Pennsylvania fines Verde Energy $1 million for ‘egregious’ marketing violations

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Pennsylvania on Thursday imposed a $1 million fine against a Texas-based energy supplier, Verde Energy USA, for allegedly committing a wide range of “egregious” marketing violations, including switching customers’ energy supply without their consent.

The settlement with Verde, which markets itself as a renewable power supplier, provides for refunds for hundreds of accounts affected by deceptive telemarketing or door-to-door activities from February 2017 through early 2020, when the Pennsylvania Public Utility Commission’s investigators filed a formal complaint against the supplier.

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The punishment is the latest enforcement action against an energy supplier in Pennsylvania’s competitive marketplace, where retail customers can choose to buy their energy from an independent supplier or remain supplied by the incumbent electric or gas utility. A quarter of Pennsylvania’s 6 million electric customers, or about 1.5 million, buy their power from competitive suppliers, according to a PUC tally at the end of August.

“I hope that the supplier community pays heed to this,” said John F. Coleman, Jr., the commission’s vice chairman. “This hopefully will be the final warning on unacceptable behavior in the competitive marketplace.”

The settlement, which was approved by a 2-1 vote, was a far lighter punishment than the $8.8 million fine and license revocation that the Bureau of Investigation and Enforcement initially proposed in January 2020. Verde and the bureau reached a settlement agreement, approved by an administrative law judge in January.

The Pennsylvania Office of Consumer Advocate, which wanted to include evidence that Verde had been the subject of similar complaints in Ohio and other states, objected to the settlement and did not sign on it.

Gladys Brown Dutrieuille, the commission’s chair, sided with the consumer advocate’s office in a dissent.

Coleman suggested that the disagreement between the consumer advocate and the PUC was a “process dispute” and that the consumer advocate’s office could file its own complaint against Verde if it was unsatisfied with the settlement. He said aggrieved customers had waited over two years to settle the complaint. “I believe that customers deserve their refunds,” he said.

The complaint alleged nearly 9,000 violations of energy marketing regulations or other sections of the public utility code, including 339 customer accounts affected by deceptive telemarketing or door-to-door activities and 3,922 incidents where Verde representatives allegedly used confidential customer information to access or create an account without the customers’ authorization.

Verde, or a third-party marketing agent acting on its behalf, switched customers’ energy suppliers without their consent, a practice called slamming. It enrolled three customers who were dead. Agents misrepresented themselves as employees of a utility, and telemarketers spoofed phone numbers to falsely identify themselves as utility representatives.

The complaint alleged that Verde representatives refused to leave after customers expressed no interest in the service, refused to cancel enrollments after customers complained, provided misleading information about the customers’ contracts with their current electric generation suppliers, and misrepresented Verde as a discount supplier.

The state launched its investigation after representatives of PPL Electric Utilities in Allentown reported a large number of complaints against Verde. In addition to the $1 million fine to the state, Verde will pay $75,000 to PPL Electric’s Hardship Fund, which provides grants to eligible families struggling with their energy bills.

Under the settlement, Verde will provide customers with refunds equal to their first two months of electricity supply charges, less any amounts previously refunded. Verde will refund any early termination fees customers paid to their previous supplier if they were switched. Customers must sign a release of claims in order to receive the payments.

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