Complaints have spiked against gas and electric suppliers in Maryland’s competitive energy marketplace, prompting heavy scrutiny in recent weeks from regulators looking to root out deceptive tactics.
The Maryland Public Service Commission has launched an unprecedented enforcement blitz that could lead to suppliers being prosecuted, fined or having their licenses revoked. The effort is expected to last through August.
The commission — which licenses nonutility gas and electric suppliers, but does not regulate their prices — said it is taking the rare step because of record-high numbers of complaints, many concentrated in low-income neighborhoods in Baltimore. Already, nearly a dozen companies have been barred from taking on new customers.
Consumers say suppliers have overbilled them, enrolled them in contracts without their permission and falsely claimed affiliations with a utility or state agency.
“We do have bad apples within the retail supply community, and they’re ruining it for all the other reputable suppliers that operate in the state,” PSC Chairman Jason Stanek said during a January administrative meeting.
Maryland opened up utility monopolies to competition in 1999 in an effort to drive down prices. Deregulation allows customers whose power is delivered by Baltimore Gas & Electric and other utilities to continue having utilities supply gas and electric or choose a supplier on the open market. About 200 licensed third-party suppliers buy energy from the wholesale market to resell to residents and businesses.
In one PSC case, supplier SFE Energy Maryland was barred as of March 26 from signing up new customers through door-to-door sales after commissioners found the company may have violated state laws and regulations.
Customers alleged that sales agents working for SFE, which supplies more than 20,000 Maryland electric and gas customers, claimed to be from BGE or another utility, enrolled them for service without their permission or did not give them required contract documents.
A spokesman for SFE said the supplier does not comment on matters before the commission.
In additional enforcement cases, the commission suspended supplier SunSea Energy’s license April 6 for violations of state law and PSC regulations, directing it to stop enrolling new customers and return current customers to utility default service by April 10.
Another supplier, Greenlight Energy, reached a settlement Friday with the PSC and the Office of People’s Counsel to pay a $40,000 civil penalty and issue $62,000 in refunds to some customers who overpaid. The PSC received complaints from 34 Greenlight customers over the last couple of years, some alleging that invalid enrollments resulted in bills with variable rates well above their utility’s default rate.
Yet another case, against SmartEnergy and involving deceptive enrollment practice allegations, is headed for the Supreme Court of Maryland in September after a series of appeals.
Stanek said in an interview that the commission is going after “retail suppliers who we have evidence are either using deception or other improper techniques to enroll customers, or once the customers are enrolled, defrauding customers in some way, shape or form.”
Since Feb. 1, the commission’s Consumer Affairs Division and staff counsel have issued cease-and-desist orders to nearly a dozen suppliers barring them from marketing their services or signing up customers in the state because of allegations such as deceptive marketing and misleading marketing materials.
Regulators say complaints are increasing as consumers more closely scrutinize bills amid inflation and high energy commodity prices. Those market fluctuations have had more impact on customers of unregulated suppliers who can pass along higher costs. Officials also attribute the increase to suppliers’ use of sales agents who are often inexperienced or poorly trained in selling relatively complex gas and electric commodities.
Recent studies have shown some suppliers focus door-to-door sales in low-income, often densely populated, city neighborhoods where residents often feel pressured into signing contracts with excessively high rates.
One BGE customer complained to the PSC in January 2021 that an SFE agent came to the door “giving me details on how SFE Energy would be good and would reduce my bill to a lower cost. They did the exact opposite,” according to PSC staff testimony in the SFE case. The customer saw their bill increase from $77 with a flat BGE rate to $186, then was told it would cost $262.50 to cancel gas service and another $262.50 to cancel electric.
SFE, in a response filed with the PSC, called the recent spike in complaints an aberration.
“Most of the enrollments underlying the complaints were compliant with commission rules, and a few were due to unique factual circumstances, human error and the recent volatility in energy commodity pricing,” SFE said.
The company added that half of the PSC’s final decisions on 16 complaints from July 1 to Nov. 30 last year were in its favor. It said it has taken steps to retrain sales representatives.
“The vast and overwhelming majority of SFE’s customers are satisfied with their enrollment experience and the services they are provided,” the company said in the filing.
New York-based Greenlight had 34 complaints filed between June 9, 2020, and Sept. 14, 2022, with the PSC’s consumer affairs division finding in favor of the customer in 24 instances. PSC staff alleged Greenlight has failed to give customers valid contracts as required by law, resulting in bills with variable rates well above utility default rates.
