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Electricity sellers allegedly posed as CMP auditors to poach customers

Salespeople for a company that has charged Maine electricity customers millions over the going rate since 2012 have been accused of impersonating utility employees to lure customers into contracts. George Danby | BDN
By Darren Fishell, BDN Staff
June 22, 2018 6:00 am

Residents in Bath, Norway, Paris and Fryeburg opened their doors in recent months to the same scene: a man claiming to be an “auditor” for Central Maine Power Co.

He said he was there to make sure customers were not overpaying for electricity, at a time when hundreds were shocked by high wintertime bills from the utility.

But CMP doesn’t send auditors door to door. The “auditors” were actually salesmen for Electricity Maine, an electricity seller that historically has led customers to shell out hundreds of dollars more a year for electricity than they would have under the standard rate for power.

New allegations in a potential class-action lawsuit against the company accuse 21-year-old salesman Wyatt Struin of using the CMP ruse — pretending to correct a high bill — to get a customer in Bath to agree to an electricity supply contract that cost 30 percent more than the standard rate.

The lawsuit claims it’s part of a pattern of abuse among salespeople for Electricity Maine and its Houston-based parent company, Spark Energy.

Earlier this month, Spark fired a different salesman over similar allegations, for sales made to Fryeburg customers in May, according to a letter Spark filed with regulators.

The cases demonstrate how vexing retail electricity sales in Maine still are to customers, law enforcement, regulators and salespeople working entirely on commission, seven years after Electricity Maine broke open the home and small business market in Maine.

In the confusion, there are significant financial consequences for customers, who from 2012 to 2016 paid $77 million more to retail suppliers than they would have under the standard rate negotiated by regulators. Most of the customers overpaying sent their money to Electricity Maine, which grew to serve roughly 160,000 customers in the state, at its peak.

That tally for above-market spending with retail electricity suppliers continues to grow. And the suppliers most often offer electricity that’s no different from the standard supply.

The door-to-door sales campaign also signals how tough the retail electricity business can be. Electricity Maine was losing millions in 2015, and its revenue has dropped steadily since, to $51 million last year. It had brought in $81.5 million from Maine customers at its peak in 2014. The door-to-door effort started in 2017 is an apparent attempt to stanch the bleeding.

But problems with sales staff have prompted the company to halt all of its door-to-door operations twice this year. It stopped those sales June 7, when the company said it planned to retrain staff “on the importance of ensuring that no agent ever represents themselves as representatives of the utility company,” according to a letter to regulators.

The company’s door-to-door campaign has employed about 70 people across much of the state.

The first suspension of door-to-door sales, in February, followed a customer complaint in Norway. A police report documented how the same salesman at the heart of the expanded lawsuit against Electricity Maine told a customer he was from CMP.

The salesman, Struin, denies impersonating a CMP employee. But he confirmed that the deceptive practice happens in his industry.

“I’ve heard of people wearing orange vests and construction helmets and really putting on the old act,” Struin said in a telephone interview. “But we don’t do that.”

In 2015, regulators reprimanded another supplier, Clearview Energy, after receiving numerous complaints of salespeople impersonating utility employees.

In the interview with the BDN, Struin contradicted police reports and the court testimony of a private investigator. But he also contradicted statements his own employer has made to Maine regulators about the structure of its door-to-door operation.

An attorney for Electricity Maine and owner Spark Energy declined to comment.

After the knock

As the temperature dipped just below freezing on Saturday, Jan. 13, 59-year-old Norway resident Phillip Randall called police to report what he thought was a scam. Struin, who identified himself as a salesman for Spark Energy, had spoken to Randall’s wife during a door-to-door sales call.

She had given Struin the couple’s power bill from CMP and, according to a police report, he used the account number to begin signing them up with Electricity Maine. The process involves having a third-party service call the customer to verify his or her understanding of the contract in a recorded call, a procedure required by state law for signing up customers.

Despite customers’ general unfamiliarity with the retail energy market, Struin said, those verification calls are crystal clear.

“The verification call is very, very, very explicit and very detailed and there’s no way that someone would not know what’s going on after that,” Struin said. “It literally says three or four different times that you’re switching to Electricity Maine and your new rate is going to be a fixed rate, for this long.”

But that’s not what Randall’s wife told Norway police officer Robert Federico.

“[Randall’s] wife said the man who called spoke with such a heavy accent she couldn’t really understand him,” Federico wrote.

In a training presentation for salespeople, Spark Energy advises “if a prospect is confused, do not pursue the sale.” In parentheses, it notes “do not solicit in retirement communities.”

The federal complaint alleges the company’s door-to-door effort has done just that, targeting low-income and elderly residents, including a subsidized housing development in Bath that serves seniors.

Salespeople from Electricity Maine solicited in a subsidized apartment complex in late 2017, with some allegedly posing as employees of CMP. A CMP spokeswoman said the company does not send auditors door to door, and that customers can call 1.800.750.4000 to verify the identity of CMP representatives. Google Earth | BDN

A private investigator hired by the attorneys suing Electricity Maine said in sworn testimony that other customers described the verification calls similarly, with the caller speaking too quickly for them to understand.

