PUC Fines Retail Supplier $500,000; Permanently Bans Supplier From Door-to-Door Marketing
Supplier Prohibited From Residential Marketing Via Other Channels For One Year
March 1, 2021 Email This Story Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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The Maine PUC issued an order finding that, "Electricity Maine, LLC (Electricity Maine) engaged in conduct in violation of 35-A M.R.S. § 3203 and Chapter 305 of the Commission’s Rules, both of which govern the retail competitive sale of electricity in Maine. Electricity Maine sales agents, during several door-to-door marketing campaigns, repeatedly made false and deceptive claims about being associated with the local transmission and distribution (T&D) utility and about the electricity rates and savings being offered by Electricity Maine."
The PUC ordered that:
• Electricity Maine shall pay within 30 days an administrative penalty of $500,000, payable to Treasurer, State of Maine
• Electricity Maine’s authority to engage in door-to-door marketing activities is permanently revoked
• Electricity Maine’s authority to engage in any residential marketing activities in Maine via telephone, internet, or any other means is revoked for one year
The PUC also ordered that Electricity Maine provide a notice via US Postal Service and electronic mail to all existing residential customers enrolled through door-to-door marketing activity informing them of the PUC's proceeding and informing the customers of their current rate with Electricity Maine and the customer’s opportunity to transfer their supply service to standard offer service at the current standard offer residential rate of $0.064494/kWh without an early termination fee
Electricity Maine issued the following statement concerning the matter:
"We appreciate the Commission’s willingness to settle this historical matter. We value the privilege of providing Mainers choices in their electricity supply for years to come."
--- Statement from Electricity Maine
The PUC said that, "The complaint record shows the rate offered by Electricity Maine to customers in CMP’s service territory from late 2017 to late 2018 ranged from 8.49 cents per kWh to 12.70 cents per kWh. This is 24% to 62% higher than the standard offer rates offered during the same time period. Thus, during the time period when Electricity Maine was marketing door-to-door to CMP customers, it was offering a rate that was significantly more than what customers were paying under the standard offer rate."
While the PUC said that, "the Commission does not regulate the rates of CEPs [competitive electricity provider], and thus simply offering a rate higher than the standard offer rate is not a violation. 35-A M.R.S. § 3203(9)," the PUC added that, "The Electricity Maine rates documented in the complaint record, however, are relevant in the context of this proceeding, that is, in examining the false and deceptive claims made by Electricity Maine’s sales agents about for whom they worked and whether Electricity Maine was offering savings to customers. There are no instances in the complaint record where Electricity Maine offered customers a rate that was lower than the standard offer rate."
The PUC said, "The facts set forth in the complaint record in this matter cover a period from late 2017 through late 2018 during which electric customers were contacting CMP and CASD [Consumer Assistance and Safety Division] with complaints regarding the door-to-door marketing activities of Electricity Maine. A review of the of the complaint record shows the complaints about Electricity Maine generally fall into two general and sometimes overlapping categories: (A) Electricity Maine sales agents made false and deceptive claims about being associated with CMP and (B) Electricity Maine sales agents made false and deceptive claims about Electricity Maine’s electricity rates, the potential for savings, and the standard offer rate."
More specifically, the PUC said, "For example, Electricity Maine sales agents told customers they were from or worked for CMP, that Electricity Maine was taking over CMP, and that CMP had hired the sales agents as auditors to provide refund checks due to overbilling. In one instance, an Electricity Maine sales agent wore a badge indicating he was from CMP. In other instances, sales agents claiming to be from CMP enrolled customers by making the customer feel pressured and uncomfortable, and in one instance falsified a third-party verification call to enroll the customer without the customer’s authorization. On other occasions sales agents, while claiming to be from CMP, told a customer because she was a senior citizen, a sales agent could lock in a lower rate for her, and told an 87-year-old customer a sales agent could guarantee her a lower electricity bill at a fixed rate. A low-income customer described Electricity Maine sales agents as targeting the elderly, and the 87-year-old customer referenced above reported feeling upset, frightened, vulnerable, and gullible after the sales agents’ door-to-door visit."
