Electric choice: Know your rights

Marketing and solicitation increase as more customers switch supplier

  • Michelle Breau is a BGE customer who complained about Constellation's sales tactics; she had trouble canceling a gas contract with BGE Home and electricity contact with Constellation Electric.
Michelle Breau is a BGE customer who complained about Constellation's… (Baltimore Sun photo by Gene…)
January 07, 2012|By Hanah Cho, The Baltimore Sun

The pitch from the door-to-door salesman sounded appealing: a deal to lock in a lower electricity rate with Constellation Energy Group and get a better gas price with Constellation's BGE Home for the next 12 months.

But Baltimore County resident Michelle Breau says she soon discovered the deal offered by the Constellation vendor wasn't all that she believes she was promised.

Feeling deceived, Breau says, she tried to get out of the contract within the three-day cancellation window guaranteed by state law, but found it wasn't easy. So she filed a complaint last month with state energy regulators.

Breau believes she was misinformed.

"If had the correct information, then I would have never gone through with it," she said.

As the number of Maryland residents who switch to alternative energy suppliers has grown in the last two years, so have concerns about marketing and sales tactics. The state Public Service Commission, which oversees the power industry, received 552 consumer complaints against power suppliers last year, up from 316 in 2010.

The PSC regulates third-party suppliers, and Maryland laws provide protections for consumers. Still, some suppliers have been fined for operating in Maryland without a license, and the state energy regulator has accused others of misleading marketing practices.

Industry representatives say they take customer complaints seriously. "In order for this to thrive as a market, we have to make sure we do this right," said Robert Barkanic, the state chair for Maryland, Delaware and District of Columbia at the Retail Energy Supply Association, which represents 20 suppliers, including Constellation.

The state deregulated its energy market more than a decade ago, but only recently have residential customers have begun shopping around to find better deals with suppliers other than their utilities.

Two years ago, only 5 percent of the state's nearly 2 million residential customers got their electricity from a third-party supplier. By October 2011, the most recent month for which data was available by the PSC, the portion had climbed to almost 20 percent.

In Baltimore Gas and Electric's service territory, more than one in four customers have switched to an alternative supplier. BGE serves 1.1 million residential customers in Baltimore and surrounding suburbs.

Paula Carmody, who represents residential utility customers in Maryland as the state People's Counsel, said her office is seeing more door-to-door and telephone solicitations from suppliers. "That increases the opportunity for problems to occur," she said.

The Public Service Commission has initiated cases against some companies for what it says are deceptive marketing practices.

Last year, the commission fined Connecticut-based North American Power and Gas $100,000 for making misleading advertisements and ordered the supplier to suspend all telemarketing activities in Maryland. A separate investigation into Viridian Energy for alleged deceptive marketing practices is pending.

Barkanic, of the Retail Energy Supply Association, noted that the number of complaints last year represented less than 1 percent of the almost 390,000 Maryland residential customers who buy power from alternative suppliers.

"We want to make sure we address every single one," Barkanic said. He said the group has a set of principles governing marketing practices.

The trade group would also like to see more programs to explain choices to consumers. A Public Service Commission working group recently recommended an overhaul of the agency's website to develop an educational campaign, including creating a cost calculator to help consumers assess the impact of different deals.

Carmody, the People's Counsel, said consumers should not feel pressured to respond to salespeople or sign a contract immediately when they are solicited by phone or in person. She suggests that consumers request price and other contract terms in writing "so that they could look at it at their leisure."

Third-party suppliers must be licensed by the Public Service Commission, and some jurisdictions, such as Howard County, require door-to-door salespeople to obtain peddler's licenses.

The Office of People's Counsel provides a consumer rights handbook for electric choice on its website. The Retail Energy Supply Association also has a brochure.

Constellation said Breau's experience was not typical. Spokeswoman Maureen Brown said company records show that two complaints related to door-to-door sales were filed with the Public Service Commission as of June.

The PSC reported 64 complaints of all kinds against Constellation and BGE Home in 2011, up from 27 the year before.

Constellation has acquired three companies in the past year to expand its business of selling power in states where residents can choose their electric suppliers. That business now has 1.1 million retail customers in Maryland, New Jersey and Illinois, among others.

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