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PSC Reverses ALJ's Proposal Requiring Retail Supplier To Provide "All Terms And Conditions" During Telephone Solicitations

Also Reverses Proposal Requiring Supplier To Ensure Mailers Include "All Material Terms And Conditions"

PSC Finds All Of Supplier's Telephonic Contracts Over Three-Year Period Are Invalid, Addresses Treatment Of Customers

August 24, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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In an order on appeal in a PSC Staff complaint brought against U.S. Gas & Electric d/b/a Maryland Gas & Electric and Energy Services Providers, Inc. d/b/a Maryland Gas & Electric ("MDG&E", "MDGE", or "the Company"):, the Maryland PSC reversed in part a proposed order from a public utility law judge (PULJ) and specifically rejected the proposed order's requirement that: (a) "MDG&E shall provide all terms and conditions of the contract to customers during telephone solicitations"; and (b) "That MDG&E shall ensure that any mailers it uses from this point forward shall include all material terms and conditions of the sales offer"

The proposed order's requirements, which the PULJ acknowledged exceeded the Commission’s regulatory requirements but were recommended as a sanction for past behavior, had been exclusively first reported by in March (story here)

The case concerns a complaint brought against MDG&E by PSC Staff for various alleged enrollment violations. The period at issue is January 2016 through June 2019, prior to Vistra's acquisition of MDG&E (via Crius)

As previously reported, MDG&E has already paid $150,000, plus refunds to certain customers, in addition to an estimated $305,000 in refunded early termination fees, under a settlement in the case. The PSC's order on appeal addresses discrete legal questions concerning telephonic contracting that were reserved for litigation

See our prior story for more details on the settlement

Also see our earlier story for more details on the allegations in the case

As discussed further below, the PSC found that, "The evidence reflects that MDGE’s actions arose from a misinterpretation of the MTSA," and that, "the Commission determines that MDGE’s violations are not intentionally fraudulent."

As such, the PSC rejected certain of the proposed remedies from the PULJ.

"[T]he Commission rejects the PULJ’s proposed remedy of MDGE including all material terms and conditions on its mailers, as this requirement would be onerous and difficult to satisfy. The Commission declines to require adherence to conditions that well exceed the statutory and regulatory requirements, as such authority is not vested in the Commission," the PSC said

"Additionally, the Commission also rejects the PULJ’s proposed remedy of MDGE reciting all terms and conditions of the contract to customers during telephone solicitations, for the same reasons," the PSC said

The PSC's order on appeal affirmed that proposed order's finding that, consistent with another recent PSC decision, both inbound calls resulting from marketing materials sent by a supplier, and outbound calls from a supplier, fall within the MTSA’s definition of a telephone solicitation

The PSC, "affirms the PULJ’s finding that the MTSA applies to the inbound customer calls to MDGE, in response to their marketing postcards and other mailed solicitation materials."

"The MTSA applies to all inbound calls, made pursuant to marketing materials, where the sale takes place entirely over the phone. Additionally, the Commission’s telephone contracting regulation (COMAR applies," the PSC said

In terms of whether MDGE could claim an exemption from the MTSA wet signature requirement, the PSC found as "valid" the PULJ’s finding that the mailing of marketing materials does not, in and of itself, create a preexisting business relationship

With respect as to whether MDGE's mailer contained all key terms and conditions (and thus qualified for a MTSA exemption), the PSC said, "The Commission finds that MDGE’s mailings were inconsistent in its contents and compliance with the consumer protection laws, were deceptive and misleading, and the supplier therefore violated the MTSA through its telephone enrollment processes."

"MDGE’s arguments notwithstanding, the evidence in this case does not clearly show that its mailers were directed to prior or current customers – or anyone – with whom MDGE had a preexisting relationship, and none received the full contracts as required by either MTSA or, alternatively, the Commission’s contracting regulations," the PSC said

"The Commission also affirms the PULJ’s finding that the MTSA § 14-2202(a)(5) marketing exemption does not apply, since customers were not enrolled under circumstances in which they had the opportunity to examine MDGE’s services beforehand, particularly considering that the marketing information may not have contained all the important information needed to understand the offering such as price, contract term, renewal term, or other limitations," the PSC said

"The Commission affirms the PULJ’s finding that any telephone enrollments that were exempt from the MTSA are, in the alternative, in violation of COMAR and COMAR, because MDGE did not send customers entire written contracts within three days of the customers’ telephone enrollments," the PSC said

"Having failed to comply with the MTSA’s requirements, and admitting that failure in the stipulation of facts, the Commission finds MDGE’s contracts with all of its Maryland customers enrolled during the complaint period of 2016-2019 are invalid," the PSC said

As proposed by the PULJ, the PSC ordered MDGE within 30 days, to inform its telephone-enrolled customers, enrolled from January 2016 through June 2019, that they may choose to continue with MDGE, return to SOS, or select another supplier. To the extent customers do not affirmatively elect to remain with MDGE or select another supplier, they are to be returned to default service, under the specific process below

"MDGE is ... directed to file with the Commission, within 60 days of the date of this Order, a plan to address any remaining invalid enrollments. After reviewing the MDGE’s plan, the Commission shall determine a process for MDGE to return any customers without valid contracts to their utility SOS provider within 180 days," the PSC held

The PSC noted, "the Commission determines that MDGE’s violations are not intentionally fraudulent when compared to the actions of other suppliers where the Commission determined an intent to commit fraud and deceive existed, and assessed more stringent penalties and higher fines," as the PSC did not impose any further civil penalties beyond the terms of the previously noted settlement

The Commission affirmed the PULJ’s directive that MDGE provide a full written contract, containing all terms and conditions, within three business days for all future telephonic sales in Maryland, whether outbound or initiated by inbound calls, regardless of whether an exemption would be allowed based on the MTSA

Case 9615


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