Greenlight in a PSC response said it halted door-to-door marketing and online advertising after getting complaints last year. The company has not marketed its services since the third quarter of last year and has not enrolled any new customers since Jan. 3, showing “it takes these complaints very seriously.”
The company said it disagrees with the allegations, but plans to work with the commission “to address their concerns and resume operations in Maryland with enhanced consumer protections and disclosures, enrollment procedures, and compliance mechanisms.”
In Baltimore, low-income, minority consumers often pay higher rates than higher-income consumers because they are more likely to be targeted by retail energy suppliers who charge more, said Laurel Peltier, a consumer energy advocate who also volunteers with Baltimore nonprofit GEDCO helping people with their utility bills.
Research published in November by the University of California, Berkeley’s Energy Institute at Haas confirms predatory targeting of certain ZIP codes in Baltimore, which Peltier said she has long observed as a volunteer. The report, written by Jenya Kahn-Lang, a graduate student affiliate, used three years of billing data from BGE territory in Baltimore. It found low-income households and marginalized communities pay substantially higher electricity prices than their higher-income counterparts.
“Baltimore is in the bull’s-eye, and this research just basically verified how bad it is and how intentional,” said Peltier, chair of Maryland Energy Advocates Coalition, a group of nonprofits, churches and foundations focused on reducing energy costs for low-income households. “These companies know exactly what they are doing.”
Sales agents go into the lowest income ZIP codes and “distort the truth,” using bait-and-switch tactics or offering gift cards to entice consumers to sign up for variable rates that later increase, Peltier said.
Data compiled by Peltier’s coalition shows that Maryland families that chose suppliers instead of regulated utilities have overpaid by $1 billion since 2014.
In 2021 for instance, 404,000 residential households paid a total $117 million more on their bills, or an average $290 extra per account, according to the research, based on data from the U.S. Department of Energy’s Energy Information Administration.
David Hash, a retired Bowleys Quarters resident, believes he may have paid excessive amounts for his gas and electric supply for years. He chose Constellation Energy, now based in Baltimore, as his supplier years ago after comparing rates from third-party suppliers. From then on, he just assumed he was getting a good deal.
It was only after getting his most recent 12-month renewal notice that he looked more closely at his bill, comparing rates of Constellation and BGE, the utility that delivers his power. That’s when he discovered Constellation charged 13.49 cents per kilowatt-hour, while BGE charged 9.81 cents per kilowatt-hour for what is known as standard offer service.
“Out of habit, I’ve been sticking with Constellation … maybe erroneously assuming that their rate was the best,” said Hash, who retired from facilities planning and construction management at Johns Hopkins Bayview Medical Center.
But “the default rate from BGE was a lot lower than the rate that Constellation wanted to charge for just the next 12 months,” he said. “I haven’t really been doing a lot of comparison for the last several years. I guess I got into a sense of feeling comfortable with Constellation. You’ve got to look at the fine print.”
Hash opted not to renew with Constellation and now uses BGE. He said he has not ruled out returning to a third-party supplier in the future, but would do so only with a more watchful eye.
A spokesman for Constellation said customer service agents are available “to quickly address any customer issue that may arise.”
“As a retail energy supplier, we are proud to offer our customers competitive prices and fixed rates,” said Dave Marcheskie, communications manager. “We believe strongly that Maryland residents deserve a choice in their energy provider.”
Some argue the deregulated market benefits relatively few consumers.
Complaints against suppliers have persisted for years, and some remain licensed despite repeated violations of consumer protection laws, said David Lapp, head of the Office of People’s Counsel, a state agency that advocates for residential utility consumers.
“We think more effective remedies in the past would have lessened what we’re seeing in recent months and years,” Lapp said.
Companies that have been cited in the past “have continued to profit from signing on customers through deceptive marketing practices and profiting from that,” he said, adding: “We are very pleased to see commission taking more interest in this issue.”
Complaints began rising last year, PSC data shows. The commission had received about 41 complaints per month on average since 2019, but numbers began climbing in August, said Stephanie Bolton, director of the PSC’s Consumer Affairs Division. Complaints hit 87 in January and 84 in February, she said.
“It’s more than double what we would expect to see,” she said.
Bolton said the commission’s enforcement blitz has prompted some suppliers to reach out to address concerns. The commission also is trying to get the word out about online tools consumers can use to make sure they are getting a fair price.
“The goal is to have a better, cleaner market experience for people in Maryland who are shopping for retail energy suppliers,” Bolton said. “We want to take misleading tactics out of the market. We want more upfront advertising of what this is to make sure people are making these product decisions knowledgeably.”
