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State regulators crack down on energy marketing practices Public Service Commission OKs new rules on energy sales contracts

The state Public Service Commission is beginning to crack down on energy marketers amid reports that some companies have been using deceptive tactics to convince consumers to switch their natural gas supplier.

The rules approved Wednesday by the PSC require marketers to include on the first page of any sales agreement a summary of the terms of the service contract, including its term and the fees that consumers would face if they terminated the agreement.

The rules also require salesmen who go door-to-door to prominently display identification, including a photograph, that clearly states the name and logo of the company that they work for. Marketers also are barred from representing to consumers that they work for, or on behalf of, utilities, such as National Fuel Gas Co., the Amherst-based energy company that had been pressing the PSC to tighten the rules on energy services companies.

The PSC's standards, however, fall short of the more sweeping restrictions that National Fuel had sought, which included giving utilities like National Fuel the authority to determine whether any rules had been violated and issue sanctions. National Fuel also had urged the commission to give consumers additional time to change their minds and opt out of the agreements without penalty, but the commission did not include that in its new rules.

Also left undecided were the penalties that energy marketers will face for violating the new rules. The PSC said those sanctions will be determined in a future proceeding.

"We view this as a positive development, but the proceeding began more than a year ago," said Julie Coppola Cox, a National Fuel spokeswoman.

"We see the enforcement issue as critical," Cox said. "We're still getting complaints about door-to-door sales tactics."

Rather than follow National Fuel's proposals, the PSC followed more closely the recommendations for additional scrutiny of marketers proposed last December by the state Consumer Protection Board and the New York City Department of Consumer Affairs.

PSC Chairman Garry Brown said the new rules will "provide even greater confidence and security to consumers," while balancing the need for greater consumer protections against the desire to avoid placing unnecessary barriers against marketers that want to provide energy services in New York.

Mindy Bockstein, the executive director of the Consumer Protection Board, said she was pleased with the new rules regarding telephone and in-person contacts between marketers and consumers, as well as the requirement that customer complaints be investigated within five days.

"We see these standards as absolutely necessary and appropriate," said Chris Kallaher, New York director of government and regulatory affairs for marketer Direct Energy. "It prevents marketers from being able to get a competitive advantage by not following the rules."

U.S. Energy Savings, a Toronto-based natural gas marketer, agreed in July to pay $200,000 in costs and penalties and to waive hundreds of thousands of dollars more in termination fees for its customers under a settlement for allegedly deceiving consumers into signing up for gas service that ended up costing much more than promised.

That settlement stemmed from allegations that U.S. Energy Savings used high-pressure sales tactics, often from door-to-door sales representatives, to convince consumers to sign four- to five-year gas service agreements that fixed prices at rates higher than those charged by National Fuel.


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