In the Matter of SmartEnergy

In the Matter of Smart Energy Holdings, LLC D/B/A SmartEnergy, No. 1, September Term, 2023, Opinion by Booth, J. Public Utilities – Administrative Law – The Electric Customer Choice Act of 1999 – – The Maryland Telephone Solicitations Act Under the Maryland Electric Customer Choice and Competition Act of 1999, Md. Code Ann., Public Utilities Article (“PU”) § 7-501, et seq. (2020 Repl. Vol., 2023 Supp.) (the “Choice Act”), the Maryland General Assembly granted significant regulatory authority and oversight to the Public Service Commission (“Commission”) to ensure that electricity suppliers who sell electricity in Maryland comply with applicable laws designed to protect consumers, including the State’s consumer protection laws. SmartEnergy Holdings, LLC (“SmartEnergy”) is a retail electricity supplier that obtained a license from the Commission to sell electricity in Maryland in 2017.

After numerous consumer complaints, the Commission Staff filed a complaint against SmartEnergy alleging violations of various provisions of Maryland law governing retail electricity suppliers. The Commission delegated the case to a public utility law judge (“PULJ”), who issued findings of fact and a proposed order. The PULJ found that SmartEnergy engaged in deceptive, misleading, and unfair trade practices, and a pattern or practice of systematic violations of the Choice Act and the Commission’s regulations. On appeal, the Commission affirmed the factual findings of the PULJ and determined that the Maryland Telephone Solicitations Act, Md. Code Ann., Commercial Law Article (“CL”) § 14-2201, et seq.

(2013 Repl., Vol., 2023 Supp.) (“MTSA”) applied to SmartEnergy’s marketing and sales practices. The Commission found that SmartEnergy violated the MTSA. As a result of these violations, the Commission: (1) imposed a moratorium prohibiting SmartEnergy from enrolling or soliciting additional customers in Maryland and (2) directed SmartEnergy to take certain actions, including returning all of its Maryland customers to their utility’s standard offer service, and refunding to its former and existing customers the price difference between SmartEnergy’s electricity rate and the utility’s standard offer service during the period of the customer’s enrollment. SmartEnergy filed a petition for judicial review in the Circuit Court for Montgomery County, and the circuit court affirmed the Commission’s decision.

Thereafter, SmartEnergy appealed to the Appellate Court of Maryland, which affirmed the circuit court’s judgment. The Supreme Court of Maryland granted SmartEnergy’s petition for writ of certiorari. The Supreme Court of Maryland held that: 1. Under the plain language of the Choice Act, the General Assembly granted the Commission the express authority to determine whether electricity suppliers under its jurisdiction have violated Maryland’s consumer protection laws, including the MTSA, and to impose statutory remedies and civil penalties when it determines that the supplier has violated any applicable consumer protection laws of this State. 2.

The Commission correctly concluded that the MTSA applied to SmartEnergy’s marketing and sales practices that are the subject of this proceeding. The MTSA applies to sales made over the telephone where the consumer places the telephone call to the merchant in response to a merchant’s marketing materials unless the transaction falls within one of the statutory exemptions outlined in CL § 14-2202. 3. The Commission’s affirmance of the PULJ’s findings of fact that SmartEnergy’s business practices violated the Choice Act and the Commission’s regulations, and its additional findings of fact that SmartEnergy’s business practices violated the MTSA, were supported by substantial evidence in the record. 4. The remedies imposed by the Commission in its final order arising from SmartEnergy’s violation of Maryland laws were within its discretion and were not arbitrary or capricious.

Circuit Court for Montgomery County Case No.: 485338V Argued: September 7, 2023 IN THE SUPREME COURT OF MARYLAND No. 1 September Term, 2023 IN THE MATTER OF SMART ENERGY HOLDINGS, LLC D/B/A SMARTENERGY Fader, C.J., Watts, Hotten, Booth, Biran, Gould, Eaves, JJ. Opinion by Booth, J. Gould, J., concurs and dissents. Filed: February 22, 2024 Pursuant to the Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. 2024.02.22 11:52:08 -05'00' Gregory Hilton, Clerk In 1999, the electricity supply market in Maryland underwent a sea change. With the enactment of the Electric Customer Choice and Competition Act of 1999 (the “Choice Act”),1 the General Assembly deregulated the electric industry in Maryland.

Prior to the enactment of the Choice Act, electric energy supply and electric energy distribution were bundled together and were exclusively provided by one electric utility company to customers within the distribution territory for that company. The legislative purposes of the Choice Act included establishing “customer choice of electricity supply” and creating “competitive retail electricity supply and electricity supply services markets.”2 In furtherance of these goals, the Choice Act requires that the component parts of the electric service be unbundled. Although distribution would remain monopolized, the Legislature intended that electricity supply rates would be largely established by the open market. Since the enactment of the Choice Act, a Maryland consumer may shop on the open market for a third-party retail energy supplier.

For example, if a residential consumer who resides in a Baltimore Gas and Electric Company (“BGE”) distribution territory wishes to purchase electricity from a third-party retail energy supplier, the customer may do so. In such a case, the consumer will receive a monthly invoice from BGE, as the utility company responsible for distribution services in the territory, that includes the electricity rate charged by the retail electricity supplier. Md. Code Ann., Public Utilities Article (“PU”) § 7-501, et seq. (2020 Repl.

Vol., 1 2023 Supp.). 2 PU § 7-504(1), (2). Recognizing that not all Maryland consumers will shop for their electricity supplier, the Choice Act also requires electric utility companies to provide “backstop” electricity supply, known as the “standard offer service” or “SOS” to consumers who do not shop for their electricity supply on the open market.3 In other words, although the consumer may select an electricity supplier that is different from the consumer’s local utility company providing electricity distribution service, the consumer is not required to choose an electricity supplier and may pay the standard offer service to the distribution company. As a condition to selling electricity in Maryland, the Choice Act requires that an electricity supplier hold a license that is issued by the Maryland Public Service Commission (“Commission”).4 As we will discuss in more detail herein, the General Assembly has granted significant regulatory authority and oversight to the Commission to ensure that electricity suppliers who sell electricity in Maryland comply with applicable laws designed to protect consumers, including the State’s consumer protection laws. In this case, we are asked to consider whether the Commission correctly determined that the marketing and sales practices of an electricity supplier, SmartEnergy Holdings, LLC (“SmartEnergy”)—which obtained a license from the Commission to sell electricity in Maryland in February 2017—violate Maryland laws and regulations designed to protect Maryland consumers from unfair, false, misleading, or deceptive trade practices.

In March 2021, the Commission issued a decision and order concluding that SmartEnergy’s 3 PU §§ 7-506(e), 7-510(c). 4 PU § 7-507. 2 marketing and sales practices in Maryland violated the Choice Act, the Maryland Telephone Solicitations Act,5 and regulations promulgated by the Commission. As a result of these violations, the Commission: (1) imposed a moratorium prohibiting SmartEnergy from enrolling or soliciting additional customers in Maryland and (2) directed SmartEnergy to take certain actions, including returning all of its Maryland customers to the customer’s utility’s standard offer service, and refunding to its former and existing customers the price difference between SmartEnergy’s electricity rate and the utility’s standard offer service during the period of the customer’s enrollment. The legal issues raised by SmartEnergy in this matter arise under two statutory schemes—Maryland’s consumer protection laws that are set forth in Titles 13 and 14 of the Commercial Law Article, and Maryland’s public utilities laws that are applicable to energy suppliers, which are set forth in Title 7 of the Public Utilities Article. Before turning to the parties’ specific contentions at issue, it is useful to provide an overview of the statutory schemes and their interrelationships.

I Statutory and Regulatory Framework A. The Maryland Consumer Protection Act (“MCPA”) The Maryland Consumer Protection Act (“MCPA”) is set forth in the Commercial Law Article of the Maryland Code, (“CL”) § 13-101 et seq. (1974, 2013 Repl. Vol., 2021 Supp.). The purpose of the MCPA is to “set certain minimum statewide standards for the 5 Md. Code Ann., Commercial Law Article (“CL”) § 14-2201, et seq.

