The Successful Administration of an Assurance of Discontinuance

In the Matter of Viridian Energy, LLC Assurance of Discontinuance, in the Commonwealth of Massachusetts Superior Court.

In 2018 the Commonwealth of Massachusetts, by and through its Attorney General (AGO), entered an Assurance of Discontinuance (AOD) with Viridian Energy, LLC (Viridian). The AGO alleged that Viridian may have engaged in policies and practices in violation of provisions of the Commonwealth’s laws and regulations while marketing and selling retail electricity to consumers beginning in or around June 2012. Viridian denied the AGO’s allegations. Ultimately, the parties entered into an AOD, which included Viridian’s agreement to pay a total settlement sum of $5,000,000. From the total payment amount, $4,596,000 was paid into the restitution fund to be distributed to eligible customers, and the remaining $404,000 was paid to the AGO and the Massachusetts General Fund.

Kroll Settlement Administration was appointed by both parties to be the Viridian Energy trustee to administer the restitution fund.

Restitution Fund

Over a period of 19 months, Viridian agreed to make four separate deposits totaling $4,596,000 into the restitution fund for the benefit of its eligible current and former customers. Our team conducted the restitution distribution program in four phases corresponding to each of the deposits. No claims process was required for eligible customers to receive their restitution checks.

Administration Set Up

Prior to mailing any restitution checks, we built and maintained an informational website, which provided answers to customers’ frequently asked questions. In addition, we established a toll-free telephone number staffed by our in-house live operators to answer more specific questions. Our live operators received calls from and spoke with almost 1,000 customers during the AOD process.

In Viridian’s original customer data, there were 96,301 total records of current and former customers. Our team was responsible for determining the customers’ eligibility for payment based on Viridian’s customer data.   Our team also utilized the customer data to calculate the restitution payment amounts to be paid to eligible customers. We determined the eligible customers and calculated the restitution amounts, and then applied a $5.00 de minimis check cutoff. This $5.00 cutoff avoided mailing checks so small that the print, postage, bank and administration fees would have exceeded the value of the check.

In the end, there were 56,615 customers eligible to receive a restitution check.

Distribution

After identifying each customer eligible for restitution, we calculated each customer’s pro-rata share of the $4,596,000. Our team was required to designate enough customers who would ensure that all of Viridian’s first $1.8 million payment into the restitution fund was exhausted if all the phase one eligible customers cashed their checks.  Based on our calculations, and through a random selection of eligible customers, 20,394 customers were mailed checks during phase one of the restitution program.  Prior to mailing the phase one checks, we provided our calculations to the parties for their review and approval.

Applicable to all four phases, all checks were mailed with an explanatory letter describing the AOD and restitution program. All restitution checks were valid for 90 days. Further, Kroll Settlement Administration was required to void any uncashed checks no later than 30 days after the check’s 90-day stale date.

If any customer’s check and letter were returned as undeliverable, our team attempted to contact those customers to the extent the customer contact information was available in Viridian’s database. The purpose of these outreach efforts was to remind customers to cash their checks, offer to re-issue their checks and/or to obtain updated mail addresses. During the four phases, we placed a total of 2,528 outbound calls to customers to assist them in receiving their restitution checks.

Subsequent restitution payments:

• Phase 2: $921,000 paid by Viridian into the restitution fund. A random designation of 10,810 customers were sent restitution checks.
• Phase 3: $1 million paid by Viridian into the restitution fund. A random designation of 11,046 customers were sent restitution checks.
• Phase 4: $875,000 paid by Viridian into the restitution fund. The remaining 14,365 customers were sent restitution checks.

Summary

During this two-year administration, Kroll Settlement Administration successfully distributed well over 90% of the $4,596,000 Restitution Fund.