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PSC Sets Hearing To Determine Whether Retail Supplier Should Be Required To Deposit Any Revenue In Excess Of SOS Into Escrow, Pending Adjudication Of New Allegations

PSC Directs Retail Supplier To Appear At Hearing To Address Whether Probable Cause Exists To Refer Allegations From New Staff Report To New Evidentiary Proceedings

PSC Staff Allege Lack Of Signature On T&Cs Provided At Contracting (Only Separate Service Agreement Signed) Violates Contracting Requirements

February 13, 2023

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Copyright 2010-21
Reporting by Paul Ring •

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The Maryland PSC directed SunSea Energy, LLC (SunSea) to appear at the Commission’s March 8, 2023, Administrative Meeting, "for a hearing on the matters described [below] for the purpose of determining whether there is probable cause to refer this matter for evidentiary proceedings on the alleged violations."

The PSC's notice is prompted by a memo from the Compliance and Enforcement Unit ("CEU") within the Consumer Affairs Division ("CAD") of the PSC (CAD Memo), summarizing a new investigation by Staff into SunSea

At the hearing the Commission will determine whether there is probable cause to refer the violations alleged in the CAD Memo for expedited evidentiary proceedings by the Public Utility Law Judge Division, and whether interim protections are necessary during such proceedings including:

a) whether SunSea’s license to provide electricity or electricity supply services and/ or gas or gas supply services should be immediately suspended;

b) whether SunSea should be precluded from soliciting additional customers; and

c) whether SunSea should be ordered to deposit all Maryland proceeds in excess of applicable standard offer service rates into an interest-bearing escrow account pending final resolution of this matter.

SunSea is directed to file by March 1, 2023, a response to the allegations of the following alleged violations of Maryland law and regulations as alleged in the CAD Memo:

a) Defects in contracting practices and documents

b) Unauthorized enrollment of customers (slamming)

c) Supplier advertising and misconduct by agents

d) Inaccessibility of customer service representatives

The memo, from the Compliance and Enforcement Unit ("CEU") within the Consumer Affairs Division ("CAD") of the PSC, summarizes an investigation that was prompted by various customer complaints

The CAD memo alleged that a review of contracting documents from SunSea, information provided by complainants, and communications from SunSea sent in the course of the complaint resolution process, "led the CEU to determine that SunSea is not in full compliance with COMAR with regard to its door-to-door marketing practices."

The CAD memo alleged that, in 2021 and the first half of 2022, CAD received just one complaint against SunSea.

The CAD memo alleged that, "Based on complaints and supplier enrollment reports received, it appears that SunSea began soliciting customers in Maryland via door-to-door marketing on, at the latest, June 19, 2022."

The CAD memo alleged that, "CAD received 41 customer complaints against SunSea from July 1, 2022, through January 27, 2023. Of those 41 complaints, the primary issue or dispute categorization cited in each complaint was as follows: Unauthorized enrollment / slamming: 27; Misrepresentation by supplier: 11; Billing dispute: 2; Start/stop service issue: 1".

The CAD memo alleged that, "Of the 41 complaints received, 30 were resolved in favor of the customer and 2 were resolved in favor of the company. Nine complaints are still open at the time of this writing."

The CAD memo alleged that, for the period of July 1, 2022 - September 30, 2022, SunSea's complaint total was second highest among all licensed suppliers in Maryland. The CAD memo alleged that, in the quarter that followed, October 1, 2022 - December 31, 2022, SunSea amassed the most complaints of any Maryland supplier.

Notably, the CAD memo alleges violations based upon the manner in which terms and conditions are presented to customers, and which documents SunSea had customers sign

The CAD memo states that a signed contract is required pursuant to COMAR (electricity) and COMAR (gas).

The CAD memo states that COMAR and COMAR detail the minimum contract requirements with regard to electricity and gas suppliers, respectively: "a supplier shall provide the customer a copy of the executed contract and completed Contract Summary" when the contracting process is complete, the CAD memo states

The CAD memo states that a contract is defined as, "the total legal obligation that results from the patties' agreement," under Com. Law § 1-201(12).

The CAD memo alleges that, in door to door marketing, SunSea presented the following documents to customers:

• 'Residential and Small Commercial Electricity Service Agreement,'

• 'Customer Disclosure Statement' or 'Maryland Electricity Contract Summary,'

• 'Terms of Service' or a second document titled similarly to the first but containing terms and conditions -- 'Maryland Residential and Small Commercial Electric Service Purchase & Sale Agreement'

• 'Notice of Cancellation' which may include 1 or 2 copies and are frequently undated, as alleged by the CAD memo.

