State regulators have threatened to kick a New York City energy marketing company out of the state after receiving complaints of misleading sales practices,.
Family Energy is the second energy sales company to come under scrutiny in the past two months from the Public Service Commission for allegedly fraudulent or misleading sales tactics. The PSC voted Thursday to give the company two weeks to justify its eligibility to operate in the state.
The other company under scrutiny, Liberty Power of Ft. Lauderdale, Fla., was also told Thursday that it must immediately cease door-to-door sales pending a commission decision on how to better regulate the company.
The crackdown comes as the PSC’s five-member board and staff work on new rules for the retail energy market. Dozens of energy marketing businesses operate in the state, selling natural gas and electricity to utility customers. In the late 1990s, the commission restructured the wholesale energy markets to allow the companies – known as energy service companies, or ESCOs – to sell gas and electricity normally sold by utilities. Supply and delivery costs each make up half of the typical utility bill.
It is not believed that any of the problems with Family Energy or Liberty Power occurred in the Capital Region, which is served mainly by National Grid.
The PSC said most of the complaints have come from downstate utility customers, mostly those served by Consolidated Edison, which is based in New York City.
In 2012, the panel received 93 complaints about Family Energy, compared to 40 the year before. Although all the complaints were eventually resolved, the PSC said the company’s salespeople have continued to violate the state rules governing business practices.
The PSC last amended its rules concerning ESCO marketing practices in 2008, although the commission is expected to make substantial changes later this year, especially to door-to-door sales practices.
Energy marketing companies typically go door-to-door during the summer months, using other companies that employ college students or recent graduates. The sales pitch is fairly easy, with only a few pieces of information being needed to switch a customer from his utility supply to an ESCO.
Many ESCOs promise lower supply costs, while others offer “green energy” plans that use hydro and wind power. Some plans offer fixed pricing favored by seniors on a fixed income.
PSC investigators have found that in some cases, door-to-door salespeople impersonate utility workers asking to correct bills. When the unsuspecting customer hands over a bill, the salesperson has enough information usually to switch the customer without his knowledge. The practice is called “slamming.”
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