The verification call, handled by the Arizona-based call center company Calibrus, mentions the new rate and plan one time, according to a script Electricity Maine provided to regulators.

Several others said they were misled about the purpose of the verification call.

Jim Tilton, of Bath, said in an interview that a salesman who knocked on his door last November told him his “bill hadn’t been adjusted properly to indicate a more recent lower rate.” Tilton gave the salesman his power bill, and the man used the account number to sign him up for an Electricity Maine plan.

In an interview, Tilton said the salesman did not mention Electricity Maine at all. That’s despite a sales script the company provided to regulators that mentions the company seven times in its opening pitch.

“Nope, nope, nope. You can take the ‘Electricity Maine’ right out of that,” Tilton said, when a reporter read him the company’s written door-to-door script to compare with his memory of the sales call.

Tilton said he was familiar with Electricity Maine and other retail power suppliers because he had signed up with another company before. If he had known the salesman was representing Electricity Maine, he said, “I would have said thank you but no thank you.”

Tilton, who wants to be added as a plaintiff in the potential class-action lawsuit against Electricity Maine, told the investigator that the salesperson on his doorstep then handed him a phone, saying Tilton was supposed to respond “yes” to correct the problem with his bill. But, the court complaint states, he was saying “yes” to something altogether different: an electricity contract at a rate 30 percent higher than the going rate.

Gail Rice, a spokeswoman for CMP, said the company would never go door to door to ask for a customer’s bill for one simple reason: “we already have customer account information on file,” she wrote.

All employees of the utility wear company badges with their names and photos clearly displayed, Rice said. Some may have clothing with a CMP logo.

The investigator, David Loranger, said some salespeople for Electricity Maine had their own CMP gear. A neighbor of Tilton’s, Ariel Halsey, told the investigator “a man wearing a green CMP company vest came to her home” in December, pitching Electricity Maine’s plans.

Struin said customer confusion or misinterpretation, not deceptive sales tactics, are sometimes to blame for blurring those lines, as most customers don’t necessarily understand that the utility that maintains the power lines is different from the company that generates the electricity that travels through those lines. Retail power sellers like Electricity Maine, which buy and sell electricity for customers, are in yet another category.

“People get confused and they think that either we’re related to CMP or that we kind of work with them,” Struin said, “but that’s just confusion on the customer.”

That can make it confusing for customers when a salesperson asks to see a utility bill, which Struin said he does to see who’s supplying that customer’s power. The bills also hold a key piece of information: a customer’s utility account number, which is required to transfer a customer into a new power supply contract.

A salesperson could use the number to sign up a customer without their consent. Struin said that type of abuse is the retail electricity industry’s “biggest problem.” The scam typically happens in a different way, he said, with the salesperson carrying a second phone and actually posing as the customer during a verification call.

“They have a second phone and they say, ‘Oh, you want to talk to [the customer]? Hold on, his phone number is such-and-such,” Struin said. “And then the second phone rings.”

Regulators in Maine have investigated cases in which a salesperson posed as the customer during a verification call, resulting in at least one provider, Ambit Energy, firing a salesperson in 2015.

The attorneys suing Electricity Maine want to add similar allegations about falsified verification calls to a potential class-action suit first filed in November 2016, on behalf of customers enrolled with Electricity Maine prior to 2014.

By enlisting Tilton as a plaintiff, the attorneys seek to have him represent customers they say were defrauded into Electricity Maine contracts later by door-to-door salespeople posing as CMP employees.

Who’s confused?

The Norway police report and Struin’s interview illustrate the room for confusion among customers, law enforcement and even salespeople.

Officer Federico reported that Struin described Spark as the owner of CMP. It’s not. But Federico wrote Struin also said Spark both “owns the power plant” and that it “owns the power company.” Power companies such as CMP, which own the electric poles and wires, are generally prohibited from also owning power plants that feed those lines. Did Struin misspeak, or did Federico misinterpret “power company” as CMP instead of Electricity Maine? Federico did not return a request for comment.

Struin’s own description of his sales pitch raises other questions about customer confusion and accuracy of sales pitches. Struin said he does ask to look at customers’ bills, to determine whether they’re receiving what he called a “fixed rate.”

In his interview with the BDN, Struin incorrectly described customers’ power options, mischaracterizing the default rate set by state regulators as volatile and “variable.” Regulators solicit bids from power generators each year and approve the contracts ultimately signed with utilities. The process sets the standard rates that take effect Jan. 1, and those rates are fixed for the calendar year.

Spark’s own training materials define variable rates as those that change on a monthly basis, versus fixed rates that are set at a specific price for a longer period.

Struin wrongly said “there’s a lot of variables in that” standard offer rate, such as natural disasters or legislative action that stand to raise power prices.

Such a change is rare and limited. It’s only happened once in recent memory, in 2007, for an unusual 26-month standard offer contract covering Maine’s smallest group of utility customers, in northern Maine. The commission now sets the standard rate every 12 months.