Citing SunSea materials, the CAD memo alleged that, "The first document in the 'Application' / 'Wet Signature' package titled 'Residential and Small Commercial Electricity Service Agreement' is one page long and contains handwritten customer contact information and account information. This document includes space for a customer’s signature. One version of this document contains an affirmation, 'You are the customer of record or the spouse of the customer of record.' In the package, this document is followed by either a 'Customer Disclosure Statement' or a 'Maryland Electricity Contract Summary.' The 'Customer Disclosure Statement' differs from the form provided by the Commission, which is required to be used under COMAR (electricity) and (gas)."

The CAD memo alleged that, "The signature in the first page of SunSea’s 'Application' / 'Wet Signature' package does not transform the company’s Terms and Conditions and/or Contract Summary into the required signed contract. Moreover, the company’s incorporation of the Contract Summary and other documents, including those containing material terms, also does not create a valid contract."

Addressing a second set of documents provided to customers in a welcome package, the CAD memo alleged that, "The documents received in the 'Welcome Letter' packet do not match the documents as purportedly received by the customer at the time of signing. None of the documents contained in the Welcome Letter contain the customer’s signature or even an indication that a customer signature was received by the company. Given the number of complainants who indicated they had not signed a contract with SunSea, this is particularly concerning. In many of CAD’s complaint records it is unclear what, if any, documents customers reviewed and received at the time of their contracting."

The CAD memo alleged that complainants' descriptions of their experience, "indicate that, where documents are presented at the time of sale, SunSea affirmatively misrepresents the nature of these contracting documents."

As an example, the CAD memo alleges that a complainant alleged as follows: "...I am an energy geek and have considered switching to a third-party supplier many times. That's why when one of SunSea Energy, LLC's representatives knocked on my door and wanted to talk about my bill, I was interested in having the conversation. A woman by the name of [BEGIN CONFIDENTIAL] [END CONFIDENTIAL] who had a badge indicating she was a subcontractor of SunSea told me that if I showed her my electric and gas bills, she would help explain why PEPCO is overcharging and how I can save money on my bill. When I showed her my bills, she scrolled to the pages explaining the charges and spent about 5-10 seconds there, and then instantly scrolled to my residential service numbers and inputted it into her phone without my consent. At no point did she explain anything about my bill like she promised. She then handed me two Residential Service Agreements, one for natural gas and one for electric. She told me these Agreements were solely meant to acknowledge that we spoke today and assured me that I could think about whether I wanted to sign up or not. I told her, I can't sign these because these are Agreements explicitly stating that I would agree to sign up with SunSea as my third-party energy provider, despite me already stating I do not want to do that. She relented and took the forms back, but before she did I asked why the $ per therm and $ per kWh for variable and fixed rates were left blank, when she was just asking for my signature. She told me that is something that PEPCO calculates and then inputs. I knew this was entirely false but figured, since I didn't sign anything and explicitly stated I was not interested in signing up, that everything would be fine."

Illustrating alleged misrepresentation, the CAD memo alleges a customer complaint alleged as follows: "[O]n September the 2nd I received a knock on my door from a man claiming to be SMECO this is my first Apartment so I didn't find this unusual. he stated that SMECO was doing promotional offer where they where giving new residence a $200 dollar gift card for residence living in these complexes the only information he said he needed was to see my SMECO bill which he took a photo on his iPhone he then asks for me to right my number down on this sheet of paper. I noticed he was wearing an xfinity band around his neck which I questioned him on it as it was weird of one company wearing another companies item he then proceeds to say he was just wearing it to hold his ID from there I knew it was a scam[.] Automatically I went to my leasing office and asked them if they new about any SMECO promotions going on which they said no."

Despite a prior Commission order which found that SunSea, in CAD's words, "misrepresented its product to Maryland customers, including by promoting its product as 'competitive'," the CAD memo alleges that, "One year and five months since the Commission’s issuance of Order 89914, SunSea is still advertising its rates as 'competitive' on its website[.]"

Concerning pricing, the CAD memo alleged that a complainant alleged that, "Despite SunSea and their subcontractor telling me that I would save money on this program to which they fraudulently signed me up, they charged me at a rate of nearly 16 cents per kWh (15.8884 cents) compared to my Price to Compare of 8.86 cents per kWh."

Among other relief, the CAD memo seeks:

1) That SunSea identify and refund affected customers the difference between the billed amounts and the utility rates where no valid contract exists to support the enrollment.

2) That the moratorium prohibiting SunSea from acquiring or soliciting new customers in the State of Maryland be reinstated.

3) That, within 20 days, SunSea file evidence showing why SunSea should not be subject to a civil penalty, as appropriate, pursuant to PUA §§7-507(1), 7-603, and 13-201 for engaging in misrepresentation and deceptive practice and for failing to comply with the identified consumer protection regulations under COMAR 20.53.07 and 20.59.07

5) That SunSea’s license be suspended or revoked pursuant to PUA §§ 7-507(1) and 7-603 for (a) committing fraud, (b) engaging in deceptive practice, (c) slamming, and (d) failing to comply with the Commission’s consumer protection regulations as contained in COMAR 20.53 and 20.59


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