Attorney General Memorializes Previously Reported $10 Million Settlement With Retail Supplier

August 20, 2020

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Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Office of Massachusetts Attorney General Maura Healey announced that a consent judgment among the AG and Starion Energy, and its principals Ruzhdi Dauti, and Dashmir Murtishi, was entered in Suffolk Superior Court on Tuesday to settle claims made by the AG against Starion

A Memorandum of Understanding among the Starion parties and the AG, containing the major tenets of the consent judgment, had been previously filed as part of Starion's bankruptcy proceeding, and the settlement was first reported by EnergyChoiceMatters.com in December 2019 (more details on the terms here). Earlier this year, a court approved Starion's bankruptcy exit plan. Under the bankruptcy exit plan approved earlier this year, Starion did not undergo a financial restructuring. Rather, the company was able to keep its prior structure and is scheduled to pay its creditors 100% of valid claims.

Starion Energy provided the following statement concerning the consent agreement:

"On August 17, 2020, several parties involved in The Commonwealth of Massachusetts v. Starion Energy, Inc. et al., Suffolk C.A. No. 18-3199H, filed a document titled Final Judgment by Consent with the court. While it was announced back in December 2019 that the parties had reached an agreement in principal, this document memorializes that agreement. Starion maintains its denial of many of the allegations of the Commonwealth, but after several years of litigating Starion believes that entering into this agreement is in the company’s interest. Thanks in part to this agreement, Starion is now offering new products to Massachusetts’ consumers and is looking forward to our continued growth, not only in Massachusetts, but in all of the markets it serves."

--- Statement from Starion Energy

The AG's office said that the AG’s original lawsuit, "alleged that the defendants violated the state’s consumer protection laws by engaging in unfair sales tactics, including unsolicited telemarketing calls and pre-recorded robocalls, that deceived Massachusetts customers by falsely promising them lower electricity rates while ultimately charging them, collectively, millions more on their bills."

"Starion Energy used unsolicited telemarketing calls to falsely promise Massachusetts customers big savings on their electricity bills and then illegally charged them sky-high rates month after month," AG Healey alleged. "Our settlement returns millions of dollars to tens of thousands of customers who were harmed by this company’s deceptive tactics. We are working to stop these predatory companies from scamming Massachusetts residents."

"According to the AG’s Office, Starion signed up more than 117,000 Massachusetts customers to variable rate electricity contracts. The AG’s Office alleges that these customers paid millions more for their electricity than they would have if they had received basic service from their utility company. The AG’s Office also alleged that Starion’s telemarketing and pre-recorded robocall scripts used deceptive and misleading information including that 'most consumers are overpaying on their energy bills by hundreds of dollars each year' and that new laws that have been passed in the area give consumers 'the right to receive a lower rate on [their] current electric bill,'" the AG's office said

Under the terms of the consent judgment, Starion will pay up to $10 million including $7.25 million in restitution that will go to affected customers and $250,000 in penalties that will go to the state’s general fund. Of the remaining $2.5 million, $2 million will be forgiven if Starion complies with the terms of the settlement. The portion of the $2.5 million amount that is not forgiven will fund programs that assist customers with paying or lowering their energy bills.

Restitution will be paid by checks mailed to eligible customers over several phases spanning the next two years. Customers will not be required to fill out a claim form to receive restitution. Customers are eligible to receive restitution if they purchased variable rate electricity service from Starion, paid more than they would have paid their utility for basic service electricity, and did not separately seek restitution through Starion’s Delaware bankruptcy proceeding.

The AG's office said that the settlement requires that Starion make several "substantial" changes to its marketing activities in Massachusetts, which were more thoroughly detailed in our prior story.

Under the settlement, for a three-year period, Starion will not enroll any new Massachusetts customer in a variable rate contract

The company is also required to ensure, for a three-year period, that the amounts that low-income customers pay for electricity supply from Starion does not exceed what they would have paid if they received basic service through their utility company.

The settlement requires the company to hire, and pay for, a monitor to implement a three-year program to ensure that Starion complies with the state’s consumer protection law and with the terms of the settlement.

The AG's office said that, in the last four years, residents in Massachusetts filed more than 1,000 complaints with the AG’s Office about competitive suppliers engaging in aggressive and deceptive tactics. "Complaints include suppliers pretending to be a utility company to induce customers to turn over sensitive information; suppliers harassing customers with repeated calls or home visits; and door-to-door salespeople forcing their way into elderly customers’ homes and refusing to leave without a signed contract," the AG's office said

"Today’s settlement is part of AG Healey’s ongoing efforts to protect customers from the unfair and deceptive practices in the individual residential competitive electric supply market. Her office has issued two reports on the impact of the market in Massachusetts, which together found that customers in the state who switched to a competitive electric supplier paid $253 million more for their electricity than if they had stayed with utility company, from July 2015 through June 2018. Low-income customers who switched to suppliers during that period overpaid for their electricity by $57 million. In January 2019, AG Healey filed legislation to ban competitive electric suppliers from signing up new residential customers for contracts," the AG's office said

As previously reported, the DPU is investigating the impact of competitive electric suppliers on low-income electricity customers, after the issue was raised by the AG

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