(2013 Repl. Vol., 2023 Supp.). 3 protection of consumers across the State.” CL § 13-102(b)(1). In enacting the MCPA, the General Assembly determined that the State “should take strong protective and preventive steps to investigate unlawful consumer practices, to assist the public in obtaining relief from these practices, and to prevent these practices from occurring in Maryland.” Id. § 13- 102(b)(3). The General Assembly further instructed that the MCPA shall be “construed and applied liberally to promote its purpose.” Id. § 13-105.

To that end, the MCPA generally prohibits unfair, abusive, or deceptive trade practices, id. § 13-303, and also contains a nonexclusive list of such practices, which includes making any “[f]alse, falsely disparaging, or misleading oral or written statement, visual description, or other representation of any kind which has the capacity, tendency, or effect of deceiving or misleading consumers[,]” id. § 13-301(1) (emphasis added). Also included within the definition of “unfair, abusive, or deceptive trade practices” is a violation of the Maryland Telephone Solicitations Act (“MTSA”), set forth in Title 14, Subtitle 22 of the Commercial Law Article. Id. § 13-301(14)(xiv). The MCPA includes public enforcement mechanisms and private remedies.

Specifically, CL § 13-201 establishes the Division of Consumer Protection in the Office of the Attorney General (“Division”) and charges it with the duty to administer the MCPA. Notably, “[t]he Division has the power and the duty to receive and investigate complaints and to initiate an investigation of any unfair and deceptive trade practice.” Consumer Prot. Div. v. Morgan, 387 Md. 125, 149 (2005) (citing CL § 13-204). The General Assembly has also conferred rule-making authority on the Division, including the authority to adopt reasonable “rules, regulations, or standards which further define specific unfair or 4 deceptive trade practices.” CL § 13-205(a)(1).

Although the Division is the primary agency charged with enforcing the MCPA, the statute also confers concurrent enforcement authority on other State agencies. See id. § 13-103(c) (stating that “[t]he provisions of this title shall be enforced by each agency of the State within the scope of its authority”). B. The Maryland Telephone Solicitations Act (“MTSA”) The General Assembly enacted the Maryland Telephone Solicitations Act (“MTSA”) in 1988. 1988 Md. Laws, ch. 588. According to the purpose paragraph of the legislation, it was enacted: FOR the purpose of requiring that certain contracts solicited by telephone be reduced to writing in order to be enforceable; prohibiting certain actions by merchants regarding telephone solicitation; requiring that a contract made pursuant to a telephone solicitation meet certain conditions; providing that a violation of this Act shall be an unfair and deceptive trade practice; providing for the applicability of this Act; defining certain terms; and generally relating to telephone solicitations.

The MTSA, codified at Title 14, Subtitle 22 of the Commercial Law Article, is a consumer protection statute that applies to contracts arising from “telephone solicitations” as defined by the Act. If a contract for the sale of consumer goods, consumer services, or consumer realty6 is made pursuant to a “telephone solicitation,” it “is not valid and enforceable against a consumer”7 unless it complies with the provisions of the MTSA. The provisions 6 “‘Consumer goods’, ‘consumer realty’, and ‘consumer services’ mean, respectively, goods, real property, and services which are primarily for personal, household, family, or agricultural purposes.” CL § 14-2201(c). The definitions of these terms under the MTSA are identical to the terms as they are defined in the MCPA.

See id. § 13-101(d). “‘Consumer’ means an actual or prospective purchaser, lessee, or recipient of 7 consumer goods, consumer services, or consumer realty.” CL § 14-2201(b). 5 require, among other things, that a contract “be reduced to writing and signed by the consumer.” CL § 14-2203(b)(1).8 “A merchant engaging in a telephone solicitation may not make or submit any charge to the consumer’s credit account until after the merchant receives from the consumer a copy of the contract which complies with” the MTSA. Id. § 14-2204. In addition to any remedies otherwise available at law, a violation of the MTSA constitutes an unfair or deceptive trade practice under the MCPA. Id. § 14-2205(1).

Under the MTSA, “‘[t]elephone solicitation’ means the attempt by a merchant to sell or lease consumer goods, services, or realty to a consumer located in this State that is: (1) Made entirely by telephone; and (2) Initiated by the merchant.” Id. § 14-2201(f). The parties dispute whether SmartEnergy’s marketing and business practices—consisting of 8 CL § 14-2203 states: (a) A contract made pursuant to a telephone solicitation is not valid and enforceable against a consumer unless made in compliance with this subtitle. (b) A contract made pursuant to a telephone solicitation: (1) Shall be reduced to writing and signed by the consumer; (2) Shall comply with all other applicable laws and regulations; (3) Shall match the description of goods or services as that principally used in the telephone solicitation; (4) Shall contain the name, address, and telephone number of the seller, the total price of the contract, and a detailed description of the goods or services being sold; (5) Shall contain, in at least 12 point type, immediately preceding the signature, the following statement: “You are not obligated to pay any money unless you sign this contract and return it to the seller.”; and (6) May not exclude from its terms any oral or written representations made by the merchant to the consumer in connection with the transaction. 6 SmartEnergy mailing postcards to prospective consumers stating that they are eligible for a free month of electricity and providing a toll-free telephone number, which sets in motion a telephone call from the customer to SmartEnergy, during which SmartEnergy attempts to sell electricity to the customer—fall within the statutory definition of “telephone solicitation.” We will discuss the parties’ competing statutory interpretations infra. C. The Choice Act and Other Relevant Provisions of the Public Utilities Article The Commission was established in 1910 for the purpose of regulating public utilities and transportation companies conducting business in Maryland.

See 1910 Md. Laws, ch. 180. An independent unit of the executive branch of State government, the Commission has jurisdiction over each public service company that engages in or operates a utility business in the State “to the full extent that the Constitution and laws of the United States allow[.]” Md. Code Ann., Public Utilities Article (“PU”) §§ 2-101, 2-112(a) (2020 Repl. Vol., 2023 Supp). “The Commission has the powers specifically conferred by law[,]” as well as “the implied and incidental powers needed or proper to carry out its functions under” the applicable provisions of the Maryland Code. Id. § 2-112(b).

The General Assembly instructs that “[t]he powers of the Commission shall be construed liberally.” Id. § 2-112(c). When the General Assembly enacted the Choice Act, it granted the Commission regulatory oversight over third-party retail energy suppliers. Id. § 7-507. This regulatory authority extends not only to requirements related to licensure and financial integrity, see id. § 7-507(a)–(c), but also to ensuring that electricity suppliers comply with the State’s consumer protection laws.

The Choice Act expressly states that “[a]n electricity supplier 7 may not engage in marketing, advertising, or trade practices that are unfair, false, misleading, or deceptive.” Id. § 7-505(b)(7). The General Assembly granted the Commission the power to adopt regulations: (1) to protect consumers from “anticompetitive and abusive practices;” (2) requiring electricity providers to provide “adequate and accurate customer information to enable customers to make informed choices regarding the purchase of any electricity services offered by the electricity supplier;” (3) establishing “reasonable restrictions on telemarketing;” (4) establishing “procedures for contracting with customers;” (5) establishing “requirements and limitations relating to deposits, billing, collections, and contract cancellations;” (6) establishing “provisions providing for the referral of a delinquent account by an electricity supplier to the standard offer service” required to be provided by the consumer’s electric company under the subtitle; and (7) establishing “procedures for dispute resolution.” Id. § 7-507(e). The Choice Act requires that the Commission “consult with the Consumer Protection Division of the Office of the Attorney General before issuing regulations designed to protect consumers.” Id. § 7-507(o). In tandem with its licensing and regulatory authority, the General Assembly has given enforcement responsibility to the Commission.

