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New York Attorney General Investigating "Several" ESCOs for Deceptive Marketing Practices The New York State Attorney General's Office is, "currently investigating several ESCOs for engaging," in deceptive marketing practices, the Office said in comments to the New York PSC.
The Attorney General did not elaborate further as to the number of investigations currently open, the precise nature of the alleged practices, or the identities of the ESCOs being investigated.
The comments came in the New York PSC's proceeding to assess the current state of the retail energy markets.
The Attorney General noted that as a result of previous investigations of ESCOs, the AG obtained one court order and six settlements providing for extensive injunctive relief, more than $4.35 million in restitution to defrauded consumers and $800,000 in penalties and costs to the State.
While the Attorney General continues to receive consumer complaints regarding the deceptive marketing practices of "numerous" ESCOs, "over the same time period and despite the growing evidence of improper practices by ESCOs, the PSC has not sanctioned any New York ESCO for marketing misconduct," the Attorney General said.
"[T]he dishonest minority of ESCOs will further tarnish the reputation of the industry, discouraging consumers from trusting offers received from any ESCO," the AG said. "Unless the Commission monitors the marketing activities of ESCOs, identifying those that treat consumers dishonestly and takes firm action to bar such dishonest ESCOs from continuing to do businesses in New York, retail choice will be more of a burden than a benefit to consumers. Only by vigorously enforcing honest marketing standards, will the PSC drive out dishonest ESCOs and thereby enable honest competitors to thrive and consumers to enjoy the benefits of competition."
The Attorney General's recommendations, many of which were espoused by other consumers groups, were not surprising. Among other things, the Attorney General recommended:
• The PSC should prohibit ESCOs from engaging in door-to-door solicitations of residential and small business consumers. If door-to-door marketing is permitted, the PSC should require marketers to record the entire sales presentation, should regularly audit such recordings to ensure honest sales practices and should prohibit ESCOs from imposing early termination fees on consumers who were enrolled during a door-to-door solicitation.
• The PSC should require that ESCOs seeking to renew consumers' contracts provide advance written notice conspicuously alerting the consumer to any price changes or other material changes in terms and a comparison of its prices with those of the utility during the contract period prior to renewal.
• The PSC should restrict early termination fees. The PSC should prohibit such fees where the ESCO offers a variable-rate contract and limit the fees for cancellation of fixed-price contracts so that consumers are not charged amounts that exceed the ESCO's actual loss.
• The PSC should take measures to eliminate unnecessary delays in a consumer's ability to cancel an ESCO contract so that consumers are not unnecessarily forced to continue paying for service from a provider no longer of their choosing.
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January 28, 2013
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Reporting by Karen Abbott • kabbott@energychoicematters.com
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