The state of Connecticut and a subsidiary of NRG Energy have agreed to a $4.5 million settlement to resolve allegations that the subsidiary — which supplies electricity to consumers — used deceptive marketing practices to solicit customers.
The company reportedly offered a rewards program that led customers to believe that they might receive cash back or airline miles type rewards.
The state consumer counsel and attorney general filed a complaint in 2012 against Energy Plus Holdings, a third-party electric supplier, after receiving complaints from customers about marketing tactics. Energy Plus currently serves almost 200,000 customers across nine states. New Jersey-based NRG acquired the company in September 2011.
“With this settlement, we are agreeing to disagree with the company regarding any finding of fault in its past behavior,” Attorney General George Jepsen said in a statement. “The company has been acquired by a new owner who has undertaken efforts to improve marketing practices.”
The $4.5 million will go to the state Public Utilities Regulatory Authority (PURA) for consumer assistance, education and enforcement activity. PURA may also use settlement funds in the development of new regulations related to electric supplier sales, marketing and billing practices.
“I’m pleased that we have addressed concerns raised about pricing and advertising claims by Energy Plus in a way that will be a positive for all electric ratepayers,” said state Consumer Counsel Elin Swanson Katz. “This money will fund new positions at PURA to increase enforcement, ramp up customer education, and support other important initiatives with respect to the electric supplier market. It’s been a rough year for many customers of electric suppliers, and I’m glad we can bring them some good news.”
While the bulk of electricity in the state is generated by two big utilities — Connecticut Light & Power and United Illuminating — several years ago the state opened the door to third-party suppliers that sell electricity at lower rates. Energy Plus is one such supplier.
In their 2012 complaint, the attorney general and consumer counsel cited examples of solicitations made by Energy Plus that they alleged could lead consumers to conclude that they would receive benefits in addition to competitive electricity prices. Additionally, some consumers complained that they paid much more than the standard service rate — sometimes double the rate — and also claimed they had difficulty obtaining information about variable rates from the company.
In an emailed statement to the Law Tribune, NRG Energy said: “This matter related to past marketing practices and while we believe our marketing materials have been clear, we have also regularly reviewed materials and proactively updated them to make them clearer where possible. We are very pleased to have reached this settlement so we can move forward under the direction of our new management team and focus our full attention to our business and customers.”
The General Assembly approved legislation this past session designed to make the electric supply marketplace more responsive to consumers. Among other things, the legislation directs PURA to develop new regulations on marketing and sales practices, standard contract requirements and standard billing formats.
“I worked hard to advocate for legislation creating meaningful consumer protections in the electric supplier market,” Jepsen said. “Those reforms will only be effective if PURA can enforce them, and this settlement provides much needed enforcement resources in the near term.”
Assistant Attorneys General John Wright, Michael Wertheimer, Brendan Flynn and Phillip Rosario assisted Jepsen with this matter. Attorney Joseph Rosenthal and Utilities Examiner Dave Thompson assisted Katz.•