PU § 7-507(k)(1) states: The Commission may revoke or suspend the license of an electricity supplier, impose a civil penalty or other remedy, order a refund or credit to a customer, or impose a moratorium on adding or soliciting additional customers by the electricity supplier, for just cause on the Commission’s own investigation or on complaint of the Office of People’s Counsel, the Attorney General, or an affected party. 8 “Just cause” is defined by statute to include: (1) “switching or causing to be switched, the electricity supply for a customer without first obtaining the customer’s permission;” (2) “committing fraud or engaging in deceptive practices;” and (3) “violating a provision of the [Public Utilities Article] or any other applicable consumer protection law of the State[.]” See id. § 7-507(k)(3)(ii), (iv), and (viii). The General Assembly granted the Commission discretionary authority to determine the amount of any civil penalties for a violation of § 7-507 after notice and a hearing, and after considering certain statutorily enumerated factors. Id. § 7-507(l)(1)(i).9 The Commission also has the authority to revoke or suspend an electricity supplier’s license, id. § 7-507(l)(1)(ii), and “may order the electricity supplier to cease adding or soliciting additional customers or to cease serving customers in the State.” Id. § 7-507(n). 9 PU § 7-507(l) states: (1) An electricity supplier or person selling or offering to sell electricity in the State in violation of this section, after notice and an opportunity for a hearing, is subject to: (i) a civil penalty of not more than $10,000 for the violation; or (ii) license revocation or suspension. (2) Each day a violation continues is a separate violation.

(3) The Commission shall determine the amount of any civil penalty after considering: (i) the number of previous violations of any provisions of this division; (ii) the gravity of the current violation; and (iii) the good faith of the electricity supplier or person charged in attempting to achieve compliance after notification of the violation. 9 Finally, it is worth noting that the General Assembly recognized that its consumer protection directives set forth in Subtitle 5 of Title 7 of the Public Utilities Article would overlap with the consumer protection statutes set forth in the Commercial Law Article. Accordingly, PU § 7-507(q) expressly states that “[n]othing in this subtitle may be construed to affect the authority of the Division of Consumer Protection in the Office of the Attorney General to enforce violations of Titles 13 and 14 of the Commercial Law Article or any other applicable State law or regulation in connection with the activities of electricity suppliers.” D. Pertinent Regulations Promulgated by the Commission Consistent with the authority granted by statute, the Commission has promulgated regulations that are set forth in Title 20, Subtitle 53 of the Code of Maryland Regulations (“COMAR”), which apply to electric utilities and suppliers who serve residential customers. Pertinent to SmartEnergy’s contentions in this case, the Commission’s regulations prohibit a supplier from engaging “in a marketing or trade practice that is unfair, false, misleading, or deceptive.” COMAR 20.53.07.07A(2). Concerning telephone solicitation specifically, the regulations state that “[a] supplier soliciting customers by telephone shall comply with all applicable State and federal law, including the [MTSA.]” Id. 20.53.07.07D(1).

The regulations specify the minimum requirements that must be included in an energy supplier’s contract with a customer. Id. 20.53.07.08A. In addition to providing a contract, the regulations also require that the electricity supplier provide a 10 contract summary on a form provided by the Commission. Id. 20.53.07.08B.10 We will address additional regulations as we consider the parties’ contentions herein.

II Factual Background and Procedural History SmartEnergy is an electricity supplier with its principal offices located in New York. SmartEnergy sells 100% renewable energy.11 In February 2017, the Commission issued SmartEnergy a Maryland electricity supplier license. Thereafter, SmartEnergy commenced marketing efforts to solicit customers and enrolled Maryland consumers in electricity contracts that were consummated during telephone calls between the consumer and SmartEnergy’s agents.12 These marketing efforts, and the contracts that SmartEnergy 10 COMAR 20.53.07.08B states, in pertinent part: (1) At the time of completion of the contracting process, a supplier shall provide the customer a copy of the executed contract and completed Contract Summary on the form provided by the Commission. (2) If the contract is completed through telephone solicitation, the supplier shall send the Contract Summary to the customer along with the contract that must be signed by the customer and returned as required by the Maryland Telephone Solicitations Act.

If the contract is exempt from the Maryland Telephone Solicitations Act, the supplier shall send the Contract Summary with the contract to the customer. According to SmartEnergy’s website, it purchases “renewable energy credits 11 (RECs) to offset 100% of [a customer’s] electricity usage[.]” https://perma.cc/W9HD- 455A. 12 SmartEnergy is licensed to provide electricity and electricity supply services to residential, commercial, and industrial customers in the distribution territories of Baltimore Gas and Electric (“BGE”), Potomac Electric Power Company (“PEPCO”), Delmarva Light and Power Company, Southern Maryland Electric Cooperative, Inc., and Choptank Electric Cooperative, Inc. 11 entered into with Maryland consumers during telephone calls, are at the center of this administrative proceeding. A. SmartEnergy’s Postcard Mailings and Telephone Contracts From February 2017 through May 2019, SmartEnergy mailed six million postcards to Marylanders advertising its services. The postcards informed consumers that they were “eligible” for a “free month of electricity” and a six-month guaranteed rate protection plan.

They also provided a toll-free number inviting prospective customers to call to learn more about the offer and made multiple references to the consumer’s existing utility company. The administrative record in this case includes many examples of the types of postcards that SmartEnergy sent to prospective Maryland customers during this period, which contain substantially the same content. For purposes of our discussion, we will focus on one postcard that SmartEnergy mailed to prospective customers within BGE’s distribution territory as an example. The front and back of the postcard included six references to BGE—the customer’s utility company.

The left-hand corner of the postcard (in a similar location to where a return address would appear) contained the words “SmartEnergy for BGE customers.” The postcard indicated that the eligibility for the free month of electricity is linked to the customer’s status with BGE, stating: Because you are a [city] resident and a BGE customer, you are eligible to receive a free month of electricity. In addition to free electricity supply on your BGE bill, you are also eligible to receive 6 months guaranteed rate protection. Call us today to claim this benefit. 12 The postcard stated that the offer was “time sensitive” and indicated that the prospective customer should respond by a certain date to receive the offer. In smaller print at the bottom of the postcard, SmartEnergy informed the customer that, to receive the free month of electricity, the customer must “select SmartEnergy,” SmartEnergy “is not affiliated with BGE[,]” the offer “[a]pplied to electricity supply only[,]” and “[d]elivery, taxes and other BGE fees are not included.” A license number was provided.13 Curiously, although SmartEnergy sells 100% renewable energy, that fact was omitted from its postcards.

During this time period, SmartEnergy received approximately 104,000 calls from prospective customers who received the postcards. Each call was recorded by SmartEnergy, and SmartEnergy agents were directed to follow a script. The initial focus of the telephone call was the promotional one month of free electricity. Under the script, the SmartEnergy agent first greeted the customer, informed the customer that the agent was with SmartEnergy and “congratulated” the customer on the free month of electricity.

The agent then stated that, in addition to the free month of electricity, the customer also qualified for a promotional “price protection” and advised them that their rate would remain the same for six months. The agent also suggested that the fixed rate would provide more security compared to variable utility rates during high usage periods. 13 Between February 2017 and July 2018, SmartEnergy’s postcards did not contain SmartEnergy’s license number. As a result of a complaint-based investigation by the Commission’s Consumer Affairs Division (“CAD”) into SmartEnergy’s marketing practices, SmartEnergy added its license number to subsequent mailings beginning in July 2018. The adequacy of the subsequent remedial inclusion of the license number is discussed infra. 13 The script contained statements that “all” of the customer’s services from the utility would “remain the same” and that, if the customer opted for SmartEnergy’s services, the only difference would be that the price that the consumer paid for electricity would be protected.

The agent then stated that they wanted to make sure the price protection was applied to the correct account. At that point, the agent requested information from the electric choice ID that appeared on the customer’s existing utility bill and confirmation of the account holder status. Once the SmartEnergy agent believed the customer had agreed to the promotion being offered, the agent proceeded to the confirmation questions portion of the script. The script required the agent to say, “[n]ow I just need to ask you two quick questions to confirm the information we’ve discussed.” In many instances, however, the information that was included up to that point in the telephone solicitation was not previously discussed, and instead, was being mentioned for the first time.

In an attempt to obtain affirmative confirmation on the part of the customer as to all the terms and conditions of the contract, the agent read a statement with several pieces of information, and then the customer was asked if they understood their right to cancel.14 14 The following are the confirmation questions from the script: Confirmation question #1: [customer], do you understand that by enrolling in SmartEnergy’s Price Protection Plan, you’ll receive a fixed rate of [insert rate] for 6 months and then a competitive market-based rate that may change from month-to-month, and as mentioned, [insert utility company] will continue to deliver your electricity, send your bill, and respond to emergencies? . . . . 14 Of the approximately 104,000 calls from prospective customers during the relevant period, approximately 32,000 callers enrolled as customers with SmartEnergy. SmartEnergy did not provide written contracts or contract summaries to those customers who enrolled. In some instances,15 SmartEnergy sent customers a Welcome Kit, which contained a letter stating: Welcome and congratulations for choosing SmartEnergy. We want to remind you of the key benefits of your plan, and make sure you understand what to expect.

