Energy Choice
                            

Matters

Proposed Order Would Fine Retail Supplier $300,000, Allow Customers To Cancel Contracts

October 26, 2015

Email This Story
Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A proposed order from a Maryland Public Utility Law Judge would impose a civil penalty of $250,000 on Major Energy Electric Services, LLC, for what the proposed order finds to be, "its misleading, false and deceptive statements or trade practices," and would impose a $50,000 civil penalty, jointly and severally, on Major Energy Electric Services, LLC and Major Energy Services, LLC for what the proposed order finds to be violations of the contractual requirements of the Maryland Door-to-Door Solicitations Act and Maryland Telephone Solicitations Act

The proposed order is not final and may be appealed

The proposed order results from an investigation into Major Energy resulting from complaints in the wake of the polar vortex

The PULJ would further order that, for all active residential customers, whether fixed rate or variable rate or for natural gas or electricity supply, Major Energy shall send a notice allowing its residential customers to cancel his/her contract within three days without penalty. In the event the customer cancels, the PULJ would require Major Energy to take whatever steps necessary to ensure that any difference between the Major Energy rate and the utility's default rate, if the Major Energy rate exceeds the SOS rate, is credited to the customer from the cancellation date until the date the customer is returned to the default service.

The PULJ would conclude that Major Energy Electric Services, LLC violated Maryland law and the Commission's regulations by:

1. "Falsely and deceptively marketing its variable rates as cost-reducing or providing savings without any disclosure of any 'downside' or risks associated with a variable rate, which is not an accurate description of its variable rate product and was relied upon by customers enrolling in the variable rate product.

2. "Falsely claiming an 'up to percentage' amount of savings, which it knew or should have known that this maximum percentage of savings had not actually been achieved by any Maryland customer enrolled in Major Energy's variable rate product.

3. "Falsely representing to a select number of customers that a re-rate of the variable rate during the period of February 2-7, 2014 was a 'billing error,' when in fact the Company decided to reduce the variable rate as a marketing strategy.

4. "Falsely representing in a letter dated February 10, [2014] to certain customers that SOS rates would see a similar increase due to the Polar Vortex in the upcoming months which is not an accurate description of the manner in which SOS is procured in Maryland. The representation was false and was intended to mislead these customers and encourage them to enter into a fixed rate contract with the Company.

5. "Falsely representing to several customers during customer service calls that if the customer accepted a new energy rate product, the customer may return to SOS service if the rate exceeds the SOS rate without disclosing that the switch would not be immediate.

6. "Contracting with customers in the service territories of Pepco, DPL, and PE prior to being authorized by the Commission to do so."

The PULJ would conclude that both Major Energy Electric Services, LLC and Major Energy Services, LLC violated:

1. "The Maryland Door-to-Door Solicitations Act by failing to conform the rescission provisions of its door-to-door sales agreement to comply with the requirements of the Maryland Door-to-Door Solicitations Act Section 14-302 (1) (ii), (2) and (3); and

2. "The Maryland Telephone Solicitations Act requirement by failing to obtain a "wet signature" on enrollments made during the Companies' telemarketing campaign.

The PULJ's conclusions regarding Major Energy's variable rate marketing was based on specific language in various Major Energy scripts and materials, some of which was granted confidential treatment in the proposed order.

However, the PULJ said that Major Energy's representations, "did not accurately describe the electricity variable rate product because it only described the variable rate product in terms of 'savings' and 'cost reductions,' without any disclosure of the possibility of a variable rate that exceeded the SOS rate of the utility and could increase the customer's energy costs."

"The Company knew that the description misrepresented the nature of a variable rate, but intentionally omitted the risks of the variable rate," the PULJ said

Furthermore, the PULJ said that based on Major Energy's marketing, "a customer reasonably could conclude that the expected range of the variable rate would not exceed the utility's SOS rate in any given month. Thus, I find that the Company's omission of the risks of the variable rate misled customers as to the range of expected variable rates."

The PULJ would also impose a moratorium on residential door-to-door solicitations by Major Energy until Major Energy has revised its sales agreement to strictly conform the disclosure of the rescission period to applicable provisions of the Maryland Door-to-Door Solicitations Act.

The PULJ would further impose a moratorium on the marketing of the variable rate product (either electricity or natural gas) until Major Energy has modified its sales script to require its sales agents to discuss the nature and risks associated with the variable rate, to represent that there is no guarantee the customer will see savings in any given month over the default energy rate in effect at the time of the solicitation, to disclose the current established variable rate to allow the customer to compare it to the price to compare on the utility bill and to describe how to obtain the monthly variable rate in effect thereafter; and to disclose that even though it is a month-to-month contract and may be canceled without any fee, the Major Energy rate in effect may be billed to the customer until the local utility makes the change in its system and the approximate length of time it may take for the switch.

The PULJ would direct Major Energy Electricity Services, LLC to send a letter to each active customer in the service territories of Pepco, DPL, and PE advising the customers that it did not have a license to contract with the customer and that the customer has 30 days to cancel the contract with Major Energy without penalty.

Major Energy provided the following statement to EnergyChoiceMatters.com:

"While we are still reviewing the Proposed Order from the Public Utility Law Judge and discussing our potential appellate rights with counsel, like many other deregulated marketers, we recognize that the Polar Vortex of 2014 unearthed opportunities to enhance and improve our customer acquisition practices and are committed to working with the Maryland PSC to strengthen the standards by which we engage with customers."

Case No. 9346(b)

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- ERCOT Business Development Manager -- Retail Supplier -- Houston
• NEW! -- Channel Manager -- Retail Supplier
• NEW! -- Marketing/Channel Manager -- Retail Supplier -- Houston
• NEW! -- Supplier Services Account Executive
• NEW! -- Manager, Operations -- Retail Supplier -- Houston
• NEW! -- Settlements Analyst -- Retail Supplier
• NEW! -- Data Administrator -- Retail Supplier
• NEW! -- Customer Support and Retention Rep -- Retail Supplier -- Houston
• NEW! -- Contracts Analyst -- Retail Supplier -- Houston
• NEW! -- Pricing Analyst -- Retail Supplier
• NEW! -- Billing Analyst -- Retail Provider -- Houston
• NEW! -- Energy Services Program Director - $230K
• NEW! -- Senior Retail Analyst -- Retail Supplier
• NEW! -- Manager, Retail Pricing -- Retail Provider
• NEW! -- Retail Commodity Pricing Analyst -- Retail Supplier
• NEW! -- Director of Pricing, Risk & Portfolio -- Retail Supplier
• NEW! -- Manager/Director, Customer Retention and Satisfaction -- Retail Supplier -- Houston
• NEW! -- Bilingual Rep Support Specialist -- Retail Supplier