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PSC Imposes $400,000 Civil Penalty On Retail Supplier, Won't Revoke License

PSC Says Supplier's Use Of Term "Competitive" To Describe Its Rates Was Misleading

Prohibits Telemarketing; Allows Supplier To Resume Other Marketing

August 19, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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The Maryland PSC issued an order imposing a civil penalty of $400,000 against SunSea Energy, LLC.

Upon full payment of that fine, a previously issued moratorium on SunSea’s marketing, solicitation, and enrollment of new customers in Maryland will be lifted, subject to the conditions described below.

Most notable of those conditions is that SunSea shall not market, solicit, or enroll customers by telephone in Maryland -- a provision the company had already decided to undertake itself during the proceeding.

The PSC declined a recommendation from Staff that SunSea's supplier license should be revoked

The civil penalty relates to a proceeding in which the PSC had found that SunSea had enrolled customers without a signed contract and other violations of Maryland law and the Code of Maryland Regulations (COMAR).

The PSC had previously said in a news release that, "The Commission found that SunSea Energy violated specific provisions of Maryland law and COMAR by enrolling nearly 1,000 customers over the phone but did not provide those customers with a written contract or have the customers sign a contract prior to enrollment, failed to provide an accurate contract summary to those customers, and engaged in deceptive solicitations."

See our prior story for more details on the proceeding

Per prior PSC order, SunSea issued over $66,000 in customer refunds. SunSea also returned all of Maryland customers to default service (the PSC had only ordered those enrolled via telephone to be returned to SOS)

In assessing the civil penalty, the PSC found that SunSea's use of the term "competitive" rates was misleading

The PSC stated, "OPC and Staff witnesses have provided compelling evidence of a multitude of violations by SunSea over the short duration of its presence in Maryland. As the Commission previously found at the October 7 hearing, SunSea has evidenced a pattern and practice of violating applicable Maryland laws and regulations by intentionally providing false information and engaging in deceptive practices."

The PSC said, "Although the Commission does not regulate retail supplier rates and is not penalizing SunSea for charging rates that Staff witness Mosier described as uncompetitive, the Commission does find that SunSea misrepresented its product to Maryland customers, including by promoting its product as 'competitive.' Its website contained the statement 'Yes Competitive Rates!' even while charging customers prices that were multiple times higher than the SOS rate provided by Maryland utilities. In particular, SunSea charged rates ranging from 12.92 cents to 18.99 cents per kWh, in comparison to the SOS rate of less than 8 cents per kWh. As Mr. Mosier testified, dozens of retail offers exist for 100 percent renewable products at under 8 cents per kWh, making SunSea’s 'competitive' claim misleading and deceptive."

The PSC said, "SunSea’s deceptive claims were further exacerbated by its violation of COMAR regulations that require suppliers to provide a clear and concise price description of its services. The record indicates that SunSea failed to provide a specific charge per kilowatt hour, instead indicating only that the rate would be variable. In fact, SunSea failed to provide a contract summary of any sort prior to enrollment, in violation of COMAR regulations."

The PSC said, "SunSea also misled customers by prominently advertising on its website that no contract was required. Its website contained the statement 'No contract!' As Mr. Mosier asserted, that statement is false because Maryland law expressly requires a contract and contract summary."

With respect to SunSea’s argument that it did not need to obtain a written signature for a telesale due to an alleged pre-existing relationship with the customer, due to an alleged relationship the customer had with an affiliate cable installation company, the PSC said, "The Commission likewise finds no merit to SunSea’s pre-existing relationship argument. SunSea initially claimed it was not required to obtain a customer signature because its affiliate -- a cable installation company -- had a pre-existing business relationship with SunSea’s prospective customer, which would ostensibly exempt it from the requirements under the MTSA. However, SunSea subsequently conceded that it had no relationship with the prospective customer itself prior to the cable company’s referral."

The PSC said the lack of any pre-existing relationship was demonstrated in the following colloquy:

Commissioner Herman: But the person who is being called to confirm their cable appointment, they do not have a preexisting relationship with Easy Sales and Marketing. They have a preexisting relationship with Comcast, isn't that right?