The change raised the average monthly bill by about $1.58, but it was not a surprise. Regulators anticipated the possible increase due to a change in federal policy.

Spark’s training materials themselves contain a falsehood at the heart of their marketing, stating that companies like Spark seek out power contracts “that will provide a profit for the supplier while also offering savings over the price the customer would pay for the energy with the utility.”

But on the whole, customers haven’t seen those savings, particularly with Spark subsidiary Electricity Maine. And in the first quarter of 2018, Spark posted net losses of $41.8 million, for operations across the country.

In the case that a supplier is not offering cheaper plans, salespeople face the ultimate challenge: selling a product that isn’t any different and costs the same or more.

Most offerings from retail suppliers, such as Electricity Maine’s basic plans, don’t differ from the standard offer, but more are starting to tack on other elements to their power plans.

Recently, Electricity Maine began offering an 18-month “green” plan. The plan doesn’t power homes with renewable power but purchases renewable energy credits on behalf of those customers.

Standard offer customers can do the same thing through the Maine Green Power program, offsetting consumption for the average home for $8.95 per month. In CMP territory, that’s about $1 less than the cost of Electricity Maine’s green plan, for the average home.

Overall, only one retail supplier offered a power contract below the standard rate as of this week, according to the state’s utility watchdog office. As of January, about 130,000 home and small business customers — 16 percent of the market — bought power from such retail suppliers.

A turnaround attempt

The door-to-door marketing campaign is an apparent attempt to stem the tide of customer losses for Electricity Maine, which remains the largest retail supplier in the state.

Auburn businessmen Kevin Dean and Emile Clavet founded the company in 2011 and grew it quickly, promising cheaper electricity to homes and small businesses. But markets shifted in 2014 and left them unable to compete on price. At least one other supplier, Dead River’s DR Power, shut down because it said it could no longer offer customers savings.

Electricity Maine continued, charging customers $58 million more than the going rate for electricity from 2012 to 2016.

[Read our full series, Power Grab: How private electricity companies cost Mainers $77 million]

New information in the potential class-action lawsuit against Electricity Maine reveals how the state’s largest retail seller retained customers despite raising rates.

After signing up customers at often competitive introductory rates, the company knew that it could jack up prices for a second term with most not taking notice. Internal records showed only about half of the company’s customers ever opened their emailed renewal notices, according to the lawsuit.

Despite that, the company’s revenues continued to dwindle and Dean testified that many of his attempts to sell the company in 2015 “all fell through when the numbers were disclosed, and due diligence was completed.”

The challenges are reflected in the money coming through the door.

In 2016, the company’s Maine revenue fell 20 percent, to $68.9 million. That’s despite charging customers roughly $23.6 million more than the standard rate for power in that year, according to regulators. Electricity Maine’s revenue fell another 25 percent in 2017, to $51 million, the same year it turned to door-to-door sales for the first time.

As of January, the company told regulators its roughly 70-person door-to-door effort brought in 2,355 new customers.

Who’s in charge?

Details of the lawsuit, the company’s own description of its sales efforts and Struin’s interview and social media posts also raise questions about who’s actually running the door-to-door operation that has allegedly defrauded customers.

In regulatory filings, Electricity Maine said all door-to-door sales staff work directly for the Texas-based D2D Masters LLC. David Guajardo, a D2D manager, referred the Bangor Daily News to his business partner, who said the company works as a vendor for Spark in Maine. The partner said Spark does not own D2D. He did not identify himself in a conference call with Guajardo and a reporter.

Ben Donahue, a Portland attorney representing customers suing Electricity Maine, said that “evidence we have indicates that these door-to-door salespeople are paid directly by Spark.”

Struin, a salesman supposedly working directly for D2D, said he had never heard of the company. He also told police in Norway that he works for Spark.

The attorney representing Spark in Maine declined to answer questions from the Bangor Daily News about its relationship to D2D or how the company does business in Maine. D2D is not registered as a foreign corporation with the Maine Secretary of State’s Office and does not have a state license to sell door to door. It’s possible that D2D operates in Maine as an agent of Spark, which holds multiple registered Maine corporations.

Spark told regulators in February that “there is no affiliation between Electricity Maine and the sales representatives going door-to-door,” noting that it hires D2D to recruit, train and pay the salespeople. But it apparently handles discipline directly. In response to the recent complaint in Fryeburg, the company noted that, after a review, “[Electricity Maine] chose to permanently terminate the agent.”

Spark’s testimony also raises questions about the scope of its door-to-door sales effort in Maine, between January 2017 and January 2018.

Spark provided regulators a list of cities and ZIP codes where its salespeople knocked on doors, but those lists contained errors. Some ZIP codes were listed twice, as belonging to towns located far apart from one another.

But until further notice, that effort remains on hold, according to the company’s regulatory filing late Monday.

The company did not say when it intends to resume knocking.

Maine Focus is a journalism and community engagement initiative at the Bangor Daily News. Questions? Write to mainefocus@bangordailynews.com.

   

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