Former Rockland County gas and electricity broker Major Energy Services has agreed to pay $1.5 million in restitution to New York customers it was accused of tricking into buying overpriced services.
Major Energy made the deal with New York Attorney General Letitia James to settle a lawsuit filed this past January in which the state claimed that the company, once based in Orangeburg, overcharged tens of thousands of New Yorkers by tens of millions of dollars.
Brokers such as Major Energy were formed when New York deregulated the energy market in 1996. Â They could buy gas and electricity on the open market and have them delivered to customers through local utilities’ pipes and wires.
The idea was to encourage more competition and lower energy prices. As there is no qualitative difference between the energy that brokers buy, they compete against one another and local utilities such as Con Edison on price.
But Major Energy lured customers with false promises of savings, according to the lawsuit. Initially, it set a low fixed rate for the customer but when the contract expired the plan automatically switched to higher fixed rates or variable rates.
Customers paid millions of dollars more than they would have paid if they had stuck with their local utility companies, the state argued.
Major Energy’s alleged scheme went well beyond false pricing, according to court records.
Door-to-door solicitors posed as local utility representatives, according to the lawsuit, and used high pressure tactics to persuade resident to switch services. In some instances they refused to leave until the resident switched and they coached customers on how to circumvent a verification system when they switched.
Telemarketers pressured residents to reveal account numbers on their utility bills, according to the state’s findings, then engaged in slamming, impersonating the customers and switching their accounts to Major Energy.
Customers who tried to cancel were unable to reach anyone at Major Energy, the state claimed, and when they did cancel they were charged excessive termination fees.
Major Energy neither admitted nor denied the state’s allegations, according to the settlement, and they agreed to pay restitution “solely for the purpose of avoiding costly and protracted litigation.”
Spark Energy Inc., Houston, acquired Major Energy in 2016 and has since changed its name to Via Renewables. Major Energy’s management was replaced, the settlement states, and it does not employ anyone involved in the deceptive practices.
Major Energy also agreed to change its ways. Sales people may not mislead customers about pricing, for example, or pretend that they represent the local utility. Door-to-door sales people must wear clothing and display IDs that identify them as representatives of Major Energy.
The company may not claim that it provides the best available rates for gas and electricity. Staff must be trained about proper sales practices, their work must be monitored, and quarterly compliance reports must be filed.
The settlement was signed on Nov. 30 by Paul Konikowski, the chief operating officer of Via Renewables. Assistant Attorney General Glenna Goldis and consumer frauds bureau chief Jane M. Azia signed the deal for the state on Dec. 12.
Major Energy customers who think they were cheated can file an online complaint through the Attorney General’s consumer frauds bureau or call 800-771-7755 to have a complaint form sent by mail.
