PSC Orders Retail Supplier To Return All Customers To Default Service -- EnergyChoiceMatters.com

PSC Orders Retail Supplier To Return All Customers To Default Service

April 6, 2023

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

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After a hearing addressing a response to a show cause order, the Maryland PSC directed SunSea Energy, LLC (Sunsea) to return all of its Maryland customers, both electricity and gas, to default service by 5 p.m. April 10, 2023

The PSC immediately suspended Sunsea's electric and gas supplier licenses, based on what PSC Chairman Jason M. Stanek called, "serious violations".

Sunsea was also ordered to cease all marketing activities and halt enrollments in Maryland

The PSC ordered Sunsea to post an additional $500,000 in security with the Commission (bringing the total posted security to $1 million)

The PSC said that a further hearing process would determine any potential refunds to customers, any potential monetary civil penalty, and any potential license revocation

The PSC's hearing addressed alleged violations of Maryland law and regulations, as alleged by the PSC's Consumer Affairs Division ("CAD")

See background on the allegations here

The PSC from the bench said that it finds as follows with respect to Sunsea:

• Defects in contracting practices
• Unauthorized enrollments
• Misconduct by agents of Sunsea
• Inaccessibility of Sunsea customer service reps
• Other unfair and deceptive marketing and trade practices do exist

Stanek stated, "I cannot begin to emphasize the level of violations that the parties and the Commissioners have found on their own throughout the course of the past few days [of the hearing.]"

Citing testimony from Sunsea's president Jacob Adigwe who appeared before the PSC, Stanek alleged Adigwe, "takes no personal responsibility for the experiences of his customers."

Stanek said that Sunsea presented "little evidence" to dispute allegations in CAD complaint. Rather, Sunsea argued that safeguards put in place since January 2023, which were implemented prior to a CAD memo seeking a show cause order, support Sunsea's continued licensure and service to customers

While Stanek did note that the PSC hasn't received any complaints concerning Sunsea since the enhanced processes were adopted, Stanek cited Sunsea's prior complaint history and prior attempts at compliance, despite previously being subject to a PSC order which prohibited telemarketing by Sunsea and which fined the company $400,000 in 2021

Stanek said that, in the relevant period subject to the current PSC proceedings -- a period of time which is after the 2021 order -- Sunsea recorded 41 complaints in less than 7 months, which Stanek called a "shocking" number

Stanek said that in Q2 and Q3 of last year, Sunsea was either the supplier in Maryland with the most complaints, or the supplier with the second-highest number of complaints

Stanek said, "I have no confidence," based on Sunsea's testimony that Sunsea's training practices have improved substantially since 2021

Further addressing Sunsea's testimony, Stanek said that such testimony, "gives this Commission no assurance that Mr. Adigwe has the fitness to operate a retail energy supply company," Stanek said

Stanek also said "facial violations" continued to exist in a revised contract Sunsea used after the 2021 order

"Customers need to be protected," Stanek said

Sunsea had said in response to the show cause order that, "After SunSea promptly paid the $400,000 fine, the moratorium on its door-to-door marketing activities was lifted. SunSea did not start marketing in Maryland again until May 11, 2022, when SunSea recommenced door-to-door marketing only. When it did so, SunSea used substantially the same contracting documents and procedures that were subject to the 2021 Audit, which was reviewed by the Commission, Staff, and OPC, with no red flags."

SunSea said that, in response to complaints, it suspended marketing activities, issued refunds, rerated customers, and terminated agents.

"Rather than attempt to dispute or challenge these complaints with CAD (even though many are lacking solid evidence, as discussed below), SunSea instead pursued a 100% customer satisfaction target by adopting a policy of issuing refunds, rerating the customers to the SOS rate, and cancelling the contracts with no termination fees. This is the same cooperative posture SunSea took earlier in this proceeding, when it issued refunds and rerated its telemarketing customers, with no termination fees," SunSea has said

"As these new complaints came in, SunSea recognized a problem. Voluntarily, and in accordance with Staff’s request, SunSea suspended its marketing activities in October 2022, respecting this Commission’s strict policy about keeping complaints to a minimum. Before suspending marketing, SunSea fired contractors who were responsible for more than two complaints, and provided retraining and warnings for contractors on their first or second complaint. See Exhibit B [to the response]. This proved insufficient, however, so SunSea suspended marketing so it could take the time to develop a more robust solution to the problem that has always plagued it as a small business in the retail energy industry: the challenge of controlling third-party marketing vendors," SunSea said

"Over the next couple of months, SunSea invested a substantial sum in engaging an external consultant to develop a state of the art door-to-door enrollment program specifically designed to make it extremely difficult for third-party vendors to violate applicable regulatory requirements (the 'Enhanced Safeguards')," SunSea said

"The Enhanced Safeguards constitute a cutting-edge scalable enrollment process for door-to-door marketing for retail energy customers in Maryland. Among other things, the Enhanced Safeguards include: 1. Wet-signature contracts for all customers; 2. A parallel digital enrollment and electronic contract; 3. Electronic third-party verification via a proprietary SunSea enrollment platform; 4. A recorded welcome call; and 5. Numerous automatic fraud checks designed to prevent any fraudulent enrollments, including geolocation of the enrollment device," SunSea said

"Simply put, the Enhanced Safeguards, taken as a whole, virtually eliminate the opportunity for third-party vendors to commit slamming infractions in violation of the Code of Maryland Regulations ('COMAR') 20.53.07.05A, 20.59.07.05A, 20.53.07.08C and 20.59.07.08C, as alleged in the CAD Memo. Having parallel digital enrollment with dual wet-signature and electronic contracts, combined with electronic third-party verification, a recorded telephone call to the customer and geolocation of the enrollment device make it virtually impossible for an agent to get away with signing up a customer without his/her consent," SunSea said

Case 9647

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