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PSC Expands Universe of Customers Required to Receive Refund From Retail Supplier

Affirms $40,000 Fine on Retail Supplier But Finds No Misrepresentation Over Polar Vortex Rates

December 7, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Maryland PSC largely affirmed a proposed order requiring Xoom Energy Maryland, LLC to pay a civil penalty of $40,000 due to Xoom's automatic renewal of fixed price customers onto variable rates in what is found to be in violation of the original contracts, but found that Xoom did not engage in any misrepresentation, in addressing post-polar vortex complaints.

The PSC's final order does expand the universe of customers entitled to a refund due to certain automatic renewals, but otherwise adopts the findings of the proposed order.

The PSC said that the Public Utility Law Judge's (PULJ) proposed order, "correctly found that XOOM adequately confirmed customer identity for new contracts and did not take part in any unfair, misleading, false or deceptive trade practice."

As described in the proposed order, during the period January 2013 through June 2014, Xoom sent to each fixed term, fixed price customer with a so-called "evergreen contract" an email which was entitled "contract expiration notice". A failure to respond to the email during the January 2013 to June 2014 period resulted in the conversion of the contract from a fixed rate, fixed term contract to a variable rate, month-to-month contract

Notably, the email directed customers to follow links to specific terms of the renewal, and did not highlight the change from a fixed rate to a variable rate. Under these emails, the PULJ had concluded that XOOM enrolled approximately 36 existing fixed rate customers onto a variable rate plan without the customer's affirmative consent between January 2013 and December 2014.

"I find that converting a customer from a fixed rate to a variable rate, when the existing contract contemplates a renewal to a fixed rate, is a material change to a term or condition of the existing agreement between XOOM and its customer," the PULJ had said in the proposed order.

"Further, I find that a customer's ability to access the required regulatory information by clicking 'live links' within an electronic notice cannot be considered to be a 'clear and concise' statement of or highlight of changes in the material terms and conditions contained 'in the notice,'" the PULJ had said in the proposed order.

The PULJ had further highlighted that the auto-renewal email did highlight that the new plan was "month-to-month" and could be "cancelled without penalty," yet did not highlight the conversion from a fixed term, fixed rate contract to a variable rate contract

"XOOM's failure to disclose, in the text of the email renewal notice, one of the most critical material changes while highlighting other material changes, is a violation of COMAR 20.53.07.08C and 20.59.07.08C," the PULJ had found

The PSC adopted these findings

The PULJ had proposed that Xoom be directed to compensate each customer who was defaulted from a fixed rate to a variable rate and filed a complaint with the PSC prior to December 2014 by refunding directly to the customer (or to the applicable utility for a credit to the customer's account), the difference for each month during 2014 (or the months in 2014 in which the customer continued as a Xoom customer) that the variable rate billed to the customer exceeded the utility's default rate

The PSC, in its final order, said that additional customers should also receive refunds.

"[A]ll affected customers should have the right to refunds," the PSC said

The PSC noted that under PUA § 7-507(k) and COMAR 20.53.07.05D, the Commission has the authority to, "order a refund or credit to a customer ... for just cause."

"Because XOOM’s improper practices, although remedied, may have negatively affected more customers than the few that filed complaints, the Commission concludes that the class of customers entitled to refunds from XOOM should be expanded to any customer that might have suffered harm," the PSC said

Under the final order, Xoom was directed to notify all of its residential customers of record between January 1, 2013 and December 31, 2014 of the Commission’s finding of its violation of COMAR described above. If an individual: (1) contacts Xoom within thirty days of the company’s notice, (2) was defaulted from a fixed rate plan to a variable rate plan, and (3) requests a refund, then Xoom must compensate the individual in the same manner as under the refunds required under the proposed order

One issue addressed by the case was the duty of Xoom (and suppliers generally) to confirm the identity of individuals enrolling onto a plan, and the manner in which this can be accomplished

The PSC affirmed that Xoom met its regulatory duty in this regard by sending the contract to a "valid email address."

The People's Counsel had said that the PULJ had erred by requiring a supplier to do no more than send an email that does not bounce back.

OPC had claimed that a supplier cannot confirm the identity of the person entering the contract simply by sending the contract to a, "valid email address of the contracting customer," but must also take additional steps to confirm the customer’s identity.

The PSC, however, affirmed that COMAR only requires that a message in a proper email format be sent and not bounce back. "The CPULJ considered that the word 'valid' within the phrase 'valid email address' should take its generally accepted meaning, and took into consideration that XOOM also implemented other safeguards to monitor improper enrollments," the PSC noted

Xoom Energy Chief Operating Officer Chris Phillips issued the following statement: "We are pleased that the Commission confirmed our position in that XOOM Energy did not partake in any unfair, false, misleading or deceptive marketing practices. The technical error in our renewal notices from 2014 was corrected immediately once the issue was identified. XOOM Energy maintains high compliance requirements and standards and our team works hard every day to ensure a positive customer experience."

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