,178.20 was a mere compliance filing, and LifeEnergy does not contend otherwise.
The remainder of the directive, however, went beyond that. The Commission insists that it did not
order the filing “for the purpose of resolving any dispute of material fact regarding the calculation”
of the refunds. But that is exactly what the order did. The Commission noted potential inaccuracies
in LifeEnergy’s calculations yet said that LifeEnergy “should” and “shall” refund its customers
$34,178.20, the amount that LifeEnergy calculated. The Commission then required LifeEnergy to
justify its calculations and gave the Commission’s staff and the CUB leave to object to such
calculations. This aspect of the order cannot be characterized as a mere compliance filing. The
Commission instead invited further evidence and proceedings to confirm the accuracy of
LifeEnergy’s calculations, despite having entered a final decision on the merits and directing
LifeEnergy to refund its customers a specific amount.
¶ 146 The question becomes whether the Commission had the authority to do this. “Agencies
have no inherent or common-law power; they are creatures of statute that have only the power that
their legislative creators gave them.” Mercury Sightseeing Boats, Inc. v. County of Cook, 2019 IL
App (1st) 180439, ¶ 55. The only statute that the Commission cites to justify its actions is its power
to amend orders on its own motion. Specifically, section 10-113(a) of the Act provides, in relevant
portion, that “the Commission may at any time, upon notice to the public utility affected, and after
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2021 IL App (2d) 200411opportunity to be heard as provided in the case of complaints, rescind, alter or amend any rule,
regulation, order or decision made by it.” 220 ILCS 5/10-113(a) (West 2018). “Section 10-113 is
a formal procedure the Commission must follow if it intends to rescind, alter or amend one of its
decisions.” People ex rel. Madigan v. Illinois Commerce Comm’n, 231 Ill. 2d 370, 378 (2008).
¶ 147 Here, the Commission did not state that it intended to rely on its authority under section
10-113(a) of the Act to rescind, alter, or amend its final order. Indeed, it would make no sense for
the Commission to exercise its power to rescind, alter, or amend an order as soon as it was entered.
LifeEnergy also makes a compelling argument that the Commission could have ordered additional
proceedings before entering a final order if the Commission wanted to confirm LifeEnergy’s
calculations. The Commission has not cited any authority giving it the power to enter a final order
that includes a requirement for a party to submit additional materials that could have been
presented and considered prior to the entry of the order. We note that the case that the Commission
cites, Moncada v. Illinois Commerce Comm’n, 212 Ill. App. 3d 1046 (1991), is distinguishable, as
that case discussed the nature of the Commission’s powers before entering a final order.
¶ 148 Accordingly, we hold that the Commission exceeded its authority by (1) requiring
LifeEnergy to file its customer list and proposed voluntary refunds after the final order was entered,
(2) allowing parties to then object to any inaccuracies in LifeEnergy’s calculations, and
(3) directing the Commission’s staff to make recommendations as to how to proceed in light of
any discrepancies that might be identified in LifeEnergy’s calculations. Those portions of the order
are vacated. The remaining portions of the Commission’s order shall remain intact, including
LifeEnergy’s obligation to refund its customers $34,178.20 and to submit proof of compliance
with that obligation.
¶ 149 III. CONCLUSION
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2021 IL App (2d) 200411¶ 150 For the reasons stated, we affirm in part and vacate in part the order entered by the Illinois
Commerce Commission.
¶ 151 Commission decision affirmed in part and vacated in part.
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2021 IL App (2d) 200411No. 2-20-0411
Cite as: LifeEnergy, LLC v. Illinois Commerce Comm’n, 2021 IL App
(2d) 200411Decision Under Review: Petition for review of order of Illinois Commerce Commission,
No. 18-1540.
Attorneys Clifford W. Berlow, E. Glenn Rippie, and Marjorie R. Kennedy,
for of Jenner & Block LLP, of Chicago, for petitioner.
Appellant:
Attorneys Robert W. Funk, Thomas R. Stanton, and Rebecca L. Segal,
for Special Assistant Attorneys General, of Chicago, for respondent
Appellee: Illinois Commerce Commission.
No brief filed for other respondent.
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