UPDATE: A Fairview third-party energy supplier that state authorities said “lured consumers with promised monthly savings that turned out to be fictional,” agreed to pay $554,698 and agree to certain conditions to settle state authorities said today in announcing a lawsuit against it.
The amount agreed to by Keil & Sons, Inc. — doing business as Systrum Energy — includes $436,131 in restitution to consumers, state authorities aid.
The company also has stopped selling electric and/or natural gas service to residential consumers and “will make other changes to its business practices,” in order to resolve the charges.
It now provides gas supply services only to commercial customers.
Systrum is the second third-party energy suppliers to settle with the state out of three originally named.
The first, HIKO Energy LLC, agreed this past January to pay $2.1 million. The complaint against Palmco Power NJ, LLC and Palmco Energy NJ, LLC (collectively, “Palmco”) is still pending.
“New Jerseyans who had a hard time paying their monthly utility bills were hit even harder when Systrum allegedly broke its promise of monthly savings,” Acting Attorney General John J. Hoffman said.
Systrum “promised savings of up to 20% percent on consumers’ monthly electric and/or natural gas bills” during what was an unusually long and cold winter, Hoffman said when the state complaint was filed in June 2014.
“However, instead of delivering the promised monthly savings, Systrum charged consumers far more per unit of energy than the utility companies – as much as 300% more per kilowatt-hour,” he said at the time.
“This resulted in monthly bills that were significantly higher than the consumers would have paid if they had stayed with their previous energy provider,” the attorney general said.
Advertisements by the Bergen Boulevard business also “lured consumers with the false promise of ‘no contracts,’ in violation of BPU regulations,” yet used contracts that contained “various misrepresentations and omissions of material facts,” Hoffman said.
“For example, certain Systrum contracts did not include a required statement of the residential customer’s rights or a complete list of fees, and some included the name ‘PSE&G’ even though PSE&G was not a party to the contract,” he explained. “In addition, certain Systrum contracts required consumers to waive all consumer rights under New Jersey law.
“Consumers who sought to cancel their service were often unable to reach a live Systrum customer service representative. Consumers who did reach a representative were told they could not cancel without 30 days’ notice – a requirement included in contracts that consumers had never signed or even seen,” Hoffman said.
After “drastically” increasing consumers’ energy bills this past January and February, Systrum “abruptly, and without proper notice, discontinued their services and reverted customers back to their original energy suppliers,” he said. “At the same time, Systrum deactivated its website, leaving consumers without access to information.”
The settlement includes $50,000 in civil penalties, with the rest after consumer restitution going to reimburse the state’s investigative and legal costs.
Systrum also will pay a state-approved firm up to $40,000 to act as a “settlement administrator” and distribute the restitution to affected residents
Systrum also agreed that it will comply with all applicable laws and regulations, including a September 2014 Order by the BPU that added requirements for third-party energy suppliers.
These include “providing consumers with either a fixed pricing arrangement or a clear statement of the precise mechanism by which monthly prices will be determined; maintaining a customer service representative and a regulatory affairs representative who will be available during normal New Jersey business hours; maintaining a website and email address by which consumers can submit complaints or questions at any time; using good faith efforts to respond to and resolve all consumer complaints; tell consumers they may contact the BPU with complaints; and otherwise honor consumers’ rights under New Jersey law,” Hoffman said.
Investigators Jeffrey Watkins and Raquel Williams of the Office of Consumer Protection within the Division of Consumer Affairs, conducted the investigation.
Deputy Attorney General Jeffrey Koziar of the Consumer Fraud Prosecution Section within the Division of Law, and Caroline Vachier, section chief of the Public Utilities Section of the Division of Law, represented the state.
PHOTO: Boyd A. Loving