Systrum Energy to Pay $554,000, Reform Business Practices, in Settlement with New Jersey Attorney General, Division of Consumer Affairs, and Board of Public Utilities
Third-Party Energy Supplier Allegedly Failed to Deliver on Promises of Significant Savings for Electrical and/or Natural Gas Service
NEWARK – Acting Attorney General John J. Hoffman, the New Jersey Board of Public Utilities (BPU), and the New Jersey Division of Consumer Affairs, announced that Fairview-based Keil & Sons, Inc., d/b/a Systrum Energy ("Systrum”), has agreed to pay $554,698.06, including $436,131.61 in consumer restitution; 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 State’s allegations that the third-party energy supplier deceived consumers by promising they would save money by switching from their utility providers.
“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. “Beyond this settlement, the Division and BPU will continue to monitor the marketplace of third-party energy suppliers to ensure they honor their promises and follow the law.”
“The Division of Consumer Affairs’ and the Board of Public Utilities’ actions against bad actors have helped send a clear message to other third-party energy suppliers that these predatory practices will not be tolerated,” said Richard S. Mroz, President of the New Jersey Board of Public Utilities. “I am pleased that through this settlement we were able to provide restitution to impacted customers.”
“Systrum lured consumers with ads that promised ‘New Jersey’s Lowest Residential Electric Rates’ and savings of up to 20 percent on monthly energy bills – but never told consumers those promises would fall by the wayside if the company found them unaffordable,” said Division of Consumer Affairs Acting Director Steve Lee. “When business became difficult during a harsh winter, we allege that the company also became unresponsive to consumers who wished to cancel their contracts or obtain information.”
Systrum is one of
three third-party energy suppliers against whom the State filed civil Complaints during the spring of 2014, alleging they failed to live up to their promises that the consumers would save money by switching from their utility companies. When energy prices spiked during the harsh winter of 2013-2014, the companies’ rates far exceeded those the customers would have paid, had they stayed with their previous electric and/or natural gas suppliers.
Systrum’s marketing materials and advertisements represented that it offered “New Jersey’s Lowest Residential Electric Rates” and promised savings up to 20 percent on consumers’ monthly electric and/or natural gas bills. Instead, during the first three months of 2014, Systrum allegedly charged as much as 150 percent more per kilowatt-hour than the customers would have paid if they had stayed with their previous energy provider.
In settling with the State, Systrum asserted that it no longer provides energy services to residential consumers. Instead, the company only provides gas supply services, and provides them only to commercial customers.
Systrum will pay the State $554,698.06, of which $436,131.61 represents consumer restitution, $50,000 represents civil penalties, and the rest will reimburse the State’s investigative and legal costs. In addition, Systrum will pay a State-approved firm to act as a “settlement administrator” and distribute the restitution to affected residents. Systrum will pay the administrator up to $40,000, over and above the total settlement amount.
Systrum also agreed that it will comply with all applicable laws and regulations, including a September 2014 Order by the BPU which establishes additional 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.
Systrum is the second of the three third-party energy suppliers to settle the State’s allegations that they violated the Electric Discount and Energy Competition Act, the Consumer Fraud Act, multiple regulations concerning energy licensing and registration, retail choice consumer protection, advertising by energy suppliers, and/or the Plain Language Act.
The State in January 2015 announced its
$2.1 Million settlement with HIKO Energy LLC. The Complaint against Palmco Power NJ, LLC and Palmco Energy NJ, LLC (collectively, “Palmco”) is still pending.
Investigators Jeffrey Watkins and Raquel Williams, of the Office of Consumer Protection within the Division of Consumer Affairs, conducted these investigations.
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 in this action.
Consumers seeking to file a complaint about a third-party energy supplier can contact the New Jersey Board of Public Utilities at
email@example.com. Consumers can use the form provided
Consumers who believe they have been cheated or scammed by a business, or suspect any other form of consumer abuse, can file an
online complaint with the State Division of Consumer Affairs by visiting its
website or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504- 6200.
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