Citing "egregious misconduct and a pattern of misconduct," a state utilities regulator took steps to fine a competitive electricity supplier more than $5 million and revoke the company's license to do business here.
In a notice of probable violation filed Monday, Department of Public Utilities Commissioner Cecile Fraser alleges that CleanChoice Energy "engaged in business practices that nullified any manifestation of affirmative choice made by customers to select CleanChoice as their electricity supply provider." In one example provided, she alleged the company sent scores of mailers that presented consumers with false rate comparisons.
Massachusetts deregulated utilities in 1997. Today, about 400,000 Massachusetts households get their electricity directly from a competitive supplier rather than a utility company. This week's notice ratchets up pressure as efforts to reform the industry once again percolate between the Legislature and governor.
"Consumer confidence in any competitive market is based on informed choices, especially in the competitive electricity supply market, where electricity is essential, the information presented for a customer’s choice must be clear, accurate, complete, and free from deceptive sales practices and aggressive marketing," Fraser wrote in the notice, which she said began with complaints DPU received from 66 CleanChoice customers between April 2022 and April 2024.
Fraser said there's material to support allegations that CleanChoice sent a number of direct mail ads that compared the CleanChoice cost to an outdated basic service rate that was higher than the actual rate the customer was paying at the time of the mailer; gave eight customers "inaccurate and deceptive" information in contracts or contract summaries; made three "deceptive" sales enrollment calls; "deceptively offered" eight customers prices supposedly based on market conditions; made seven "deceptive or unfair" customer service calls; and in four instances enrolled customers outside retail stores without proof that it was the consumer's affirmative choice.
"In some instances (call recording review), the Department’s review was limited to a small share of the Respondent’s actions related to marketing, sales, and service, and yet CleanChoice’s misconduct was severe," Fraser wrote. "In other instances, CleanChoice’s violations of the Commonwealth’s consumer protection requirements was extensive (basic service rate comparisons, contact summary forms, contracts)."
The company said it is "fully cooperating with the Department of Public Utilities to ensure our practices meet all state regulations, and we are ready to voluntarily make any changes that may be required."
"CleanChoice never promised saving - a fact which is publicly available in the materials available DPU filing. CleanChoice is not a cheaper alternative. It is a clean alternative," CleanChoice spokesperson Kate Colarulli said. "Our mistake was that we published an Eversource rate that expired on June 30, 2023 for a mailing that was not received until August 2023. We proactively acknowledged this mistake with the DPU and made corrections to ensure this did not happen again. As we explained to the DPU at the time, our mail campaigns are planned months in advance of being received by customers. For this particular campaign, the mail was printed in June before being received by customers in August. While CleanChoice regrets that the basic service price was outdated - nothing in CleanChoice's mail piece indicates to the customer that they would save money by enrolling with CleanChoice."
Attorney General Andrea Campbell and some advocates have argued for years that the competitive electric supply industry takes advantage of vulnerable residents and most often ends up costing customers more money than basic utility service. As attorney general in 2021, Gov. Maura Healey joined then-Gov. Charlie Baker to support prohibiting competitive electric suppliers from signing up new residential customers.
The Senate last year passed a bill that would have done that, but the House did not go along with the idea. Competitive suppliers cover about 16% of Bay State households, according to the attorney general's office's latest report on the industry. About 1.14 million households (46%) buy power through municipal aggregation plans and about 930,000 households (38%) pay the utility company's basic service rate.
"We are glad to see proactive steps such as this to protect consumers, but the problems detailed in the case are not confined to one supplier. To protect all consumers from predatory suppliers, we also need legislation," Larry Chretien, the executive director of the Green Energy Consumers Alliance who has long pushed to outlaw third-party suppliers, said in response to this week's DPU notice.
Chretien said his group still thinks the best approach would be to pass legislation to ban third-party electric suppliers from the residential electricity market.
"Or at the very least pass substantial reforms like those introduced in Governor Healey’s recent energy affordability legislation to provide immediate relief and protections for residential electricity consumers across the Commonwealth," he said.
The Telecommunications, Utilities and Energy Committee is weighing an energy affordability bill Healey filed this spring, and it includes what the governor called "a compromise proposal to end unscrupulous practices in the competitive supply industry." Healey's proposed language would eliminate automatic renewals and variable rate contracts for the industry, establish new licensing requirements for door-to-door and telemarketing firms, and ban "the most predatory marketing practices."
CleanChoice has until mid-October to formally respond to the DPU notice, and that will kick off a more involved proceeding that includes the other two commissioners. But that process will likely unfold at the same time that the DPU undergoes a round of musical chairs.
Healey last month announced her second shake-up of the DPU in about two and a half years, one that will see Fraser and DPU Chairman James Van Nostrand depart over roughly the next month.
Fraser, an energy and utilities industry attorney first appointed to the DPU in 2017 by Gov. Charlie Baker's administration, is to be replaced Sept. 29 by Jeremy McDiarmid, a current leader of the national business association Advanced Energy United. And on Oct. 20, Liz Anderson — who as chief of the Energy and Ratepayer Advocacy Division in the attorney general's office has been one of the most vocal advocates for a ban on third-party electric suppliers — will assume Van Nostrand's spot as a commissioner, McDiarmid will become chair and the new DPU roster will be in place.
Commissioner Staci Rubin, a longtime environmental justice advocate who worked as vice president of environmental justice at the Conservation Law Foundation before she was appointed to the DPU by the Healey administration in March 2023, is remaining in place.