BALTIMORE, Md. — The Maryland Public Service Commission has ordered SmartEnergy Holdings, Inc. to refund $6.5 million within 90 days to over 32,000 former customers enrolled via telephone from February 2017 to May 2019, resolving a six-year case over deceptive marketing practices. The decision follows findings that SmartEnergy violated Maryland laws, including the Telephone Solicitations Act, by enrolling customers without signed contracts.
“This case predates the enactment of Senate Bill 1 last year, but underscores the importance of the retail supply reforms ushered in by the passage of Senate Bill 1, which was designed to protect consumers against excessive charges by retail suppliers, require licensing of retail supply salespersons, and capping retail supply charges more closely to the actual cost of the services they provide,” said Frederick H. Hoover, Jr., chair of the Commission. “Our order today will provide some relief to those customers that were harmed by SmartEnergy.”
In March 2021, the Commission upheld a Public Utility Law Judge’s ruling that SmartEnergy engaged in unfair, false, misleading, and deceptive marketing, ordering refunds based on the difference between SmartEnergy’s rates and utility default rates. SmartEnergy appealed, but the Circuit Court for Montgomery County affirmed the order in November 2021, the Appellate Court of Maryland in 2022, and the Maryland Supreme Court in February 2024. Enforcement was stayed until appeals concluded.
SmartEnergy estimated refunds at $6 million, while the Maryland Office of People’s Counsel calculated $6.5 million, later revised to $16 million. The Commission’s technical staff argued for $15.97 million, citing the need for continued customer service during appeals. SmartEnergy claimed $15.97 million would cause bankruptcy, proposing a $3 million cap using bonds and cash. The Commission rejected this, noting that SmartEnergy paid millions in distributions, salaries, and bonuses to insiders during the period, which undermined claims of financial hardship.
Although $15.97 million was deemed appropriate, the Commission suspended all but $6.5 million to avoid delays, uncertainty, and administrative challenges, prioritizing public interest. Non-compliance will trigger full refund enforcement, including actions by the Maryland Office of the Attorney General and state collection agencies, as well as potential additional civil penalties. SmartEnergy must also forfeit its $250,000 financial security bond as a civil penalty, consistent with prior supplier enforcement cases.
The case began in 2019 when complaints surfaced about SmartEnergy’s telemarketing practices. The Commission’s 2021 ruling found violations of the Maryland Telephone Solicitations Act, which requires signed contracts for telephone enrollments. Senate Bill 1, enacted in 2024, introduced reforms to prevent such issues, including stricter licensing and rate caps for retail suppliers. The $6.5 million refund order marks a significant step in addressing consumer harm from SmartEnergy’s practices, providing relief to thousands of Marylanders affected by the company’s actions.