Mr. Adigwe [Sunsea witness]: They have a preexisting relationship with Comcast. And they can create by the customer verbally agreeing to hear from an energy specialist, that's when they go ahead and create a pre-existing relationship with the company.

Commissioner Herman: How can it be pre-existing if they're just creating it right then and there

"Considering the multitude of violations demonstrated by OPC and Staff, in conjunction with the Commission’s discretionary fining authority of $10,000 per violation, per day, under PUA § 7-507(l), SunSea could easily be subjected to a multimillion dollar civil penalty. However, in its October 7 Order, the Commission observed that SunSea's compliance with the refund process would factor into the consideration of any penalty amount that may be determined and calculated at a later date. The parties agree that SunSea fully complied with the Commission’s orders and has otherwise appeared to act in good faith to achieve compliance after notification of its violations. In particular, SunSea voluntarily ceased enrolling any Maryland customers prior to the filing of OPC’s Complaint, upon learning of the allegations from OPC," the PSC said

The PSC said, "In addition, during the hearings, SunSea acknowledged its many mistakes and took steps to mitigate the resulting harm. Counsel for SunSea stated, for example, that 'SunSea understands that the actions by its agents, who it subsequently terminated, are illegal and it is the same as if it committed those violations.'"

The PSC noted that, upon learning of a third party vendor's actions that were contrary to PSC rules, SunSea terminated its contract.

"Similarly, after CAD advised SunSea that it was not exempt from MTSA requirements regarding customer signatures, SunSea immediately stopped accepting customers through its cable affiliate and began enrolling customers only through inbound telephone sales. Additionally, upon learning in May 2020 that the failure to state an actual rate on the TPV was a violation of Ohio law, SunSea changed its policy in all states in which it operates to provide the rate in the TPV," the PSC said

The PSC said, "The Commission agrees with OPC and Staff that during this complaint proceeding, SunSea has 'made a good faith effort to comply with the Commission’s order.' SunSea observed the Commission’s directive not to market, solicit, or enroll customers in Maryland during the pendency of this proceeding. It also successfully returned all customers that had been solicited via telephone, whether inbound or outbound solicitation, to SOS, and in conjunction with Staff and OPC, SunSea drafted and sent a letter of explanation to customers informing them of their right to a refund. SunSea also rerated and refunded all customers solicited via telephone the difference between SunSea's supply charges and the applicable SOS rate from the local utility for all periods those customers were served. As of the January 27, 2021 hearing, SunSea had mailed 1,258 refund checks to customers, totaling $66,675.91. In consultation with the Commission’s Staff and OPC, SunSea provided an audit to ensure the accuracy of the refunds given to customers as well as an audit of contracts acquired via door-to-door sales, to ensure that proper customer signatures were acquired. Finally, SunSea worked with Staff and OPC to develop an accurate description of its renewable product consistent with the requirements of COMAR"

"Considering all of the requirements of PUA § 7-507(l), including the number of SunSea’s previous violations, the gravity of the current violations, and SunSea’s subsequent good-faith efforts to achieve compliance, the Commission finds that a civil penalty in the amount of $400,000 is appropriate," the PSC said

"The Commission denies the requests of Staff and OPC to revoke SunSea’s license. Although SunSea has committed a multitude of violations, its subsequent actions to mitigate harm and achieve compliance indicate that it could provide future value to Maryland as a competitive retail supplier. The Commission will closely monitor SunSea’s progress in that regard," the PSC said

The PSC ordered that SunSea shall not market, solicit, or enroll customers by telephone in Maryland.

The PSC noted that, "Mr. Adigwe [CEO of SunSea] asserted that SunSea will no longer market, solicit, or enroll customers via telephone as a result of the problems stemming from this form of solicitation, and his counsel suggested that restriction as an appropriate remedy to avoid future violations. The Commission accepts this proposal as an additional condition of this Order."

Aside from this telesales prohibition, the PSC otherwise lifted the current moratorium on the marketing, solicitation, and enrollment of new customers in Maryland by SunSea upon payment in full by SunSea of the civil penalty.

The PSC will require reporting by SunSea on customer complaints and any vendors used in marketing, and will require the submission of marketing materials by the company

Case 9647

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