By: Paul Muschick |
State investigators are continuing their crackdown against electricity suppliers they allege have deceived customers in their quest to cash in on Pennsylvania’s deregulated energy market.
The latest company on the hot seat is Respond Power of Orangeburg, N.Y.
The Bureau of Investigation and Enforcement, the independent investigative arm of the state Public Utility Commission, filed a complaint last week suggesting Respond Power should lose its license, refund customers and pay $639,000 in fines.
The complaint alleges Respond Power failed to deliver promised savings; signed up customers without their permission; altered sales agreements after customers signed them; failed to property investigate customers’ complaints or timely cancel their accounts; and failed to disclose critical terms such as whether a rate was fixed or variable.
Respond Power doesn’t comment on pending cases but cooperates in any investigation and looks forward “to being completely vindicated in this matter,” spokesman Mark Berger told me.
This is the second time in two months the Bureau of Investigation and Enforcement has recommended that an electricity supplier lose its license. A complaint filed in July against Hiko Energy is pending.
Pennsylvania’s deregulated energy market is on the hot seat itself due to accusations like this. The marketplace allows homeowners and businesses to shop around and buy electricity from other suppliers instead of being locked into the rate charged by their geographic utility.
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Some homeowners have returned to buying their power from their utility because they no longer trust competitive electricity suppliers after steep, unannounced variable rate price hikes this past winter jacked up bills by hundreds of dollars.
Their complaints prompted authorities, including the Public Utility Commission, attorney general’s office and Office of Consumer Advocate, to vow to take steps to clean up the marketplace and make it more consumer friendly.
This investigation into Respond Power began before the massive outrage over the price hikes. According to the complaint, it started with a call to the PUC’s complaint hotline in October from a whistleblower who identified himself as being on leave from working as a door-to-door sales agent for a vendor who did sales for Respond Power in the Philadelphia area.
The investigation expanded after the PUC received 1,050 complaints against Respond Power from February through July, according to the complaint.
The probe examined some of “the most egregious violations” and found customers were signed up by forging their signatures on sales agreements or obtaining signatures from unauthorized people, according to the complaint.
The company misled some customers that their rates “would be competitive or always be lower than or equal to” their utility’s rate and in some cases guaranteed a savings of up to 10 percent, the complaint says.
Respond Power says any price increases were driven by factors outside its control when last winter’s extreme cold snap, known as the polar vortex, triggered increased power use that drove up wholesale power costs.
“We maintain that any increase in rates our customers have experienced were a result of the volatile energy market and a direct result of real market costs,” Berger said.
The state also alleges some customers had difficulty reaching Respond Power to discuss their accounts.
“These customers complained of being on hold for long periods of time, many exceeding an hour, being suddenly disconnected, and/or receiving messages that the call center was not open,” the complaint alleges.
Respond Power already is facing a similar complaint filed in June by the attorney general’s office and Office of Consumer Advocate.
In legal papers filed in response to that complaint, Respond Power said it incurred cost increases in excess of 10 times its typical costs during the winter and exercised its discretion under its variable-rate contracts to increase customers’ rates to recover at least a portion of those costs.
“It was a decision that Respond Power made for business reasons that it is not required to explain in a deregulated environment,” company attorney Karen Moury wrote.
She said the company told customers in its disclosure statement, which was approved by the PUC, that its goal is to charge a price less than the local utility, “but that it could not guarantee savings due to market fluctuations and conditions.”
Last week, two administrative law judges dismissed a few of the allegations in the case, including that Respond Power’s variable rates were “not reflective of the cost to serve residential customers.” Judges Elizabeth Barnes and Joel Cheskis ruled the PUC has no authority to regulate Respond Power’s prices and the concept of “cost to serve” is irrelevant.
Respond Power has not yet filed a response to the complaint filed last week by the Bureau of Investigation and Enforcement. It is due by Sept. 10.