Retail Suppliers Respond To Show Cause Orders Issued By Maryland PSC

Validity Of Initials (Used In E-TPV) As Valid Signature In Dispute

One Supplier Concedes It Did Not Obtain Wet Signature After Telesales, As Generally Required In Maryland

June 19, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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Several retail suppliers responded to separate show cause orders issued by the Maryland PSC.

The genus of the show cause orders -- the filing of complaints by Staff -- were notable because, with respect to several suppliers, Staff's complaint only listed a discrete number of customer complaints (in some cases, only a handful) as prompting Staff's request for a show cause order, and Staff, in the complaints, did not cite a concern with broader activities by a supplier (e.g. marketing behavior). See our prior stories linked below for more details on Staff's complaints

Filing separate and individual responses to the show cause orders were the following suppliers:

• Direct Energy Services, LLC (story on Staff request here)

• U.S. Gas & Electric, Inc. d/b/a Maryland Gas & Electric and Energy Services Providers, Inc. d/b/a Maryland Gas & Electric (story on Staff request here)

• Smart One Energy, LLC (story on Staff request here)

• SmartEnergy Holdings, LLC (story on Staff request here)

• Atlantic Energy MD, LLC (story on Staff request here)

EnergyChoiceMatters.com has reviewed all the responses, save for Atlantic Energy MD, LLC's, which was not available electronically at publication time

Generally, several themes emerged in suppliers' responses

Various suppliers noted that the customer complaints cited by Staff as justification for show cause order had been resolved and closed with no adverse finding against the supplier, and to the customer's satisfaction

Furthermore, several suppliers said, regarding the cited customer complaints, that Staff did not communicate to the supplier concerns about the supplier's general advertising, solicitation, or marketing activities in Maryland.

Highlights of specific responses are below:

Direct Energy Services

Direct Energy Services said that its response demonstrates that no license restrictions, fines, penalties, or further proceedings are warranted, as Direct Energy Services said that the evidence refutes Staff’s allegations of deceptive practices or other prohibited acts in violation of applicable consumer protection regulations.

"Importantly, none of the closing letters issued by CAD regarding the eight customer complaints referenced in Staff’s Complaint included CAD [Consumer Affairs Division] findings adverse to Direct Energy. The Commission’s dispute resolution procedures required CAD to provide the supplier and the customer with 'a written summary of its findings and conclusions on completion of its investigation.' Had CAD issued closing letters with adverse findings, Direct Energy would have welcomed the opportunity to request further review and provide 'new or additional information or documentation relevant to the dispute.' Instead, CAD issued closing letters finding that these matters had been satisfactorily resolved, without stating any adverse findings as to Direct Energy. Thus, the closing letters issued by CAD to Direct Energy are inconsistent with, and do not support, the allegations in the Complaint," Direct Energy Services said

Direct Energy Services' response details the various customer verifications the company obtained prior to any switch for the complaints at issue.

In a single instance, Direct Energy Services said that CAD’s informal dispute resolution process involved a concern about a Direct Energy agent. At such time, "Direct Energy investigated the matter and removed the agent. The customer was never enrolled with Direct Energy. This was an isolated incident involving a rogue agent that failed to adhere to Direct Energy’s training, policies, and procedures," Direct Energy Services said

Direct Energy also admitted that there was a billing error at issue in one customer complaint. "The customer was mis-billed for two billing cycles when a Direct Energy employee entered the wrong rate. Direct Energy recalculated the correct billing amount and issued refund checks to correct the billing error. This was human error that, once identified, was quickly remedied. The customer cashed the refund checks and remains a Direct Energy customer. This CAD complaint involved an isolated billing error affecting two customers, which Direct Energy corrected and resolved with the customers," Direct Energy Services said

Direct Energy Services denies that it engaged in deceptive practices or prohibited acts in violation of the Commission’s consumer protection regulations for which a civil penalty or other remedy may be assessed

Maryland Gas & Electric

Maryland Gas & Electric detailed its robust training materials and procedures

Maryland Gas & Electric said that analysis of the CAD complaints cited by Staff support dismissal of Staff’s complaint, and that no penalty or enforcement action is warranted against MDG&E.

Maryland Gas & Electric said that in 14 instances, CAD issued closing letters without any adverse findings or did not issue a closing letter to MDG&E.

Maryland Gas & Electric said that in several instances, an adverse finding was made, but because CAD erred in deeming initials to not be a "valid" signature

"In closing letters for CAD complaint numbers 118336162-W, 118336173-L, 818340314- W, CAD applies Maryland law incorrectly. CAD decisions were based primarily on CAD’s view that a customer’s initials did not constitute an 'actual' or 'valid' signature on a contract. However, initials – or any other mark, for that matter – are valid signatures under Maryland law," Maryland Gas & Electric said

"These CAD decisions are incorrect as a matter of law and fact. As described above, MDG&E’s E-TPV process is an electronic process where a customer electronically signs either on their phone/tablet or on their computer. It may be that the electronically-signed initials differed somewhat from the customer’s driver’s license signature because of the difference in signing medium. Or, it may simply be that people are less inclined to sign their full name electronically, with their finger on a screen, and instead default to their initials. In these cases, there was no expert forensic handwriting testimony and no reason to believe that CAD accounted for the potential differences between hard copy and electronic signatures. Put simply, CAD is not in the business of examining signatures. While MDG&E did not appeal these findings, having already returned the customers to utility service and voluntarily waiving the customer’s ETF for both electricity and natural gas accounts, CAD’s legal and factual interpretations regarding the signature on these contracts is flawed," Maryland Gas & Electric said

