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Supplier's Misrepresentation Leads to Enormous Fines

2733741_mAccording to a recent article on Energy Choice Matters, Pennsylvania Gas and Electric (PAG&E), a retail supplier in Pennsylvania, has agreed to a settlement to pay a substantial fine for alleged “deceptive marketing practices.” Though PaG&E does not have to admit wrongdoing under the terms of the settlement, the terms of the settlement are particularly harsh. The fine is a whopping $2.4 million to be paid as refunds to customers, in addition to $4.5 million that has already been paid, for a total of $6.9 million.

According to Attorney General Kathleen Kane and the Office of the Consumer Advocate, PaG&E marketed variable rates using deceptive or ambiguous terminology. Claims that such rates were “market based” were unable to be substantiated with any specific method of calculation. Customers over the 2013-2014 winter saw rates in excess of 15 cents per kWh under the variable rate agreements, when prices spiked.

In addition to the cash settlement, PaG&E will not be allowed to market variable rates in Pennsylvania for 18 months, beginning March 1, 2015. Once that moratorium is lifted, there are significant restrictions imposed on the methods PaG&E may use to market variable rates in the future to eliminate any potential confusion about the implications of such an agreement.

Specifically, the Attorney General and Office of the Consumer Advocate objected to the use of the phrase “introductory rate” or “trial period” without clear definition of what will happen at the expiration of the initial rate. Furthermore, representations about the Price to Compare increasing without any available documentation were cited as being problematic.

Cases like these are important, both to us and to our clients. The details of this settlement set a precedent for potential future action by the legal authorities in Pennsylvania. We like to keep our clients fully abreast of developments like these to avoid potential legal issues. Sales Verification Company is an excellent choice in making sure your marketing campaign is free of potentially problematic implications. Contact us today for a consultation.