PSC Staff Seeking $400,000 Fine Against Retail Supplier, License Revocation

March 20, 2023

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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In testimony concerning a complaint case brought by Maryland PSC Staff against SFE Energy Maryland Inc. d/b/a SFE or SFE Energy ("SFE" or the "Company"), Maryland PSC Staff recommended that the PSC impose a civil penalty of $400,000 on SFE and that the Commission revoke SFE’s electricity and natural gas supplier licenses

Staff had detailed allegations against SFE in a previously reported complaint and motion for a show cause order, but Staff had not made specific recommendations in such prior motion

See background on the Staff complaint here

In a prior answer to a complaint by Staff of the Maryland PSC, SFE Energy Maryland, Inc. ('SFE' or the 'Company'), SFE alleged that Staff has applied, "ambiguous and seemingly arbitrary interpretations of COMAR contract requirements," and also alleged that the PSC's Consumer Affairs Division (CAD) is accepting "unsupported allegation[s]" of customer complainants in cases where the supplier has not recorded the entirety of the sale interaction

See more details on SFE's answer here

In Staff's latest testimony, Staff said that, should the Commission decide to allow SFE to remain licensed, Staff recommends a moratorium on new customers and any marketing for 5 years.

Staff alleged, "Approximately 78% of the accusations pertain to cases where the customer in question was in the residential class and was solicited door-to-door."

In brief, Staff alleged, "SFE has enrolled customers without consent in violation of 12 COMAR 20.53.07.05A and 20.59.07.05A. SFE engaged in marketing or trade 13 practices that are unfair, false, misleading, or deceptive in violation of COMAR 14 20.53.07.07(A)(2). Finally, SFE failed to follow contracting provisions for 15 obtaining a valid enrollment as outlined by COMAR 20.53.07.08 and COMAR 16 20.59.07.08."

Notably, in testimony concerning the reliance on allegations from customer complaints in making Staff's conclusions, Staff's witness said, "Because there is no surveillance system used by SFE to monitor exactly what transpires during a given door-to-door sale, Staff and CAD must rely on consumer complaints to determine if a given agent engaged in deceptive practices. Each complaint that is the basis for my conclusion was resolved in favor of the customer after CAD conducted its investigation using information provided by both the customer and SFE."

"Furthermore, the sheer number of complaints and the similarity of those complaints from disparate sources suggests the existence of at least some misrepresentation by SFE agents," Staff alleged

"The sheer number of allegations and commonality among the complaints suggests that there is a continuous pattern of behaviors that are in violation of COMAR. Furthermore, SFE has demonstrated failure to incorporate reforms strong enough to rectify its complaint numbers to below three complaints per month on a consistent basis, which would remove it from the PSC Website’s Retail Energy Supplier Complaint reports compiled by CAD," Staff alleged

In a response filed with the PSC to Staff's testimony, SFE said, "SFE appreciates Staff’s recognition that SFE has made a 'good faith effort . . . to reform their contract materials and solicitation procedures.' Staff Direct Testimony at 16:3-5. The measures that SFE implemented – which help ensure that customers who enroll with SFE understand their contracts and want to be SFE customers – go beyond the minimum statutory and COMAR requirements for in-person residential enrollments in Maryland. That is by design, given that residential door-to-door sales has always been a 'noisy' marketing channel in terms of complaints, and the law requires only a signature on a contract that includes specific contents. SFE’s process, however, now mandates that the customer not only sign the contract after reviewing, but also the successful completion of: (1) a verification process; (2) a quality assurance ('QA') phone call from an SFE representative; and (3) a check by SFE to ensure that the name that the customer provided to SFE matches the name on the utility account. These additional measures underscore SFE’s commitment to compliance, transparency, and, simply put, doing things the right way."

In a response filed with the PSC to Staff's testimony, SFE said, "In its testimony, Staff cites to 15 CAD decisions rendered during the complaint period as 'appear[ing] to show a pattern of deceptive marketing practices.' Staff Direct Testimony at 6:21. Staff describes five complaints that involve representatives allegedly claiming to be acting on behalf of a utility, the government, or a landlord, and another three that involve savings misrepresentations."

In a response filed with the PSC to Staff's testimony, SFE said, "These types of complaints are concerning to SFE given SFE’s commitment to providing adequate and accurate information and ensuring that its customers understand the product they are purchasing and who they are purchasing it from. That is why SFE utilizes a series of customer protections for enrollments that far exceed what is required under COMARs. This makes it difficult for an agent to misrepresent his status or the product to customers. SFE has implemented numerous 'checks' and communications throughout the enrollment process to ensure that the customer is fully and accurately informed. These are evident from the screenshots depicted in Exhibit 1 and SFE’s training materials attached to the Response at Exhibit E."

In a response filed with the PSC to Staff's testimony, SFE said, "SFE continues to believe that the alleged misrepresentations described in Staff’s Complaint, and now in the testimony, are isolated incidents and do not rise to the level of a pattern or practice. Staff relies on 15 complaints to show an apparent pattern of deception without considering SFE's total number of enrollments or other statistical analyses. Nor does Staff consider that in other CAD complaints alleging misrepresentations, CAD found in favor of SFE based on the fact that the customer signed the contract and, completed an eTPV and/or TPV that were similar, if not identical, to those in the CAD decisions where CAD found an [sic] misrepresentation occurred. One could reasonably conclude that the number of CAD decisions involving alleged misrepresentation in which CAD ruled in favor of SFE show a pattern and practice of SFE complying with Maryland law."

Case No. 9690

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