At SmartEnergy we will strive to provide you with the lowest possible rate, cleaner electricity, and the same reliable service. You have selected our 6 month fixed product with a fixed price of [___] cents per kilowatt hour. Your electricity rate will appear on the supply portion of your bill. Your agreement and other materials are enclosed.

Here’s what to expect: [Insert utility company] will still deliver your electricity, read your meter and respond to emergencies just like they always have. Your choice of SmartEnergy will be processed by [insert utility company] within one or two billing cycles. After that, you will see SmartEnergy listed in the electricity supply portion of your [insert utility] bill. You’ll continue to receive one bill and make one payment to [insert utility] every month.

Nothing else will change. Confirmation question #2: SmartEnergy will send you a Welcome Kit confirming everything we have discussed today, and [insert utility company] will send you a letter confirming that you have selected SmartEnergy. When you receive the SmartEnergy Welcome Kit, you’ll be able to review all of the terms of your agreement and if you change your mind you can cancel and return to [insert utility company] standard rate at any time. Do you understand your right to cancel? 15 Of the 34 CAD complaints, SmartEnergy produced copies of the Welcome Kits for only 25 customers. 15 The Welcome Kit also included a “Free Month Redemption Form”—or a rebate form— with instructions to the customer, stating that “[a]fter your 6 months of price protection, just mail this form along with a copy of your 7th electricity bill that has SmartEnergy listed as your supplier.” B. The Commission Staff’s Investigation and Administrative Proceedings The Commission’s Consumer Affairs Division (“CAD”)16 received 34 customer complaints regarding SmartEnergy during the period in which SmartEnergy was engaging in its marketing efforts and telephone sales in Maryland.

The bases of these complaints included that: the customer’s electricity supply was switched without their authorization; SmartEnergy portrayed itself as being affiliated with the customer’s then-current electricity provider; the bills were excessive; and the customers were unable to cancel their service.17 16 CAD was established by the Commission with the authority to review and investigate inquiries referred by the Commission, its staff, or a customer. See COMAR Chapter 20, Subtitle 32. The regulations governing CAD’s review and investigation of disputes are set forth in COMAR 20.32.01.04. 17 For example, one CAD complaint alleged: “I thought I was speaking to BGE. I wasn’t.

It was someone from SmartEnergy and not affiliated with BGE. I was caught in a SCAM and didn’t realize it at the time. [] I called [] to cancel this offer. I was put on hold for 11 minutes and instructed to leave a message and my call would be returned asap.” In another complaint, a customer disputed that he enrolled with SmartEnergy during the telephone call, stating, “Nothing could be further from the truth! The reason [for] my call was to inquire about an ad for a full month for free electricity, and I thought I was talking with an employee of BGE, [who] could make such an offer.” Another complaint stated that “I am a customer of BGE.

I was contacted by SmartEnergy portraying themselves as a subsidiary of BGE,” and after learning that the account had been switched, stated that “I was deceived, that [S]martEnergy portrayed themselves as a unit of BGE.” 16 After receiving numerous customer complaints, the Commission Staff filed a complaint on May 10, 2019, alleging violations of various provisions of Maryland law governing retail electricity suppliers. The Commission granted the Staff’s request for a show cause order, docketed the matter, and delegated the case to the Public Utility Law Judge (“PULJ”) Division for investigation, finding that there were genuine issues of material fact that warranted further proceedings.18 Thereafter, the Commission Staff filed two amended complaints, and the Office of People’s Counsel (“OPC”)19 filed a complaint, Another individual notified CAD that “Smart Energy switched my 95 year old mother-in-law from Constellation to their company as her electric supplier without her permission. She had called them about a ‘free month’ postcard offer Smart Energy had mailed to her. We called and switched her back.

We also asked Smart Energy for a copy of the phone transcript (or recording). They indicated they would call me in 48 hours with the recording. They did not.” Many customers noted in their complaints that their utility company advised them to contact the CAD because “it sounded as if it was a scam,” and to prevent future misinformation from being distributed by SmartEnergy. 18 Pursuant to PU § 3-104(d)(1), the Commission has the authority to delegate to a public utility law judge (“PULJ”) “the authority to conduct a proceeding that is within the Commission’s jurisdiction.” Thereafter, the PULJ has the authority to conduct a hearing and issue a proposed order and findings of fact. Id. § 3-104(d)(2).

We discuss the parties’ right to appeal to the Commission in note 24 infra. 19 The People’s Counsel—a position created by the General Assembly—is an attorney licensed in Maryland who is appointed by the Attorney General with the advice and consent of the Senate. PU § 2-202. The duties of the Office of People’s Counsel (“OPC”) include evaluating “each matter pending before the Commission to determine if the interests of residential and noncommercial users are affected.” Id. § 2-204(a)(1)(i). If the OPC “considers the interest of residential and noncommercial users to be affected, [it] shall appear before the Commission and courts on behalf of residential and noncommercial users in each matter or proceeding over which the Commission has original jurisdiction[.]” Id. § 2-204(a)(2). 17 alleging, among other things, the enrollment of customers without written contracts and without providing contract summaries, false and misleading advertising, and failure to provide customers with pricing information. 1.

PULJ’s Findings and Recommended Order Following discovery, on September 11, 2020, the PULJ granted partial summary judgment against SmartEnergy for failing to provide its customers with a contract summary at the time of the completion of the contract process for the period between February 2017 until the Commission Staff filed its complaint in May 2019, in violation of the Commission’s regulations.20 The record before the PULJ included the testimony of multiple witnesses. The OPC filed the testimony of Susan Baldwin and Harold Muncy. Ms. Baldwin, a specialist in economics, regulation, and public policy of utilities, testified that she had reviewed all of the filings and supporting exhibits. She described the manner in which she believed SmartEnergy’s business practices were misleading, deceptive, and filled with incomplete information.

She testified about the various ways in which she determined that SmartEnergy’s postcards and script were misleading or had the capacity or tendency to mislead, which she further testified was confirmed by the customer complaints and audio recordings. Mr. Muncy testified as to what utility electric supply rate information would have been available on the dates on which the consumers who filed complaints had enrolled 20 See COMAR 20.53.07.08B(1) requiring that, at the time of the completion of the contracting process, the supplier provide the customer with a copy of a “completed Contract Summary on the form provided by the Commission.” 18 with SmartEnergy. He specifically testified regarding the comparison between the SmartEnergy rates and other utility rates. The Commission Staff filed the testimony of Kevin Mosier.

Mr. Mosier testified that, based upon a review of the complaints and associated audio recordings, SmartEnergy engaged in a pattern and practice of systemic violations of Maryland consumer protection laws. Mr. Mosier discussed telemarketing calls in the record, which contained false implications that customers’ rates would not increase, deliberately obscured information that customers would be switching to a competitive supplier, and misled customers into believing that their current supplier rates would increase if they did not switch. SmartEnergy’s filed written testimony included that of its Chief Customer Officer, Dehan Besnayake; Chief Executive Officer, Daniel Kern; and Chief Compliance Officer, Anne Marie Toss. Mr. Besnayake testified regarding SmartEnergy’s quality assurance process and the procedure for addressing cancellation requests.

He indicated that SmartEnergy transitioned to a “more formalized and standardized approach” in 2019. Mr. Kern testified concerning SmartEnergy’s process for cancellation requests. He testified that the agent would ask for the cancellation reason and attempt to retain the customer but would still go forward with processing the cancellation if the agent was unable to retain the customer. He stated that all cancellation requests cited by the Commission were in fact timely processed.

