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Puget Fined Nearly $1M for Customer Privacy Violation

State regulators in Washington penalized electric and gas utility Puget Sound Energy (PSE) $995,000 for violating consumer privacy laws by intentionally sharing private customer information with an outside marketing partner without the customers' written permission.

The fine represents an increase from a preliminary assessment of $700,000, a PSE spokesman told NGI. Both gas and power customers were affected.

The Washington Utilities and Transportation Commission (UTC) accepted a settlement that calls for PSE to pay the fine, contribute an additional $95,000 to low-income heating assistance and permanently cease the marketing program that released private customer information in violation of state law. The UTC also required the company to notify its customers of its misconduct and the penalties.

PSE will not be allowed to recover the penalties in future rates. The $95,000 contribution to low-income heating assistance reflects the estimated revenue PSE received from the unlawful sharing of customers' private information. State regulations prohibit privately owned energy utilities, such as PSE, from releasing or selling customer information to any outside party for marketing purposes without the customers' written permission.

Under the settlement, PSE acknowledged transferring more than 65,000 phone calls to an outside marketing firm without the customers' written permission over a five-year period. The program, targeting new and relocating customers, also transferred basic customer information to the marketing firm between November 2001 and March 2006. Because of a two-year statute of limitations, however, only 18,992 call transfers were subject to penalties.

"Here we conclude that PSE intentionally violated the rule as part of a corporate decision to sell its customers' private information for financial gain," said the three-member commission in its decision. The commission noted that PSE had participated in the rulemaking process that resulted in the privacy rule being adopted just one month before PSE began its marketing program.

In March 2006, the UTC began an investigation into a report that PSE call-center employees were transferring some customer calls and information to Allconnect Inc., a Georgia-based marketing company. Known as PSE Connections, the program marketed household services, such as telephone, newspaper and lawn services, to PSE's residential customers.

PSE received payment for transferring these residential customers to Allconnect. After PSE transferred a call and customer information, Allconnect would confirm the service order and then market additional services. PSE immediately suspended the program in March 2006, when the commission investigation began, pending its outcome.

Under the settlement, the company will end the program permanently. The settlement agreement was submitted to the UTC for approval last month by the company, commission staff and the Attorney General's Office of Public Counsel.

Bellevue-based Puget Sound Energy is the state's largest electricity and natural gas utility providing electricity service to more than a million homes and businesses in nine Washington counties. The company also serves more than 700,000 natural gas customers in six counties. More than 342,000 customers receive both electric and natural gas service from PSE.

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