Third-party electric supplier Discount Power was fined $2 million and barred from operating in Connecticut for three years after regulators found that its sales agents routinely misled and lied to customers to persuade them to enroll in contracts with the company.
The Public Utilities Regulatory Authority issued a scathing report this month outlining Discount Power’s “grave, systemic violations” of state marketing laws in 2018 and 2019. PURA – the state utility regulator – said it reviewed calls from dozens of agents representing Discount Power and that each call included numerous violations of law.
PURA said that there were cases where Discount representatives were clearly preying on elderly, confused people.
In one case that PURA described as “deeply troubling, if not sickening,” an elderly woman asked repeatedly if a call from an agent looking to enroll her in a contract with Discount Power was about “electric gas.”
The agent made no attempt to clarify and continued to try to enroll the woman, even though she told the agent directly, “I’m not enrolling in your company,” PURA found. The woman refused to enroll three times before the Discount agent became belligerent, according to PURA.
“I’ve told you that ten times and you forgot again… It’s not changing anything,” the agent said.
After being yelled at and lied to repeatedly, the woman finally completed the enrollment process, PURA found.
“It is difficult to imagine a call more representative of the type of marketing to which Connecticut customers should never be subjected,” PURA said.
Electric customers in Connecticut are allowed to purchase their electric supply from a third party, replacing the supply rates on their Eversource or United Illuminating bill with rates.
The offers can appear attractive to customers who are frustrated with electric bills that are among the nation’s highest, and in some cases they can save the customer some money – or offer other benefits like buying more power from renewable resources.
But in general, third-party suppliers end up costing customers significantly more than the standard service rate from Eversource, PURA has found. And last year, 22 different third-party suppliers admitted to charging customers higher rates than they said they would, leading to a $9.4 million settlement.
One of the claims PURA made against Discount was that it misrepresented its rates as “savings” when talking to prospective customers. Discount representatives told customers they were offering a “lower price” without even asking what rate the customers were already paying, PURA said.
Throughout the first half of 2018, Discount was offering a rate 0.02 cents per kilowatt hour lower than the standard service rate charged by Eversource and United Illuminating, but higher than several other third-party suppliers. And in the second half of the year, it was offering a rate more than half a cent per kWh higher than the standard rate, according to PURA.
In some cases, PURA found, Discount representatives outright told customers that the standard rate from Eversource was higher than it actually was. PURA ordered Discount Power to pay restitution to every customer enrolled in 2018 and 2019 for any amount they paid above the standard service rate.
Discount defended its rates, saying its contracts with terms longer than 6 months protect customers from the shifts in the standard rates that happen every 6 months. In some cases, the standard rates do go down, but the rates also frequently go up, like when Eversource’s standard service rate increased nearly 40 percent this January, the company said. Discount said about 2,000 of its 5,700 customers in Connecticut are now paying a lower rate than they would under the standard rate.
“Nothing is going to change”
PURA said it was clear from reviewing call recordings that customers were getting to the end of calls without ever understanding that they were switching suppliers. PURA said that in multiple cases, the representatives lied or attempted to confuse the customer so that they would not understand they were agreeing to a contract with the company. Discount representatives frequently told customers “nothing is going to change” as a result of their call.
PURA also found that agents representing Discount routinely misled customers on what they were agreeing to. All of the “win back” calls PURA reviewed – where the company attempts to bring back a former customer –followed a similar pattern:
The agent tells the customer that they are no longer receiving “price protections” or “benefits” from Discount, and the agent says that they want to reinstate the customer. The agent then re-enrolls the customer with Discount, without stating that the customer is switching suppliers, or explaining “price protection” or “benefits,” PURA said.
In one case, a customer who was already wary of third-party suppliers asked directly if the call was coming from Eversource, and the representative gave a misleading answer.
“This is not Eversource? This is another company?” the customer asked. “Because I had [a third party supplier] before and I really got screwed by it.”
“Keep in mind that you are not changing at all from Eversource,” the Discount representative said.
The representative was, in fact, trying to get the customer to change their supplier from Eversource to Discount, which violated marketing laws by contributing to the customer’s belief that the call was coming from Eversource. PURA said.
Discount Power told PURA that the violations were the result of “rogue agents” working for contractors the company had hired for its telemarketing, and were not evidence of any systematic failure on the company’s part.
The company – which has the option to appeal the decision to Superior Court – said it shouldn’t be penalized so harshly since it has fired the agents or entire companies that violated its standards and stopped all “outbound telemarketing” in Connecticut in 2019. Discount said that, when it found someone was enrolled because of “violative behavior” of one of its agents, it allowed the customers to terminate their contracts without a fee.
“The Company hopes that the Authority will recognize that the NOV’s $2 million penalty, unwarranted restitution requirement, and license suspension are not only disproportionate, but could also have the effect of putting DPI, a Connecticut company with Connecticut employees, out of business,” it told PURA in a filing.
PURA said it’s “difficult to overemphasize” how Discount’s marketing methods confused customers into thinking they had to contract with a supplier. Agents opened every call with a stream of information about “benefits” or “price protections,” how the person being called was already a Discount customer but their benefits “expired,” and asking to “verify” the customer’s information to re-enroll them.
“Discount’s agents barely take a breath between sentences, much less give the customer an opportunity to understand what is occurring,” PURA said. “Discount appears to capitalize on this quick succession of events, assuming, often correctly, that the customer is so confused they will not ask questions.”
Discount’s attempts to shift the blame to “rogue” telemarketers did not convince PURA, which said it found enough evidence of these issues happening repeatedly, across dozens of agents and multiple contractors, to penalize the company.
“Had Discount properly trained and monitored its agents, the myriad violations documented herein likely would either have been prevented or would have been far less excessive,” PURA said.