"Compounding the signature analysis issue is CAD’s finding in the closing letter that despite the customer’s initials on the contract, the 'document was missing an actual signature…' It appears that CAD reached this finding in part because the contract included a 'line asking for a signature' (rather than initials). CAD did not cite any legal basis for its determination that initials do not constitute a valid signature. Contrary to CAD’s findings, under Maryland law initials do constitute a valid signature," Maryland Gas & Electric said

"Maryland Commercial Law Art. § 1-201(39) provides that ''Signed' includes any symbol executed or adopted by a party with present intention to authenticate a writing.' The Maryland Uniform Electronic Transactions Act defines an 'electronic signature' to mean 'an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.' There is no legal basis for CAD’s assertion that initials do not constitute a valid signature," Maryland Gas & Electric said

"Along these lines, Maryland courts have long held that: The Code includes within the definition of ‘signed’ any symbol executed or adopted by a party with present intent to authenticate a writing. Section 1-201 (39). What is meant by this definition is that a complete signature is not necessary. That is, authentication of the document may be accomplished by a printed, stamped, or written symbol. In dealing with such symbol, it must be determined whether the symbol was executed or adopted by the party with present intention to authenticate the writing," Maryland Gas & Electric said

"Thus, what matters is the customer’s intent to execute a contract when he or she signs with initials (or with some other mark). In these cases, the only way that the sales agent would have obtained the plethora of customer-specific information to enter into the tablet is if the customer gave it to him. From there, the agent is trained to leave the premises and allow the customer to decide whether to complete the enrollment electronically. MDG&E’s name appears on the utility bill every month. And, as discussed above, there are a multitude of safeguards built into the process to ensure the sanctity of the customer’s information and that the enrollment is valid. There is, at best, conflicting evidence of the customer’s intent to enter into a contract but the preponderance of the evidence shows a contract completed by the customer after having received all information required by law. These complaints do not support or justify any penalty, fine, or other action against MDG&E," Maryland Gas & Electric said

MDG&E denies that it engaged in deceptive or prohibited acts in violation of the Commission’s consumer protection regulations

SmartEnergy Holdings, LLC

SmartEnergy’s said that its low CAD complaint record, the lack of adverse findings by CAD in two of the four cited complaints, and an analysis of the facts of each CAD complaint, support dismissal of Staff’s Complaint and shows why no Commission enforcement action against SmartEnergy is warranted.

SmartEnergy said that CAD did not issue an adverse finding in several of the customer complaints

SmartEnergy agreed in one of the CAD complaints the customer sounded "confused" and, as a result, the company ceased serving the customer. SmartEnergy said that, "This was an isolated incident that SmartEnergy addressed promptly once it was brought to its attention. Moreover, SmartEnergy submitted the cancellation request promptly. SmartEnergy denies there was an unauthorized enrollment in this case."

SmartEnergy denied an allegation in one of the CAD complaints that its sales agent stated that SmartEnergy was affiliated with BGE. "[T]he call recording not support the customer’s allegation and show that the agent did not make that misrepresentation," SmartEnergy said

SmartEnergy, "denies that it engaged in deceptive or prohibited acts in violation of the Commission’s consumer protection regulations for which a civil penalty or other remedy may be assessed."

Smart One Energy, LLC

Smart One Energy, "acknowledges that it did not obtain 'wet signatures' in accordance with the Competitive Gas Supply Regulations," for several telephonic sales.

As has been previously reported by EnergyChoiceMatters.com, the Maryland Telephone Solicitation Act requires that customers of various industries solicited via telephone must sign a written agreement to create a valid contract. While there are certain exceptions to the wet signature requirement, none of the exceptions are generally applicable to cold calling.

"In all three cases, as soon as the CAD informed SOE of the customer’s complaints, SOE promptly unenrolled all three customers and engaged with CAD and the customers to try to resolve each dispute. SOE also worked closely with the Commission’s Consumer Affairs Division to attempt to refund the customer the difference between SOE charges and the charges they would have paid had they not been enrolled," Smart One Energy said

"SOE has not previously received any complaints by Staff regarding its supply of natural gas in Maryland. Of the many customers it has served over the years, well less than 1% have registered complaints, and SOE has always worked to provide refunds in the disputed amount to the customer in the same manner demonstrated here. Failing to obtain wet signatures likewise falls on the lower end of the spectrum. Although SOE does not contest the importance of providing written agreements for signature, the sales call recordings and third party verification calls do show that these customers intended to switch, even if there was later confusion or regret about the terms. The only harm suffered was the difference in gas supply cost, and SOE has attempted to ameliorate this for all three customers. For these customers, that difference was relatively small [$272, $144.59 and $420.21]," Smart One Energy said

"Finally, slamming is narrowly defined and does not include other regulatory violations, so long as the supplier obtained the customer’s consent to prior to enrollment. The Commission has defined slamming as a 'supplier enrolling a customer without the customer’s permission or re-enrolling a customer after a customer has terminated service.' SOE has provided OPC and Staff with the recorded sales calls and TPV for two of the customers, Mrs. Ballard and Mr. Campbell, which demonstrate that the customers consented to SOE becoming their supplier and show that SOE did not slam them," Smart One Energy said

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