N.J. regulators spell out rules for prosecuting unscrupulous electricity suppliers

New Jersey regulators are cracking down on unscrupulous electricity suppliers after a winter of discontent that brought a tenfold increase in consumer complaints.

The Board of Public Utilities on Wednesday approved a memorandum of understanding with the state Attorney General's Division of Consumer Affairs that spells out the roles the agencies will take to prosecute suppliers for illegal marketing practices.

BPU president Dianne Solomon said the agreement set forth "our cooperative efforts in the investigation and, if appropriate, the prosecution of third-party suppliers for advertising, marketing, and contracting practices that are alleged to be in violation of consumer standards."

The New Jersey action is the latest effort to rein in competitive energy suppliers after consumers in many states complained about dramatic winter price spikes and alleged deceptive marketing practices.

Pennsylvania's Public Utility Commission enacted new rules to require suppliers to more clearly disclose the terms of supply contracts and to allow customers to switch suppliers more quickly. But legislation to cap the monthly increases suppliers can charge appears to have stalled.

Many customers who signed up for variable-rate supply deals were hit with bills that doubled and tripled without notice after regional energy markets went wild during severe weather in January.

"In addition to the many complaints regarding higher utility supply costs due [to] the variable-rate contracts, numerous customers alleged behavior by certain third-party suppliers that, if corroborated, would at best be considered dishonest and/or misleading," Solomon said in a statement.

In several states, including New Jersey and Pennsylvania, vibrant competitive power markets have arisen in the last decade. But some suppliers have stood out for their aggressive marketing tactics.

No suppliers have been fined or penalized in New Jersey in recent memory, but that may change with the new agreement.

"The memorandum of understanding between the Division of Consumer Affairs and BPU establishes the terms of cooperation as to addressing these complaints and pursuing any enforcement actions that may be warranted," Steve C. Lee, acting director of consumer affairs, said in a statement.

The two-year agreement also spells out how the costs of investigations will be borne by the agencies and how any fines collected from suppliers will be divided between the agencies or with consumers if overcharges are recovered.