Michigan Attorney General Jennifer M. Granholm announced Thursday that Energy America, North America’s largest unregulated energy wholesale company, will pay refunds to consumers, reform its marketing practices, and pay the state’s costs for its alleged violations of the Michigan Consumer Protection Act. The action came in response to over 600 customer complaints regarding Energy America’s Michigan natural gas marketing practices.

Under the signed agreement, Energy America, a subsidiary of Centrica plc, has agreed to de-enroll customers who allege that they have not authorized the company to sign them up for natural gas service unless the company can establish by “clear and convincing evidence” that the consumers’ allegations are invalid. Granholm said the unauthorized consumer contracts will be cancelled, and refunds will be issued for the difference between Energy America’s gas rate and the rate the consumer’s previous gas supplier had charged.

“As a service-oriented company, we take customers’ complaints very seriously,” Energy America said in response. “While almost all of our 185,000 customer contracts were solicited in an ethical manner, with the customer’s full knowledge and understanding of the contract’s terms and conditions, we recognize that a few independent sales agents appear to have acted inappropriately and in a way which Energy America considers unacceptable. We are confident that Michigan consumers will now have a far better experience with Energy America.”

In addition to consumer refunds, the Toronto-based company has agreed to reimburse the State of Michigan $250,000 for the costs of examining consumer complaints and negotiating the settlement. The attorney general added that the company has also agreed to pay a $100,000 civil penalty if it fails to comply with the agreement in the future.

“In today’s marketplace, corporate responsibility is a hot commodity,” commented Granholm. “Michigan consumers simply won’t stand for deceptive business practices, and neither will this office. We simply don’t mess around when it comes to cracking down on companies who don’t follow Michigan law. This is great news for Michigan consumers. The settlement with Energy America adds to the more than $10 million my office will have put back into consumers’ wallets this year alone.”

Through the agreement, the company has agreed to address complaints filed with the attorney general’s office. Customers who filed complaints with the Michigan Public Service Commission will also be entitled to potential refunds and de-enrollment under the agreement. Customers with questions about obtaining refunds should contact Energy America. The company has recently paid more than $25,000 in refunds to Michigan customers.

“With giant size comes giant responsibility,” said Granholm. “As one of North America’s largest natural gas companies, Energy America needs to lead its industry through sound business principles grounded in fairness. Energy America deserves credit for making strides in reforming the way it does business, but we’ll be vigilant in monitoring the company’s future conduct.”

In response to the Granholm’s statements, Energy America said that it “took the initiative” to suspend its marketing of natural gas in Michigan in early June, following complaints concerning a few of its sales agents. “Over the past two months, the company has devoted extra resources and staff to make improvements in sales agent recruitment, training and quality controls.” The company added that it “is concerned that the [attorney general’s] press release led our customers to believe they would be receiving refunds, when in fact, virtually all of those customers who were due refunds have already received those payments.”

Granholm said Energy America will take steps to ensure that its door-to-door solicitations are lawful, including promptly leaving a consumer’s home at a consumer’s request, complying with a consumer’s request to avoid further solicitation, and not soliciting where a posted notice against solicitors can be seen. The company has agreed that it will not continue a sales presentation when the consumer, through disability, illiteracy, or other vulnerability, is clearly unable to understand the terms of the offer.

Sparked by the abundance of complaints, Granholm said she began negotiating with Energy America in March to bring them into compliance with state law. Consumers complained that the company had used misleading solicitation tactics, including misrepresenting the amount of savings consumers would receive and not clearly explaining the purpose and effect of a consumer’s signature on Energy America contracts.

“Energy America regards Michigan as a pivotal market and has devoted extra resources to the sales channel to ensure that energy choice is a success in Michigan,” Energy America said. “It is committed to superior service for all of its customers.” The company said it will announce in the near future when it plans to re-enter the Michigan market.

Customers still wishing to file a complaint with the attorney general’s office can contact the attorney general’s Consumer Protection Division at 877-SOLVE-88 (877-765-8388) or www.ag.state.mi.us.

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