"The record shows that Electricity Maine sales agents lied to customers by telling them that they were from or associated with CMP. By making customers feel pressured and uncomfortable, the sales agents coerced customers into enrolling with Electricity Maine. Further, the sales agents deceived customers into believing the sales agents were associated with overbilling issues and CMP, a company name familiar to the customers because it is the local T&D utility and because customers’ concerns about the metering and billing practices of CMP were heightened. By claiming an association with CMP, the sales agents were able to engage customers, gain access to customer utility bills, and ultimately were able to enroll customers with Electricity Maine under circumstances that were unfair to customers, and at a minimum under circumstances that were likely confusing and misunderstood by customers who did not understand who was offering to sell them electric supply. For these reasons, the Commission concludes Electricity Maine sales agents employed false, deceptive, coercive, and unfair statements and actions about having an association with CMP in willful violation of the customer protection standards set forth in statute and rule. 35-A M.R.S. § 3203(4-A); MPUC Rules, Ch. 305, §§ 4(B)(12) & (13)," the PUC said
The PUC further said, "The record shows sales agents claimed Electricity Maine could save customers money when it could not because Electricity Maine’s rates were higher than the standard offer rate."
The PUC said, "For example, Electricity Maine sales agents told a customer he would have a lower rate and electricity bill if he signed up with Electricity Maine, told customers it would be cheaper or a better deal or better rate to have Electricity Maine as their supplier, told a customer she could have free electricity for a year if she signed up with Electricity Maine, told a fixed-income customer her rate would be reduced by a certain percentage, told a customer he would pay less than the standard offer rate if he signed up with Electricity Maine, and otherwise guaranteed customers lower rates; all of which were false. In one instance, a sales agent told a customer that rates were set to increase, that he could offer the customer a special rate, and he pressured the customer to show the agent his electric bill; all of which were untrue. Similarly, Electricity Maine sales agents took the electric bill of a 91-year-old WWII veteran without his knowledge and signed him up for a rate higher than the standard offer rate. In another instance, sales agents told customers they could offer cheaper rates and directed customers as to how to respond appropriately to questions during the third-party verification calls. In another instance, a low-income customer reported Electricity Maine had made false claims about cheaper rates and expressed concern about his ability to pay after he switched to Electricity Maine. One customer who did not realize he had signed up with Electricity Maine required an interpreter to assist him in rescinding a contract where his enrolled rate with Electricity Maine was higher than the standard offer rate."
"The record shows Electricity Maine sales agents lied to customers by telling them that Electricity Maine would provide rates that would be less than the standard offer rate, be lower than what was otherwise available, and/or in any event save the customer money. Electricity Maine did not offer customers rates that were less than the standard offer rates in 2017 and 2018. By making customers feel pressured to provide information, the sales agents coerced customers into enrolling with Electricity Maine. By making the false claims about rates and savings, and at a minimum by making statements susceptible of both a misleading and truthful interpretation which deceived customers into believing they would save money, Electricity Maine enrolled customers under circumstances that were unfair to customers, and at a minimum under circumstances that were likely confusing and misunderstood by customers who did not understand what rate Electricity Maine was offering. For these reasons, the Commission concludes Electricity Maine sales agents employed false, deceptive, coercive, and unfair statements about rates and savings in willful violation of the customer protection standards set forth in statute and rule. 35-A M.R.S. § 3203(4-A); MPUC Rules, Ch. 305, §§ 4(B)(12) & (13)," the PUC said
The PUC said, "There are several underlying factors that place Electricity Maine’s door-to-door marketing campaigns and violations in Maine in context. In examining Electricity Maine’s activities, the OPA references two underlying problematic issues with the retail electric supply market in Maine: (1) customers mistakenly believe that the T&D utility, in this case CMP, supplies the power rather than only delivering it; and (2) customers will sometimes choose a CEP product, in this case from Electricity Maine, even though the CEP rate is more expensive than the standard offer rate. OPA Br. 13. The Commission agrees that this proceeding has highlighted these possibilities, and notes that the Commission’s rules contain provisions intended to address these concerns about the retail market. MPUC Rules, Ch. 305, § 4(B)(12)(c) (CEPs prohibited from claiming association with T&D utility) & §§ 4(B)(1) & 4(B)(12)(b) (CEPs must disclose standard offer rate to allow comparison to CEP rate; CEPs prohibited from comparing CEP rates to standard offer rates not in effect). To the two issues cited by the OPA, the Commission adds a third, and that is to note the existence of highly publicized customer concerns about high bills in CMP’s service territory and the Commission’s investigation into same, including the hiring of an auditor to assist in the examination of CMP’s billing and metering practices."