Mr. Kern further testified that SmartEnergy did not engage in outbound telephone sales, but rather, it only received calls from potential customers—which he contended resulted in SmartEnergy’s business practices being excluded from the application of the 19 MTSA. He also disputed the contention that the postcards were misleading, arguing that all the required information for a general marketing advertisement was included on the postcards, and that there was no rule regarding particular postcard formatting. Additionally, Mr. Kern testified that SmartEnergy disclosed all material terms and had relatively few complaints. Mr. Kern disagreed that SmartEnergy engaged in a “systemic practice” of deception and misrepresentation.

Ms. Toss testified that, in her experience as Chief Compliance Officer, SmartEnergy complied with Maryland consumer protection laws. She described the process for handling complaints that originated with the Commission, including launching an investigation to determine whether a violation occurred. Ms. Toss further testified that SmartEnergy took steps to ensure compliance with Maryland laws, including, beginning in June 2019, by sending contract summaries, as well as prior to June 2019, by sending explanatory letters to enrolled customers stating that SmartEnergy is an independent supplier. After an evidentiary hearing in October 2020, the PULJ issued a 28-page proposed order with detailed findings of fact and recommendations concerning a remedy and penalty.

First, the PULJ found that the MTSA did not apply to SmartEnergy’s business practices because “the solicitations began with something other than a phone call to the consumer from SmartEnergy[.]” After concluding that the MTSA did not apply, the PULJ nonetheless found that SmartEnergy “engaged in deceptive trade practices as part of its operations in Maryland” and “engaged in a pattern or practice of systemic violations of the consumer protections” that are prohibited by the Choice Act and the Commission’s regulations promulgated in accordance with its regulatory authority under the Choice Act. 20 The PULJ made her findings based upon the testimony and exhibits, which included SmartEnergy’s mailing materials, SmartEnergy’s telephone script that was used in connection with the telephone transactions, customer complaints in connection with the CAD complaints, and audio recordings of the telephone transactions that were the subject of the CAD complaints. a. Findings Related to Mailing Materials With respect to the mailing materials, the PULJ determined that they did not contain SmartEnergy’s license number from February 2017 through July 2018 in violation of the applicable Choice Act regulations.21 b. Findings Related to the Telephone Script Concerning SmartEnergy’s telephone script that its agents used to make the telephone sales, the PULJ found that the script had the “capacity, tendency, or effect of deceiving or misleading consumers, whether or not any consumer in fact was misled, deceived, or damaged as a result of the agent following the script.” The PULJ found the following portions of the script to be misleading: • The statement “as a [utility name] customer . . . you are eligible to receive one free month of electricity” when coupled with the promotional “price protection” offer pursuant to which agents told customers their rate would not change, caused customers to believe they were dealing with their utility company, not an electricity supplier. • The statement that the call may be recorded for quality and training purposes when the calls were, in fact, recorded for the purpose of verifying the contract pursuant to 21 COMAR 20.53.07.07B(1) states: “All supplier marketing or solicitation information, including that used by its agents or employees, shall include the supplier’s Maryland license number in a clear and conspicuous manner.” 21 the applicable regulations requiring that contracts arising from telephone solicitations be recorded. • Telling customers that they were eligible to receive one month of free electricity on their utility bill by “using” smart energy. With respect to BGE customers in particular, because BGE had a “Smart Energy Rewards®” program, the PULJ found that the script had the tendency to mislead customers into thinking they were being offered a utility program or service. • Statements related to the 6-month price protection plan that had the capacity to mislead or deceive customers into thinking that the price they were currently paying for electricity would not increase. • Statements implying that the customer’s current rate with their current utility would go up during high usage periods like winter and summer, which the PULJ determined were false and deceptive with respect to actual trends in the standard offer service. • Failing to disclose, during the sales pitch portion of the call, the rate that the customer would pay once they switched to SmartEnergy, thereby misleading customers into thinking that the price would not increase from the current rate they were paying for electricity. • The statement that the agent wanted to make sure that the price protection was being applied to the current account reinforced the deception that the price would not increase from the rate that customers were currently paying for electricity. • Under the confirmation questions portion of the script—once the agent believed that the customer had agreed to the promotion being offered—the agent’s statement that, “[n]ow I just need to ask you two quick questions to confirm the information we discussed.” The PULJ determined that the statement was misleading because, in fact, the information that had been included up to that point in the sales pitch had not been previously discussed. • In an attempt to obtain affirmative confirmation by the customer to all terms and conditions of the contract, the agent read a statement containing several pieces of information, and then customers were asked if they understood their right to cancel.

The statement was misleading as to whether the customer was assenting to all the terms mentioned, or only whether the customer understood that they had the right to cancel. 22 c. Findings Related to the Audio Recordings The PULJ found that the confusing, deceptive, and misleading nature of the script was confirmed by the testimony and a review of the audio recordings associated with the CAD complaints, as well as additional audio recordings that were admitted into evidence that were not associated with the CAD complaints. Based upon this evidence, the PULJ found, among other things, that: • The initial focus of the telephone transactions was the promotional one month of free electricity. • The agents failed to always disclose that the “free month” of electricity was based upon the customer’s seventh month of SmartEnergy’s retail supply and was only available if the customer sent in the redemption or rebate form—which the PULJ found to be a “material condition” that was omitted in violation of the applicable regulations. • The agents emphasized that the customer’s services would remain the same. • In addition to the misleading scripted statements, agents made other false, misleading, or deceptive statements during the telephone transactions. • The problematic telephone transactions were not limited to those that became the subject of the CAD complaints. • Agents thwarted customers’ attempts to cancel their enrollments, which the PULJ found to be particularly egregious because during the contracting process, when customers expressed doubt about enrolling, agents stressed the ability to cancel at any time. d. Findings Related to the Training and Monitoring of Agents The PULJ also found that SmartEnergy failed to monitor sales calls and violated applicable regulations pertaining thereto on a systematic basis.22 To support this finding, 22 In support of this finding, the PULJ cited to COMAR 20.53.10.04F, which requires an electricity supplier to monitor telephonic marketing and sales calls to: (1) 23 the PULJ found that “the sales calls in the record in this case evidence recurring instances of agents failing to provide accurate and complete information and failing to answer questions” as required by applicable regulations.

The PULJ also determined that the violations were “recurring and involved various agents[.]” e. Conclusions Related to the Pattern or Practice of Systematic Violations of the Choice Act and the Commission’s Regulations Based upon the testimony and evidence presented, the PULJ concluded that SmartEnergy engaged in a pattern or practice of systematic violations of the consumer protection provisions contained in the Choice Act and the Commission’s regulations.23 Notably, the PULJ found that the telephone transactions were based upon the written script, and that SmartEnergy used the script as an outline for all of its telephone transactions during the period under investigation. Therefore, the PULJ specifically rejected SmartEnergy’s “tenuous claims” that it made in its post-hearing briefing that any finding that the telephone transactions were deceptive or misleading would be based upon a “statistically flawed sample” of CAD complaints, “would suffer from selection bias” in the selection of audio recordings, or be “based on a sample size that is too small[.]” evaluate the supplier’s training program; and (2) ensure that the agents are providing accurate and complete information and complying with applicable regulations. 23 Specifically, the PULJ found that SmartEnergy violated PU § 7-505(b)(7), which prohibits an energy supplier from engaging in marketing, advertising, or trade practices that are unfair, false, misleading, or deceptive, COMAR 20.53.07.07A(2) (containing the same prohibition), and COMAR 20.53.07.08C(4)(b)(i)–(iii), (v), which governs sales contracts arising from telephone solicitations that are exempt from the requirements of the MTSA. 24 f. Recommended Remedies and Penalties Based upon these findings, the PULJ recommended that the Commission impose a moratorium prohibiting SmartEnergy from adding or soliciting new customers and requiring SmartEnergy to notify its current and former customers of the Commission’s decision.

The PULJ also recommended that SmartEnergy be required to cancel existing customer enrollments and return those customers to the utilities’ standard offer service unless the customer took affirmative action to remain with SmartEnergy. The PULJ further recommended that the Commission require that the rates charged by SmartEnergy be re- rated to the utility standard offer service rate, and that current and former SmartEnergy customers be refunded the difference for each month of service. Finally, the PULJ considered the statutory criteria that the Commission must apply in fashioning a civil penalty for violations of the Choice Act, which consist of: (i) the number, if any, of previous violations of the Act; (ii) the gravity of the current violations; and (iii) the electricity supplier’s good faith attempts to achieve compliance after notification of the violation. PU § 7-507(l)(3).

