PUC Rejects Proposed MXEnergy Settlement Agreement Regarding Marketing Practices

The Pennsylvania Public Utility Commission (PUC) this morning rejected a proposed settlement agreement between the Commission's Law Bureau Prosecutory Staff (now the Bureau of Investigation and Enforcement) and MXEnergy, a PUC-licensed electric generation supplier, over the company's marketing practices.

A copy of the settlement (filed in Docket M-2012-2201861) was not immediately available, though the PUC referenced some its key terms in a news release.

The Commission voted 5-0 to approve a joint motion by PUC Chairman Robert Powelson and Commissioner Wayne Gardner rejecting the settlement agreement filed by the parties, and referred the matter back to the Law Bureau Prosecutory Staff for any further actions they deem to be warranted.

"The Commission has made it clear on numerous occasions that it will not tolerate unlawful activity that threatens to harm the burgeoning retail electricity market in Pennsylvania, " said Powelson and Gardner in the motion.

On Nov. 4, 2010, the PUC's Prosecutory Staff initiated an informal investigation of MXEnergy focusing on the company's marketing of its residential electric generation supplier services, specifically its door-to-door sales practices. This date is prior to the acquisition of MXEnergy by Constellation Energy (and Constellation's subsequent merger with Exelon).

The PUC said that the informal investigation was opened as a result of a referral by the PUC's Office of Competitive Market Oversight, based on information that Gateway Energy Services Corp. had filed a federal lawsuit against MXEnergy. The suit had been first reported by Matters see 9//2110

According to the PUC, Gateway in that suit alleged that certain third-party independent contractors representing MXEnergy engaged in "slamming, " with the intent to confuse or deceive four of Gateway's existing customers into terminating their existing contracts with Gateway and entering into new contracts with MXEnergy. Slamming is the illegal practice of switching a consumer's electric generation service without permission, the PUC noted.

The proposed settlement agreement states that, had this matter been litigated, Prosecutory Staff would have alleged 22 instances of slamming, the PUC said. In order to address these allegations, MXEnergy agreed to pay an $11,000 penalty and take certain corrective actions, according to a PUC news release.

"We simply do not believe that a $500 per-customer penalty, even when combined with the corrective actions, is enough to remedy this situation or to deter potential future violations of the Code or the Commission's regulations by an electric generation supplier, " added Powelson and Gardner.