SmartEnergy Ordered To Pay Millions In Refunds For Overcharging Telephone-Enrolled Customers

MARYLAND - Last week, the Public Service Commission partially granted a request to change the total refunds paid to customers of SmartEnergy Holdings LLC who were overcharged by the energy company for years.

What is SmartEnergy?

SmartEnergy is a utility-adjacent business that offers customers a way to offset their carbon footprint through renewable energy credits (RECS). Buying RECs is not equivalent to purchasing electricity. Instead, RECs represent proof that 1 MWh of electricity was generated from a renewable energy resource.

SmartEnergy customers continue to pay their regular utility bills but are ensured by the company that SmartEnergy purchases renewable energy credits to offset 100% of their electricity usage.

"When you choose SmartEnergy as your electric supplier, your utility will continue to send you your bill, deliver your electricity and respond to emergencies, just with 100% renewable energy. Our renewable resources include solar, wind, hydroelectric, and geothermal energy, making us a cleaner option for both your home and the planet," the company says on its website.

What happened?

In 2021, the Office of the People's Counsel filed a complaint with the Public Service Commission against SmartEnergy for allegedly overcharging its telephone-enrolled customers by a total of $6 million at a rate of over $1.75 million per year.

The Commission found that SmartEnergy violated numerous provisions of Maryland law and Commission regulations by deceptively enrolling customers by telephone. SmartEnergy was ordered to provide refunds for the extra charges. According to the Office of the People's Counsel, the energy company unlawfully enrolled more than 31,000 Maryland consumers over the phone, imposing hundreds or thousands of dollars in excessive rates on many of them.

In 2021, SmartEnergy was ordered to maintain a $2.5 million bond to ensure they could provide refunds to customers who were overcharged. The company appealed the decision and lost again in circuit court and in the Appellate Court of Maryland.

SmartEnergy has since asked the Maryland Supreme Court to hear the case. During the appeals process, the company has been permitted to continue selling its services over the phone and delay providing any refunds.

During one of the appeals filed in April of 2021, the company disclosed that the amount of customer refunds required totaled about $6 million, a far cry from the $2.5 million bond the company was ordered to maintain.

In early February of 2023, People's Counsel David S. Lapp said the bond amount needed to be higher and that customers risked losing out on refunds.

"These customers have waited almost two years for relief since the Commission found SmartEnergy's conduct unlawful," Lapp said. "Some of them may continue to be SmartEnergy customers being charged high rates as SmartEnergy continues to profit from its unlawful customer enrollments. Immediate action is needed to ensure they are protected and compensated."

On February 22, the Public Service Commission instituted new "pre-compliance" requirements to ensure that SmartEnergy begins expeditiously remitting refunds, whether the Court denies SmartEnergy's request to hear its appeal—ending its case­­—or hears the appeal and upholds the Commission's earlier findings of violations.

However, the new order declined to raise the amount of the $2.5 million bond.

"We are pleased that the Commission took steps toward protecting customers harmed by the retail supplier's marketing that the Commission found deceptive," Lapp said. "But it is unfortunate that the Commission didn't act to ensure that the bond money set aside for customer refunds was sufficient, especially given the Commission's acknowledgment that the 'refund obligation may be significantly more than' the required bond."