Given the Commission’s statutory authority to impose a civil penalty of not more than $10,000 for each violation, the Commission Staff believed that the Commission would be justified in assessing a civil penalty in excess of $500,000. The OPC recommended a civil penalty of $3,158,900, which it based upon the number of Marylanders enrolled in SmartEnergy’s contracts multiplied by $100 per customer. SmartEnergy suggested a monetary penalty of $300,000. Based upon its review of all of the evidence, the PULJ found SmartEnergy’s violations to be “egregious.” The PULJ further determined that, when CAD requested 25 documentation from SmartEnergy following customer complaints, SmartEnergy edited the telephone recording and provided only the final confirmation questions portion of the recording, “thereby withholding the sales portion of the call that might contain misrepresentations or deception.” Specifically, the PULJ noted that the record reflected that SmartEnergy either: (1) did not listen to an entire recording before responding to CAD, in order to be in a position to take remedial action, or (2) listened to the recording but, nonetheless, failed to take appropriate action after being notified of the alleged violations of consumer protection laws and/or the Commission’s regulations.

With respect to SmartEnergy’s failure to send the contract summaries required by the Choice Act regulations, the PULJ found that the record reflected that SmartEnergy had knowledge of its violation of the Commission’s regulations and admitted that it failed to take action to achieve compliance until after the Commission Staff filed its complaint. The PULJ acknowledged that SmartEnergy took “prompt action to achieve compliance when doing so was relatively easy or inexpensive”—providing the example of SmartEnergy adding its license number to its direct marketing materials after CAD notified it of that violation. The PULJ found, however, that SmartEnergy did not address “more serious violations” until it began a “process of remediation in June 2019.” Accordingly, the PULJ found, “for a significant period of time, numerous Maryland consumers were subjected to SmartEnergy’s deceptive marketing and trade practices.” Ultimately, the PULJ recommended that the Commission, “at a later date, address whether $300,000 or some other amount is the appropriate civil monetary penalty to be imposed,” after the 26 Commission has an opportunity to review SmartEnergy’s compliance with the directives contained in the Commission’s final order. 2. Commission’s Decision and Order SmartEnergy, the Commission Staff, and the OPC each appealed aspects of the PULJ’s findings of fact and proposed order.24 SmartEnergy argued that several findings by the PULJ were arbitrary, capricious, and not supported by the evidence.

The Commission Staff and the OPC argued that the PULJ erred as a matter of law in concluding that the MTSA did not apply to the telephone transactions. The Division filed an amicus memorandum in support of the Commission Staff’s and the OPC’s arguments pertaining to the applicability of the MTSA. On March 31, 2021, the Commission entered a 66-page decision and order that affirmed the PULJ’s findings of fact and proposed order in part, reversed it in part, and clarified it in part. a. Conclusion Concerning the Applicability of the MTSA With respect to the Commission Staff’s and the OPC’s arguments concerning the applicability of the MTSA, the Commission reversed the PULJ’s conclusion and determined that the MTSA applied to SmartEnergy’s business practices.

The Commission also concluded that the plain language of the MTSA does not differentiate between inbound and 24 Under the Public Utilities Article, where the Commission has delegated a matter to a PULJ, any party may file an appeal to the Commission of the PULJ’s findings of fact and proposed order within 30 days. PU §§ 3-104(d)(3), 3-113(d)(2). On appeal, the Commission is required to: consider the matter on the record before the PULJ, “conduct any further proceedings that it considers necessary including requiring the filing of briefs and the holding of oral argument[,]” and issue a final order. Id. § 3-113(d)(3). 27 outbound calls, and that such a distinction “conflate[d] the ‘initiation’ of the telephone call and the initiation of the attempt by the merchant to sell or lease consumer goods.” It determined that, because the attempt to sell was “initiated” by SmartEnergy via the postcard, and the attempt to sell was “made entirely by telephone,” the MTSA applied.

The Commission noted that its interpretation of the MTSA was consistent with the Division’s interpretation, pointing out that this Court has applied some deference on occasion to the Division’s interpretation of the consumer protection statutes, as it is the agency primarily charged with their enforcement. The Commission rejected SmartEnergy’s argument that the sales fell within the MTSA’s exemptions that apply to certain transactions involving marketing materials and sales to pre-existing customers, and found that, by failing to provide customers with written contracts, SmartEnergy violated the MTSA. b. Affirmance of PULJ Findings Related to Misleading and Deceptive Trade Practices Next, the Commission rejected SmartEnergy’s argument that the PULJ erred in finding that SmartEnergy’s written telephone script had the capacity, tendency, or effect of deceiving or misleading customers. In its decision, the Commission reviewed each finding made by the PULJ pertaining to the telephone script, determined that the findings were supported by substantial evidence, and affirmed them.

The Commission also affirmed the PULJ’s findings that: SmartEnergy’s sales agents regularly thwarted customers’ attempts to cancel SmartEnergy’s service; SmartEnergy failed to monitor agents’ sales calls as required by the Commission’s regulations; and SmartEnergy did not have an independent third party verify customer 28 confirmation for purposes of its enrollments and contracts. The Commission further found that SmartEnergy’s supplier license number that was added to the postcards in July 2018 was not provided in a “conspicuous manner” as defined by CL § 1-201(b)(10) and, therefore, SmartEnergy violated the requirements of COMAR 20.53.07.07B(1).25 c. Conclusions Related to SmartEnergy’s “Selection Bias” Argument Finally, the Commission addressed SmartEnergy’s “selection bias” argument. SmartEnergy contended that the OPC’s and the Commission Staff’s expert witness analysis that was presented to the PULJ was comprised by selection bias, meaning “[w]here a sample is drawn from a subsection of the overall population that possesses some trait not shared by the remainder of the population, a study of that sample will tend to produce inaccurate results if this subsection-specific trait affects or correlates with the dependent variable in some way.” SmartEnergy argued that selection bias rendered the assessment based upon 34 complaints unreasonable and, therefore, the findings in the PULJ’s proposed order were arbitrary and capricious.

The Commission Staff pointed out that SmartEnergy raised its selection bias argument in post-hearing briefing, without expert testimony, and without the possibility of cross-examination by the parties. As such, the Commission Staff argued that there was no 25 COMAR 20.53.07.07B(1) requires that the supplier’s Maryland license number on all marketing or solicitation materials appear in a “clear and conspicuous manner.” CL § 1-201(b)(10) defines “conspicuous” as whether it is noticeable using a reasonable person standard. The Commission concluded that the license number did not comply with the statute and regulation because it was smaller than the main portion of the solicitation, placed at the bottom of the postcards within the “fine print,” and was less noticeable than the offer of “FREE ELECTRICITY” and SmartEnergy’s toll free telephone number. 29 evidence in the record to support or validate this theory, and the PULJ was therefore correct to disregard it. The Commission rejected SmartEnergy’s selection bias argument, concluding that, because SmartEnergy, as the party asserting the affirmative issue and thus bearing the burden of proof, failed to present testimony on the issue, the PULJ was not obliged to consider it.

The Commission further concluded that, as an evidentiary matter, SmartEnergy—which was in possession of all 34,000 audio recordings from which the OPC’s and the Commission Staff’s “sample” was taken—had the ability, if it wished, to present an opposing sample for the PULJ’s consideration. Accordingly, the Commission concluded that any due process to which SmartEnergy claimed it was entitled and denied, must take into account that SmartEnergy failed to produce any evidence challenging the OPC’s and the Commission Staff’s evidence. d. Conclusions Regarding Remedies and Deferral of Penalty With respect to the PULJ’s proposed remedies, SmartEnergy made several objections. SmartEnergy asserted that requiring it to re-rate customer bills and provide refunds based upon the utility standard offer service rates was arbitrary and capricious, and further argued that any comparison of its rate, which is for a renewable product, would result in an “apples to oranges” comparison with utility standard offer service rates.

