Consumer Protection

Energy retailer asks Maryland Supreme Court to reconsider the Maryland Public Service Commission’s re-writing of the Maryland Telephone Solicitations Act

Micah Bucy on January 31, 2023

On March 31, 2021, the Public Service Commission of Maryland (Commission) issued Order No. 89795 which proposed to drastically re-write the Maryland Telephone Solicitations Act (MTSA) and, if permitted to stand, may fundamentally change the way business is conducted in the state. In Order 89795, the Commission was resolving a complaint filed by Commission staff against SmartEnergy, a Maryland retail energy supplier. The complaint alleged that SmartEnergy engaged in false and misleading advertising in connection with a mailing solicitation campaign that resulted in consumers calling SmartEnergy to sign up for the service advertised in the mailed postcards, and then subsequently becoming disgruntled with the service or the terms. Ultimately, the Commission found SmartEnergy had violated the MTSA and imposed penalties and sanctions, but Order 89795’s re-writing of the MTSA has much broader implications than just the issues and interests alleged in the complaint.

The MTSA is a consumer protection law that was enacted to protect Marylanders from telemarketers and merchants cold-calling and enrolling unsuspecting consumers into vague and un-memorialized contracts over the phone. Maryland law tasks the state’s attorney general with enforcing the state’s consumer protection laws, so there is a threshold question in this case of whether the Commission even has jurisdiction to apply and enforce the MTSA. Even if it does, in order for the MTSA to apply to a phone call between a merchant and a consumer, the solicitation call must occur “entirely” over the phone and be “initiated” by the merchant. The Commission’s Order in the SmartEnergy case seems to write out the prerequisites for the MTSA to apply. The Commission found that SmartEnergy’s solicitation started with the mailing campaign and that consumers called SmartEnergy in response to the postcards it sent. By the Commission’s own findings of facts, while part of SmartEnergy’s solicitation attempts, including consummation of the contract, occurred over the telephone, SmartEnergy’s “entire” sales attempt did not occur via telephone; similarly, it was the consumer, not SmartEnergy, that “initiated” the call and so, on its face, it is difficult to reconcile how SmartEnergy’s phone conversations are subject to the MTSA. Additionally, for calls that fall under the MTSA, in order to comply with the law, merchants are required to provide follow-up written contracts that lay out terms of the agreement. SmartEnergy provided written terms to the consumers that signed up for its service, but the Commission found the follow-up communications were insufficient.

The implications of the Commission’s Order are significant. If a consumer calls a merchant of goods or services to place an order or schedule an appointment – think take-out food or calls to the doctor, a lawyer, or a plumber – and a contract is formed over the telephone, under the Commission’s interpretation that phone conversation is subject to the MTSA. It means that to order a pizza, the pizza parlor is going to be required to provide a written contract with the terms and conditions for the take-out order memorialized. It will construct new barriers for Marylanders to conduct everyday business.

For these reasons, SmartEnergy has petitioned the Maryland Supreme Court to hear its case and revisit the Commission’s Order (and the appellate courts that affirmed the Order). Several amicus briefs have been filed in support of SmartEnergy’s request for the court to hear its case; a decision by the court about whether to hear the case is expected in the coming months. The case is In the Matter of SmartEnergy Holdings, LLC d/b/a SmartEnergy, Case No. SCM-PET-0363-2022.

Unfair Trade Practice Claims Involving Utility Billing: PUC has Primary but Not Exclusive Jurisdiction

Kevin McKeon on January 17, 2012

Utility customers who challenge billing practices under the Unfair Trade Practices and Consumer Protection Law (UTPCPL) must bring their challenge first to the Public Utility Commission (PUC), but may pursue their claim in civil court under the UTPCPL if the PUC concludes that the utility violated its tariff, the Commonwealth Court has ruled.

In Pettko v. Pennsylvania American Water Company, ___ A.3d ___ (Pa. Cmwlth. 2012) (No. 1061C.D. 2011 filed January 13, 2012) (Brobson, J.), plaintiffs filed a class action challenging Pennsylvania American Water Company’s distribution system improvement charge (DSIC) and state tax adjustment surcharge (STAS) billing procedures, together with the company’s alleged system of rounding individual charges up rather than down. The trial court sustained the company’s preliminary objection, ruling that the PUC has primary jurisdiction over a utility’s method of calculating tariffed charges, and that, because the remedy in a successful challenge would be refunds which the PUC may order, the PUC had exclusive jurisdiction as well. The Commonwealth Court affirmed the trial court’s decision as to primary jurisdiction, but held further that in the event the PUC were to conclude that the utility violated its tariff in rendering bills, plaintiffs would be able to pursue a UTPCPL claim in the trial court, not to be duplicative of any refunds ordered by the PUC, for additional damages including exemplary and treble damages, as provide for in the UTPCPL.

