Refunds and low penalty allow retail supplier to keep big profits after misleading customers and violating law
BALTIMORE – A retail energy supplier that deceived and illegally enrolled thousands of Maryland residential customers can keep more than $9 million in over-charges under an order the Maryland Public Service Commission issued this week. SmartEnergy Holdings, LLC must pay a civil penalty of $250,000 and provide only $6.5 million of the nearly $16 million in refunds owed to affected customers.
“Corporations that violate the law and profit from abusing customers should not be allowed to keep those profits and should have to pay penalties sufficient to deter future misconduct,” said Maryland People’s Counsel David S. Lapp. “The unfortunate message here is that it pays to violate the law—and the longer you can delay relief to customers, the more you profit.”
The Commission’s order follows its 2021 finding—based on complaints filed by the Commission’s technical staff and the Office of People’s Counsel (OPC)—that SmartEnergy violated Maryland’s consumer protection laws and Commission regulations while serving thousands of Maryland households.
Following its 2021 findings, and over OPC’s objections, the Commission (under prior leadership) permitted the company to continue profiting from unlawfully enrolled customers during a prolonged appellate process in which courts repeatedly vindicated the Commission’s and OPC’s legal positions. The delays substantially increased the company’s unlawfully obtained profits, even while, as the Commission’s order noted, “SmartEnergy made extensive distributions to its investors” during the delays.
In April 2024, SmartEnergy acknowledged that its total refund obligation to Maryland customers amounted to approximately $16 million. Throughout the proceedings, OPC consistently urged the Commission to enforce its 2021 directives by requiring full refunds to affected customers and ensuring accountability through audited payment reports. Despite acknowledging that SmartEnergy is “accountable” for the nearly $16 million, the Commission yesterday suspended the company’s responsibility for all but $6.5 million of that refund amount, so long as SmartEnergy pays out the $6.5 million to customers in partial refunds within the next 90 days.
“We welcome the Commission’s effort to jumpstart long-awaited refund payments to customers,” Lapp said. “We are still evaluating the order, but the relief awarded falls significantly short of what customers are owed.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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