Ben Towne teaches Great American Power a lesson

Electric supplier faces $10K penalty

Share with others:

Print Email Read Later

On May 18, 2012, Ben Towne got a call from Great American Power, an electric supplier that wanted him to switch his generation contract from his utility. Mr. Towne wasn't interested. He asked the company not to call him again.

On May 22, Great American Power made three more calls to his cell phone. The next day, another three calls. The next day, four.

What Mr. Towne did next landed him in a room with the Georgia-based company's CEO and eventually cost Great American Power $10,000.

A Carnegie Mellon University graduate student whose research interest is in using technology to help large groups of citizens inform public policy, Mr. Towne began to look into how the state regulates electric suppliers.

There are more than 200 such companies in Pennsylvania, licensed by the Public Utility Commission to offer an alternative to utilities for procuring power. Since 1996 when the state split utilities' functions into two segments -- regulated distribution and unregulated generation -- more and more competitive suppliers have been making the pitch to consumers to try their plans.

Some companies send mailers, some call homes and cell phones, some even send door-to-door salespeople to deliver their message. Some customers have complained that they were switched to another supplier without consenting, a process known as slamming, or that supply companies have misrepresented their relationship with a utility, saying they've been "authorized" to offer discounts on its behalf.

In August, the PUC made public the first four settlements that it has reached with electric suppliers accused of "questionable marketing practices."

PUC investigators alleged that IDT Energy, AP Gas & Electric, MXEnergy and Public Power had deceived and slammed customers. The companies admitted no wrongdoing in the settlements, but the commission required them to overhaul some marketing practices.

New Jersey-based IDT Energy agreed to pay a civil penalty of $39,000. AP Gas & Electric, based in Texas, got a $43,200 penalty. MXEnergy Electric, now part of Baltimore-based Constellation Energy, received a $22,000 penalty. Public Power, also based in New York, got a $64,450 penalty and was ordered to reimburse 263 customers who were enrolled in its program without consent.

Mr. Towne, who lives in Greenfield, had been getting calls from electric suppliers for months, even though he wrote a letter to his utility, Duquesne Light, saying he didn't want his information forwarded to other companies. He thought he was signed up for the state do-not-call list. When the companies called, he told them no and asked to be taken off their lists.

Nothing worked.

It wasn't just the frequency of the calls that got to him, but what he was hearing on the other end of the line.

Mr. Towne said companies would imply they were calling on behalf of his utility. Some would route him through an automated recording that congratulated him on switching, even though he'd never consented to do so. He was never actually enrolled.

On May 29, Mr. Towne sent a detailed letter to the PUC outlining his situation. That launched his case.

A hearing was set in Pittsburgh for October 2012. Mr. Towne came alone, offering 12 exhibits, including photocopies of his phone records and recordings of calls from Great American Power.

For several hours, he made his case before an administrative law judge, with Ginger Lucas, the CEO of Great American Power, and the company's attorney at the defendants' table. The hearing generated a 156-page transcript. Even Ms. Lucas said she was surprised by how long it lasted.

In the end, the judge agreed with many of Mr. Towne's accusations, scolding the company for a "telemarketing blitzkrieg," which involved "aggressive sales representatives using potentially misleading statements." Great American Power was ordered to pay a $5,000 penalty.

Mr. Towne was dissatisfied. That amount wouldn't discourage the company from doing this again, he argued.

"It's a very profitable thing for them to ignore the rules and do these things," Mr. Towne said.

But Ms. Lucas said the fine was a big deal for Great American Power.

"We are probably one of the smaller retailers in the Duquesne Light territory," she said. "We've changed processes to try to prevent any other fines and to follow other regulation."

Last month, PUC chairman Robert Powelson and commissioner Pam Witmer proposed to double the penalty to $10,000 and impose a sort of probation period on the company for 18 months.

Mr. Towne hadn't heard about that, but says the amount itself will only serve as a benchmark for companies to evaluate the risk of breaking or bending consumer laws.

Mr. Towne said he's "very supportive of electric choice" -- he has chosen to stick with Duquesne Light as his supplier -- but said he's motivated to make the marketplace a more equitable and ethical place.

"What compelled me to go through all that was in large part a sense of duty to my fellow citizen; a sense that the electric supply companies should not be able to engage in widespread, unethical behavior, freely deceiving and taking advantage of so many people."

In 2011, the latest year for which data are available, the PUC's Bureau of Consumer Services received 665 residential customer complaints about electric generation suppliers. Many of these involved billing problems.

The five companies hit with penalties so far represented less than 12 percent of the complaints that year, and were not at the top of the list.

Palmco Power PA and Verde Energy USA, both of which operate in this area, had the most complaints.

"Many of the cases are just now coming to settlement/prosecution as they are working through our system since the rate caps expired," said Jennifer Kocher, a spokeswoman for the PUC.

Statewide, about 36 percent of residential customers buy electricity through a competitive supplier. The practice is more widespread among commercial and industrial clients.

In the Duquesne Light territory, 44 percent of residential customers use a different supplier. In West Penn Power territory, it's 29 percent.

Residents in Duquesne Light's area can choose between 34 different electric suppliers besides their utility. West Penn customers have a choice of 19 other companies.

Despite the five penalties released within the past two months, Ms. Witmer said there's no pattern of misbehavior and no spike in it among electric suppliers.

The commission does a "pretty thorough investigation" when companies apply for a license to offer electricity, she said. Only one company has ever been denied a license, and that was based on its activities in another state, Ms. Witmer said.

The PUC once pondered disallowing door-to-door electricity sales, but decided against it and has no plans to take up the issue again, she said.

As for consumers, Ms. Witmer urged education and vigilance.

Visit, she advised. Check salespeople's IDs. Make sure you clearly consent to a switch. Check your bills and confer them with the offer you signed. Report complaints.

businessnews - yourbiz

Anya Litvak: or 412-263-1455


Create a free PG account.
Already have an account?