The PUC said, "The record shows Electricity Maine sales agents repeatedly used false and deceptive claims and actions to take advantage of these underlying circumstances and concerns, namely that Maine customers (1) may be susceptible to the misperception that CMP delivers and supplies their electricity, (2) may not be aware of the standard offer rate as a means to compare it to the rate being offered by Electricity Maine at the time of a door-to-door solicitation, and (3) were concerned about whether they were being over billed by CMP. By using false, deceptive, coercive, and unfair, statements and actions, Electricity Maine's sales agents exploited the susceptibility of customers to confusion about supply and rates, and customers’ concerns about CMP’s billing and metering practices. Through their repeated statements and actions, Electricity Maine’s sales agents disregarded and willfully violated the regulatory provisions designed to protect customers from unfair business practices."
The PUC said, "As stated in the July 24, 2018 Order to Show Cause and as stated by Electricity Maine at hearing, Electricity Maine has not denied that its sales agents acted in false and deceptive ways in violation of Commission rules. Rather, Electricity Maine has consistently argued that it took appropriate action to address instances where its sales agents claimed to be associated with CMP or made false and deceptive statements about rates and savings being offered. The record shows that in response to unlawful conduct, Electricity Maine retrained agents, clawed back funds from vendors, and permanently deactivated certain agents."
The PUC said, "Electricity Maine’s compliance efforts, however, fell short. While sales agents were posing as CMP auditors and claiming they could save customers money, it was Electricity Maine’s marketing department that was given responsibility for addressing such complaints and not a compliance department. Further, the record shows there were credible instances where agents violated regulatory requirements, but Electricity Maine took no action against such agents. See, e.g., C.R. 99, 257, 313, 377, 491, 532. Further, following the escalation in customer complaints, Electricity Maine held only one retraining session in 2018 and it involved no written training materials for the sales agents. This approach to retraining proved ineffective as there were a series of instances where deactivated sales agents subject to retraining and reactivation continued to engage in conduct in violation of the Commission’s customer protection standards."
Notable is that the PUC said, "Electricity Maine has also taken the position that the record shows voluntary customer enrollments were confirmed by third-party verification calls and the delivery of welcome letters setting forth the terms of service. The Commission concludes, however, that a third-party verification call is ineffective to demonstrate customer choice where sales agents, in advance of the call, made false and deceptive claims about having an association with CMP or about rates, or otherwise pressured or deceived customers and directed them as to how to respond to questions during the third-party verification call. Third-party verification and the delivery of the terms of service cannot cure underlying false, deceptive, and coercive statements and actions."
Also notable, with respect to supplier responsibility over third-party agents is the PUC's discussion that: "The OPA [public advocate] argues Electricity Maine is responsible for the actions of its third-party vendors because, even though they are independent contractors, Electricity Maine maintained control of the sales agents. OPA Br. at 4-5. While Electricity Maine denies that the sales agents must be treated as employees, “it is not disclaiming responsibility for the actions of sales agents retained by” Electricity Maine’s third-party vendors. Electricity Maine Reply Br. at 5 n.3. Thus, while we agree with the OPA’s assertion that the record shows Electricity Maine maintained control over the training and retention of the sales agents, OPA Br. 10, the Commission does not reach the legal question of whether parties are generally responsible for the actions of independent contractors because Electricity Maine does not disclaim responsibility. Moreover, as noted in legal standards section, section V, CEPs are expressly responsible for the regulatory violations of agents acting on their behalf. MPUC Rules, Ch. 305, § 4(C)."
The PUC noted that, pursuant to 35-A M.R.S. § 117, the Commission has discretion as to how administrative penalty funds are used.
"Given ongoing concerns about door-to-door marketing activities by CEPs and others, as well as customer confusion about who is providing electricity supply, the Commission directs Commission Staff to explore ways that these administrative penalty funds can be used to support customer education on the issues brought to light in the complaint record and the topics discussed in this Order," the PUC said