SmartEnergy also argued that the PULJ’s proposal, which required that customers who wished to remain enrolled as a SmartEnergy customer take affirmative action, was “unprecedented and unjustified.” SmartEnergy acknowledged that it made “certain errors” and proposed to pay a penalty of $300,000 and to adopt other measures going forward. 30 However, SmartEnergy asserted that the re-rate and refund recommendations in the PULJ’s proposed order exceeded the penalties warranted in this case and were “inconsistent with Commission precedent.” SmartEnergy also asserted that the proposed order failed to account for the remedial measures it had taken, which it contended “included a complete audit of its customer-facing documents, including scripts and contracts, and internal systems and practices, to ensure continued future compliance with Maryland law.” With respect to the monetary civil penalty, the Commission Staff recommended a civil penalty of at least $500,000, and the OPC recommended a penalty of at least $3,164,000. In addition, the Commission Staff recommended that the Commission revoke SmartEnergy’s license. The OPC recommended that the Commission suspend SmartEnergy’s license and, after the full re-rate amount is determined, consider revoking SmartEnergy’s license in light of the “extent of SmartEnergy’s pattern and practice violations.” The OPC’s recommended penalty was apparently modeled on two other Commission cases, which it cited to the Commission. Turning to the remedies and penalties, the Commission found that SmartEnergy violated the MTSA, CL § 14-2203(b) (requiring that a contract made pursuant to a telephone solicitation be reduced to writing and signed by the consumer), and reiterated its earlier determination that the PULJ’s findings “were supported by substantial evidence of systematic violations by SmartEnergy of multiple statutes and regulations,” including PU § 7-505(b)(7) (prohibiting electricity suppliers from engaging in marketing, advertising, or trade practices that are unfair, misleading or deceptive); the applicable provisions of the MCPA, CL §§ 13-301(1)(3), 13-303 (prohibiting false and misleading trade practices that 31 have the capacity, tendency, or effect of deceiving or misleading customers); and the Commission’s regulations.26 Based upon these findings, the Commission concluded that the record in this case warranted cancellation of all SmartEnergy customer enrollments in Maryland that occurred over the telephone, the return of all such customers to utility standard offer service, and the issuance of refunds to affected customers for the difference between SmartEnergy’s rate and the customers’ utilities’ standard offer service.

The Commission also concluded that the record in this case supported a continuation of the moratorium prohibiting SmartEnergy from adding or soliciting new customers in Maryland. In entering the portion of the order canceling SmartEnergy’s enrollments and requiring customer refunds, the Commission observed that under the MTSA, a contract made pursuant to a telephone solicitation is not valid and enforceable against a consumer unless it is made in compliance with the requirements of the statute. Having reversed the 26 The regulations that the Commission found SmartEnergy to have violated included: COMAR 20.53.07.07A(2) (prohibiting marketing or trade practices that are unfair, false, misleading, or deceptive); id. 20.53.07.07B(1) (requiring that all supplier marketing or soliciting information include the supplier’s Maryland license in a clear and conspicuous manner); id. 20.53.07.08C(4)(b)(i) (requiring compliance with the contracting requirements under the MTSA), (ii) (requiring that the supplier confirm that customer questions relating to the contract are answered), and (iii) (requiring that the supplier confirm that an independent third party verify the contract or record the entire telephone conversation and retain the recording for the duration of the contract); id. 20.53.07.08C(4)(b)(v) (requiring that the supplier disclose all material contract terms and conditions to the customer over the telephone); id. 20.53.07.08B(1) (requiring the supplier, at the time of completion of the contracting process, to provide the customer with a copy of the executed contract and completed contract summary in the form provided by the Commission); id. 20.53.10.04F (requiring the supplier to monitor telephonic sales calls); id. 20.61.04.01B (requiring suppliers that market renewable energy products include required renewable portfolio standard information in their contracts); and id. 20.61.04.01C (requiring the disclosure of renewable product compliance fees). 32 PULJ’s conclusion that the MTSA did not apply to SmartEnergy’s business practices, the Commission concluded that the PULJ’s “opt-in” recommendation that would “allow SmartEnergy to perfect contracts with its Maryland customers solicited via telephone was therefore moot.” The Commission cited to the remedies that it had imposed in two prior administrative cases before it, stating that “[w]here competitive retail suppliers have failed to comply with the MTSA’s contracting requirements, the appropriate remedy has been cancellation of the supplier’s Maryland invalid customer enrollments and requiring those customers to be returned to utility standard offer service.” Having concluded that SmartEnergy violated the MTSA, the MCPA, the Choice Act, and the Commission’s regulations, the Commission entered a final order continuing the moratorium prohibiting SmartEnergy from soliciting or enrolling new customers in Maryland until further order of the Commission, and directing SmartEnergy to: (1) return all of its Maryland customers who were solicited and enrolled via telephone sales to the utility standard offer service within ten days of the date of the order; (2) refund the difference between SmartEnergy’s supply charges and the applicable standard offer service rate from the local utility for all periods that any current or former customer was served; and (3) send a letter to all of its Maryland customers explaining: (i) the Commission’s determination that SmartEnergy violated state laws and regulations; (ii) that SmartEnergy’s customers are being returned to the utility’s standard offer service without penalty; and (iii) how refunds (if any) will be calculated. The Commission also adopted any findings by the PULJ “that were not expressly vacated or modified” by its decision and order. 33 Finally, the Commission reserved its final decision regarding the possibility of license suspension and/or revocation, and the assessment of a civil monetary penalty, until after SmartEnergy complied with the directives in the Commission’s order, including making refunds to all customers who had invalid contracts.

The Commission stated that SmartEnergy’s compliance with its directives would be considered in the assessment of any civil monetary penalty. C. Judicial Review SmartEnergy filed a petition for judicial review in the Circuit Court for Montgomery County. Before the circuit court, SmartEnergy argued that: (1) the MTSA did not apply to its business transactions, or alternatively, exemptions to the MTSA applied to its conduct; (2) the Commission’s findings were unsupported by substantial evidence; and (3) the penalty levied was arbitrary and capricious. The circuit court entered an order affirming the Commission’s decision.

Thereafter, SmartEnergy filed an appeal to the Appellate Court of Maryland. The Appellate Court affirmed the circuit court’s judgment. In re SmartEnergy Holdings, LLC, 256 Md. App. 20 (2022). Before the Appellate Court, SmartEnergy argued that the Commission lacked the jurisdiction to consider the application of the MTSA.

The Appellate Court rejected SmartEnergy’s argument and held that the Commission has jurisdiction to determine whether an electricity supplier violated the State’s consumer protection laws, including the MTSA. Id. at 42 . The court next addressed and rejected SmartEnergy’s argument that the MTSA does not apply to its conduct. Id.

The Appellate Court considered the plain language of 34 “telephone solicitations” in the MTSA within the context of its legislative purpose and statutory scheme, as well as the legislative history, and concluded, as the Commission found, that SmartEnergy’s conduct fell within the definition and, accordingly, that the MTSA applied. Id. at 43–48. The court determined that SmartEnergy’s conduct did not fall within statutory exemptions for pre-existing business relationships with clients and marketing materials containing specific information required by the MTSA, and that the Commission, therefore, did not err in declining to apply either statutory exemption to SmartEnergy’s conduct. Id. at 48–50.

The Appellate Court considered each of the Commission’s findings that formed the basis of its conclusion that SmartEnergy engaged in systematic violations of Maryland law— that (1) SmartEnergy failed to comply with the contracting requirements under the MTSA; (2) the postcards violated the Choice Act, the MCPA, and the Commission’s regulations; (3) the sales script was misleading and deceptive; (4) SmartEnergy thwarted customers’ efforts to cancel their service; and (5) SmartEnergy failed to properly train its representatives and monitor the calls. The Appellate Court concluded that each of the findings underpinning the Commission’s decision was supported by substantial evidence. Finally, the Appellate Court determined that the remedies imposed by the Commission were not arbitrary or capricious. Thereafter, SmartEnergy filed a petition for writ of certiorari, which we granted to consider the following questions, which we have reformatted and rephrased as follows: 27 27 The questions presented in the petition for writ of certiorari were: 35 1.

