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May 2, 2019

PURA fines Direct Energy $1.5M for misleading sales, marketing practices

HBJ File Photo Utility companies transmit and distribute the power, but customers have the option to contract with an alternative supplier for the generation portion of their bills.

Connecticut regulators on Wednesday issued its largest-ever fine on a Houston electric supplier for misleading sales and marketing practices.

The Public Utilities Regulatory Authority (PURA) fined Direct Energy, the state’s largest electricity supplier, $1.5 million for mistating standing service prices, misleading customers on generation charges, charging excessive cancellation fees and not accurately explaining rates, state officials said.

The supplier also engaged in unfair marketing practices and provided a lack of Spanish-language contracts and marketing materials, among other violations.

According to PURA’s decision, Direct Energy is only allowed to enroll new customers online for six months and must go through a compliance audit for an additional year after that.

Elin Swanson Katz, chief of the state Office of Consumer Counsel, said Direct Energy for years deliberately violated state law to bolster its sales, adding “millions of dollars” to its bottom line.

Katz, a longtime critic of competitive electricity suppliers, said the “decision sends an incontrovertible message to all electric suppliers: comply with Connecticut law or face substantial penalties.”

“Direct Energy’s consistently unrepentant attitude when faced with its own consumer abuses over the course of this investigation demonstrates why PURA’s robust civil penalty and other relief are warranted,” she said.

PURA started investigating Direct Energy’s practices in 2013, as it began looking into whether the company was switching customer’s suppliers without their knowledge, which is known in the industry as “slamming.”

In a statement Thursday, Direct Energy said it’s “pleased” the investigation has come to an end and that it will be allowed to continue online sales.

“Since 2013, Direct Energy cooperated fully in this investigation and immediately took action to ensure any customer-specific issues were satisfactorily resolved in favor of our customers,” the supplier said.

Direct Energy, which expanded its Connecticut footprint in 2014 with the $54 million acquisition of Maryland’s Astrum Solar, was also required to pay $3.2 million in 2015 for failing to meet the state’s renewable energy goals.

Founded in Toronto in 1986, Direct Energy bills itself as one of the nation’s largest retail providers of electricity, natural gas, and home and business energy-related services with almost four million customers.

This story has been updated

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