Md. PSC Hears Testimony on North American Power, Will Continue Review in March Email
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The Maryland PSC yesterday heard from Staff and North American Power and Gas LLC
regarding Staff's complaint against North American Power (see 1/10), and took the
matter under advisement after several hours of testimony.
The Commission intends to resume consideration of the matter at a meting in early
March, at which time oral arguments and/or a legislative style hearing would be held,
and the Commission would move into the question of what penalty, if any, is appropriate
should the Commission find the allegations made by Staff are sustained. Due to time
constraints, much of yesterday's hearing dealt with entering factual background into
the record, and neither Staff nor North American Power offered any testimony regarding
what appropriate actions from the Commission would be.
In the interim, North American Power will also respond to several data requests from
During yesterday's hearing, North American Power CEO Kerry Breitbart testified that
North American Power has a total of about 85,000 customers, with 12,000 to 13,000
in Maryland. Breitbart said that enrollments were about 1,000 customers per day.
About 30-40% of North American Power's customers come from its "direct" sales channel,
its term for network marketing. North American Power's network sales force includes
8,000 independent agents, with 2,000 in Maryland.
Breitbart reported that North American Power is in the process of becoming licensed
and entering the New York and New Jersey markets. Currently, North American Power
is active in three states: Connecticut, Maryland, and Pennsylvania.
Breitbart also testified that a "large" fine could potentially put North American
Power out of business, though the amount of a "large" fine that could potentially
prompt such an issue was not identified by Breitbart or counsel. Breitbart explained
that the company has been largely self-funded by its partners, but that one of the
hottest summers on record in Connecticut and one of the worst Decembers have resulted
in "losses," particularly as North American Power has chosen not to raise its pricing,
and has continued to lower its pricing in some markets such as Maryland.
Stating that he was "horrified" to have to appear before the PSC to answer Staff's
allegations, Breitbart reported a series of additional remedial and compliance measures that the company has instituted, aside from the previously reported suspension of Maryland
door-to-door and telemarketing, and revisions in the terms of service (see 1/24).
Among other things, North American Power has instituted a check in its online enrollment
procedure that flags any enrollment coming from the same IP address as a prior enrollment,
and places it into a queue for further investigation. This measure is meant to protect
against independent agents, and not customers themselves, using the website to perform
enrollments, and prevent independent agents from taking a customer's bill home and
using it to enroll the customer from the independent agent's own computer. A similar
process also flags an enrollment for further investigation if a duplicate email address
or phone number is used during enrollment.
In fact, the agent whom Staff has alleged misrepresented themself as being from the
PSC was terminated by North American Power, prior to North American Power being made
aware of Staff's complaint, because the representative had multiple enrollments from
the same IP address.
Breitbart also said that all sales would be third party verified, including web sales
which will use an outbound TPV to the customer. Previously, North American Power
attempted to TPV all sales, including web enrollments, but if the verifier could
not connect with a customer enrolling through the web after six attempts, the accounts
were enrolled without TPV.
Independent agents are also now prohibited from conducting any advertising of North
American Power. Part of Staff's allegations concern an ad placed by a North American
Power agent (though the ad did not cite North American Power by name) that made claims
regarding a 20% savings versus Baltimore Gas & Electric, and that there was "no contract"
to sign. During the hearing, Commissioner Lawrence Brenner said that an online ad
with similar statements appeared when performing a google search for "NA Power" (although
it was not clear from Brenner's statement how NA Power was entered into the search
field, e.g., spacing between N-A, whether quotes were used, etc.).
Breitbart said that North American Power has scrubbed online sites of its agents
to remove such ads, but had not encountered the ad cited by Brenner, possibly because
of google's regional and user-specific metrics used to display ads for some users
and not others. Matters could not locate Brenner's cited ad; however, it should
be noted that several social media pages, some of which are identified as belonging
to a North American Power agent, make similar claims to the claims at issue.
North American Power is staffing up its compliance department, including the hiring
of Bill Kinneary, formerly a top executive at KeySpan Energy Services and Total Gas
& Electric, as President, who will be charged with ensuring "bullet-proof" compliance
procedures and processes.
Additionally, North American Power has revised its training procedures for agents,
now requiring agents to pass an online test after online training.
Breitbart testified that door-to-door marketing is "inherently difficult" from a
compliance perspective, and is seriously considering eliminating door-to-door marketing.
Regarding Staff's allegation, based on a call from a customer to the PSC's Office
of External Relations, that a North American Power agent misrepresented themself
as being from the PSC, North American Power's cross-examination of Staff's witnesses
centered on the claim that the customer, according to Staff, alleged that the agent
informed the customer that the customer could save money on their "gas bill." North
American Power does not currently offer natural gas supply. Staff witnesses countered
that, due to BGE's dual commodity service, the term "gas bill" is colloquially used
in the region to mean "utility bill."
North American Power also stressed through its cross-examination that while the customer
alleged the agent stated they were from the PSC, when a PSC Staffer called the agent,
not identifying themself as a PSC Staffer but rather as a customer referral from
the original customer, the agent did not identify themself as with the PSC, and when
asked if they were from the PSC, the agent stated that they were not. Counsel for
North American Power suggested that it would be inconsistent for the agent to identify
themself one way to one potential customer, but another way to another potential
Regarding North American Power's terms of service, which had incorrectly stated that
they were approved by the PSC, Commissioners pressed the company of why these terms
of service were still available on North American Power's website. Although Commissioners
appreciated that the company would not want to begin using its revised terms of service
until being reviewed by Staff, Commissioners said that, at the very least, the company
could have removed the statement that the terms of service had been approved by the
PSC from its online version of the terms of service, as there is no dispute by the
company that the statement is inaccurate.