PSC Commands SmartEnergy to Return $6.5 Million to 32,000 Marylanders

On Monday, Maryland regulators instructed electricity provider SmartEnergy Holdings to return $6.5 million to over 32,000 customers. This marks the most recent turn of events in an ongoing six-year investigation into alleged misleading practices.

The Maryland Public Service Commission ordered the New York-based renewable energy provider to refund electricity customers within 90 days who were signed up via phone from February 2017 to May 2019 through the state’s competitive energy market.

In March 2021, the commission supported the conclusions of a public utility law judge who determined that SmartEnergy engaged in unfair, false, misleading, and deceptive marketing, advertising, and business tactics. Upon reviewing the appeal against the suggested ruling, the Public Service Commission (PSC) additionally concluded that the company breached the state’s regulations concerning telemarketing calls by enrolling clients over the phone without their signed consent on agreements.

Last August, SmartEnergy has sued the PSC, alleging that the commission incorrectly interpreted regulations governing telephone-based sales. And enforcing overly harsh punishments that could lead to the company’s closure. At the time, an attorney representing SmartEnergy informed The Baltimore Sun that the Telephone Solicitation Act, enacted in 1988, aimed to safeguard consumers from having goods or services involuntarily signed up for by phone marketers. It doesn’t apply when customers initiate the calls themselves.

Representatives from SmartEnergy were unavailable for contact on Monday evening.

In March 2021, the regulatory body responsible for licensing non-utility gas and electric providers instructed SmartEnergy to terminate contracts and provide refunds to approximately 32,000 clients who enrolled following calls made using a toll-free number featured on 6 million mailers distributed across Maryland between 2017 and 2019. The agency halted implementation of this directive pending completion of SmartEnergy’s appeal process.

Regulators began looking to uncover misleading tactics in April 2023 following a surge in complaints about third-party vendors.

In the most recent legislative session, Maryland legislators passed a law aimed at safeguarding consumers from high fees imposed by retail supply sales personnel. The new regulations also mandate licensure for these sales agents and establish limits on permissible charge amounts.

“Today’s order will offer some assistance to those customers who were adversely affected by SmartEnergy,” stated Frederick H. Hoover Jr., the commission chair, in a news release on Monday.

The refunded sum exceeds the $6 million that SmartEnergy had projected as the variance from its own rates compared to those set by the customer’s utility company.

The Maryland Office of People’s Counsel, a state agency that represents rate payers, estimated SmartEnergy owed at least $6.5 million and later updated that to $16 million because SmartEnergy continued serving customers while appeals were pending.

SmartEnergy claimed that paying this sum would push the company toward bankruptcy and requested that their reimbursements be capped at $3 million. During an August hearing, the commission’s staff contended that the firm was still disbursing substantial sums for distributions, wages, and incentives.

The commission's directive stated that the complete sum of almost $16 million was accurate; however, it expressed reservations regarding an extended refund procedure that could postpone payments. Consequently, it decided to suspend all but $6.5 million.

The suspension will be removed if there is non-compliance, the commission stated. SmartEnergy is also subject to a civil fine of $250,000.

Got a news lead? Reach out to Lorraine Mirabella. at lmirabella@baltsun.com , (410) 332-6672 and @lmirabella on Twitter.