The plaintiffs in the case alleged that, although the PUC authorized periodic increases in DSIC and STAS charges, to be effective at the beginning of a particular calendar month, the company implemented those increases at the beginning of billing cycles that predated the effective date of the increase, and failed to pro-rate the charges for the billing cycle in which the increase began. In addition, the plaintiffs alleged that the company rounded up every individual charge to the nearest cent, even though “accepted rules of arithmetic would dictate rounding down,” and that, although “individually small, the practice of rounding up to the next cent” when aggregated across individual customer bills and across bills rendered to all customers, “represents a considerable amount of money.”

The court affirmed the trial court’s transfer of the case to the PUC, rather than dismissal of the case without prejudice, because the PUC had primary jurisdiction over the general question of the propriety of the company’s billing practices. In the event the PUC finds that the company violated its tariff, however, the plaintiffs may resume their suit under the UTPCPL in the court of common pleas. As the court reasoned: “[W]hile we agree that the PUC has primary jurisdiction over the general question of whether PAWC’s billing practices comport with the tariff, the refund action does not eliminate Pettko’s right to seek relief under the UTPCPL, because the PUC has no power to award relief, if it is appropriate for that claim.” (Slip up at 20)

A copy of the decision is attached here. pettko v pa american water.pdf

Pennsylvania Passes 1,000,000 Customer Mark in Competitive Electricity Market

Todd Stewart on April 1, 2011

It’s official – Pennsylvania has passed the 1 million customer mark in electricity shopping. According to the latest weekly update on the Pa. Power Switch website (www.PaPowerSwitch.com), the total number of customers switching to an electric generation supplier as of March 23, 2011, was 1,001,062.

Leading the way with the highest percentage of customers shopping is
tiny Pike County Power & Light, with 73% of its customers shopping. Among the larger companies, PPL is out in front at 37.5%, which equates to 526,000 customers – 449,403 of whom are residential customers. In a not too distant second place among larger companies is Duquesne, with 24.5% of its customers shopping. This equates to 126,000 residential customers. PECO has 16%, or 199,800 residential customers shopping, but given that its customers have been shopping for only a few months, that number is likely to grow substantially. In all, for the majority of the Commonwealth, the numbers are quite impressive and evidence the strong support of the competitive electricity industry by the Pennsylvania Public Utility Commission and Pennsylvania’s electric distribution companies. These figures also are strong evidence for the notion that when it comes to competition in the electric and gas business, if you build a competitive market, the marketers will come.

The same momentum is not present in the natural gas markets, where switching has languished at about 200,000 total customers statewide. The PUC has undertaken a number of regulatory initiatives that should help improve these numbers when the changes finally come on line.

Retail Energy Market Sales Practices To Be Subject Of PUC Rulemaking

Todd Stewart on February 11, 2011

In a move that reflects growing concern over door-to-door marketing of retail energy the Pennsylvania PUC is seeking the input of industry stakeholders with an eye to adopting regulations that will curb perceived abuses.

At its February 10, 20011 Public Meeting, the PUC issued a Proposed Rulemaking Order at Docket L-2010-2208332 to establish regulations that will impose restrictions on the manner in which retail energy marketers, particularly those who rely on door-to-door sales, interact with the public. The proposed regulations are not expected to deviate significantly from the Interim Guidelines that were issued on November 5, 2010. Interim Guidelines on Marketing and Sales Practices for Electric Generation Suppliers and Natural Gas Suppliers; Docket No. M-2010-2185981 (Interim Guidelines). The Interim Guidelines addressed such subjects as: requiring marketing representatives to identify themselves and the company on whose behalf they are soliciting at the outset of every contact; prohibiting conduct such as misrepresenting the terms of a proposal; and requiring that door-to-door representatives not dress in a manner that suggests they work for a utility or another marketer. Under the Interim Guidelines, the Commission also required that sales representatives wear photo identification issued by the marketer and present customers with business cards clearly identifying on whose behalf they are marketing. Sales representatives also were required to provide customers with written copies of any offers, terms and conditions, etc., discussed with customers orally during any sales contact and would require the marketing representatives break off any such contact immediately upon customer request. One other important feature of the Interim Guidelines is the requirement that door-to-door sales representatives leave a customer’s home before the required third party verification process takes place.

Vice-Chairman Tyrone Christy filed a Statement in which he reiterated the position he took regarding the issuance of the Interim Guidelines, stating that the other Commissioners were incorrect in presuming that door-to-door sales are permissible for energy markets and suggesting that they should be outlawed altogether

The requesting comments is expected to be issued shortly.

Energy retailer asks Maryland Supreme Court to reconsider the Maryland Public Service Commission’s re-writing of the Maryland Telephone Solicitations Act

Unfair Trade Practice Claims Involving Utility Billing: PUC has Primary but Not Exclusive Jurisdiction

Pennsylvania Passes 1,000,000 Customer Mark in Competitive Electricity Market

Retail Energy Market Sales Practices To Be Subject Of PUC Rulemaking

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