Did the Appellate Court err in finding that the Commission has jurisdiction to interpret and enforce the MTSA? 2. Did the Commission err in determining that the MTSA applied to SmartEnergy’s electricity marketing and sales practices? 3. Was the Commission’s decision, affirming the PULJ’s findings that SmartEnergy’s business practices violated the Choice Act, the MCPA, and the Commission’s additional findings that SmartEnergy’s business practices violated the MTSA, supported by substantial evidence in the record as a whole? 4. Were the Commission’s remedies imposed upon SmartEnergy resulting from the violation of Maryland’s consumer protection laws arbitrary or capricious? 1.

Did the Appellate Court err in finding that the Commission has jurisdiction to interpret and enforce the MTSA? 2. Did the Appellate Court err in finding a violation of the MTSA in a telephone call made by a potential customer to SmartEnergy in response to a previously mailed postcard, which was therefore not “made entirely by telephone” and “initiated by the merchant”? 3. Did the Appellate Court err in holding that the Commission’s findings and penalties imposed, which included, for example, a sample bias of extrapolating 34 complaint calls out of 104,000 were not supported by substantial evidence and were not arbitrary and capricious? We have not rephrased question one—related to the Commission’s jurisdiction to interpret the MTSA—because it was not raised until SmartEnergy’s brief to the Appellate Court.

Although we ordinarily do not address questions that were not presented to the administrative agency, lack of subject matter jurisdiction may be raised at any time, including initially on appeal. See, e.g., County Council of Prince George’s County v. Dutcher, 365 Md. 399 , 405 & n.4 (2001). We have rephrased questions two and three because we review the agency’s decision directly, and not the decision of the circuit court or the Appellate Court. Moreover, we have broken SmartEnergy’s third question into two separate questions, given that question three encompasses SmartEnergy’s arguments related to the Commission’s factual findings, as well as the Commission’s remedies imposed for violations of the applicable consumer protection laws, each of which require a separate analysis. 36 For the reasons set forth herein, we answer no to questions one, two, and four, and yes to question three.

III Discussion A. Standard of Review In an appeal arising from judicial review of an agency’s decision, we review the agency’s decision directly, not the decision of the circuit court or the Appellate Court. Md. Office of People’s Counsel v. Md. Public Service Comm’n, 461 Md. 380 (2018). The General Assembly has set forth our general standard of review of an action by the Commission in PU § 3-203, which states: Every final decision, order, or regulation of the Commission is prima facie correct and shall be affirmed unless clearly shown to be: (1) unconstitutional; (2) outside the statutory authority or jurisdiction of the Commission; (3) made on unlawful procedure; (4) arbitrary or capricious; (5) affected by error or law; or (6) if the subject of review is an order entered in a contested proceeding after a hearing, unsupported by substantial evidence on the record considered as a whole. As we have previously observed, the standard of review of Commission decisions under PU § 3-203 is consistent with the standard of review applicable to all administrative agencies, including review under the Administrative Procedure Act (“APA”).

Office of People’s Counsel, 461 Md. at 392 ; see also Office of People’s Counsel v. Md. Public Service Comm’n, 355 Md. 1, 15 (1999); Town of Easton v. Public Service Comm’n, 379 Md. 21, 31 (2003). In Office of People’s Counsel, we noted that “PU § 3-203 also appears to be a more deferential standard in some respects compared to the standard of review under the APA.” 37 461 Md. at 392 . We pointed out that “the General Assembly has directed that the Commission’s decision is ‘prima facie correct’ and is to be affirmed unless the listed defects are ‘clearly shown.’” Id. “In giving meaning to this language in PU § 3-203 without rendering it surplusage, we believe that it calls for a court to be particularly mindful of the deference owed to the Commission on those issues on which courts typically accord some degree of deference to administrative agencies—i.e., findings of fact, mixed questions of law and fact, and the construction of particular statutes” that the Commission administers,28 and regulations adopted by the agency. Id. at 393–94 (footnotes omitted).

By contrast, we observed that, on questions in which a court would not typically apply agency deference—such as general questions of law, jurisdiction, or constitutional questions—PU § 3-203 requires no greater deference to the Commission than any other 28 In this case, the Commission asserts that we should defer to its statutory interpretation of the MTSA. We disagree. As discussed herein, the Division is the agency that has been given primary jurisdiction to enforce Maryland’s consumer protection laws. A violation of the MTSA is a violation of the MCPA.

As the agency primarily responsible for enforcing and administering the MCPA, to the extent this Court applies agency deference to an agency’s interpretation of the MTSA, we would apply such deference to the Division’s interpretation. See Scull v. Groover, Christie & Merritt P.C., 435 Md. 112, 129 (2013) (stating that the “interpretation of the statute by the agency charged with administering it is entitled to considerable weight[]”); see also Converge Services Group, LLC v. Curran, 383 Md. 462, 479 (2004) (stating that “an administrative agency’s interpretation and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts. This reliance, however, is not blind. A court does not err or abuse its discretion if it seeks to answer a purely legal question that merely overlaps with an available administrative remedy[ ]” (citations and internal quotations omitted)).

In this case, as discussed infra, whether SmartEnergy’s business practices fall within the definition of “telephone solicitation” involves a purely legal question involving statutory interpretation. As such, we decline to apply agency deference. That said, we are mindful that our plain language interpretation is the same as the Division’s—which the Division asserts it has been applying for decades. 38 agency. Id. at 394.

Questions of law “are completely subject to review by courts. In sum, with respect to the Commission, this Court has tended to accord particular deference (though not total deference) to [Commission] decisions.” Id. (cleaned up). With respect to questions of fact, we review the “record as a whole” to determine whether substantial evidence exists to support the Commission’s decision, which again, is presumed to be correct, and must be affirmed, unless SmartEnergy “clearly show[s]” otherwise.

PU § 3-203(6). Under the “substantial evidence” standard, we consider whether a “reasoning mind reasonably could have reached the factual conclusion reached by the agency.” Comptroller v. FC-GEN Operations Investments LLC, 482 Md. 343, 359 (2022) (internal quotation marks and citations omitted). “We view the agency’s decision in the light most favorable to the agency and trust the agency’s resolution of conflicting evidence and inferences drawn therefrom.” Id. (cleaned up). Finally, where a matter is committed to the agency’s discretion—such as imposing a remedy or civil penalty—we apply the arbitrary or capricious standard, which is highly deferential.

Md. Dep’t of the Env’t v. Assateague Coastal Trust, 484 Md. 399, 449 (2023); Md. Aviation Admin. v. Noland, 386 Md. 556, 581 (2005). In this case, we apply: (1) a de novo standard of review to the first two questions presented—whether the Commission has jurisdiction to enforce the MTSA, and whether the MTSA applies to SmartEnergy’s business practices; (2) the substantial evidence standard to our review of the Commission’s findings of fact presented in question three; and (3) the arbitrary or capricious standard to question four pertaining to the Commission’s discretionary imposition of remedies and penalties. 39 B. Analysis 1. The Commission’s Jurisdiction to Enforce the State’s Consumer Protection Laws, Including the MTSA SmartEnergy asserts that the Commission lacks the jurisdiction to interpret and enforce the MCPA and the MTSA. According to SmartEnergy, nothing in the MTSA authorizes the Commission to enforce its provisions.

SmartEnergy points out that a violation of the MTSA constitutes an unfair or deceptive practice under the MCPA, and that the General Assembly has charged the Division—not the Commission—with the duty to administer and enforce the MCPA. The Commission, the OPC, and the Division29 disagree with SmartEnergy’s jurisdictional argument, and assert that the plain language of the MTSA and MCPA, when read together, clearly authorize the Commission to enforce the State’s consumer protection laws, including the MTSA, as part of its authority to regulate electricity suppliers. We agree with the Commission’s, the OPC’s, and the Division’s plain language interpretation. SmartEnergy is an “electricity supplier” over which the Commission has jurisdiction.

PU §§ 1-101(l), 2-112. The General Assembly has directed the Commission to ensure that electricity suppliers comply with the statutory provisions of the Choice Act, as well as the regulations promulgated by the Commission. As noted above, under the Choice Act, the Commission has the power to conduct its “own investigation” and upon a 29 The Division has participated as an amicus curiae in this matter since the appeal before the Commission. We discuss the Division’s position in connection with our review, given that the Division is the primary agency responsible for administering the State’s consumer protection laws and the agency to which we may apply deference when appropriate. 40 finding of “just cause,” impose remedies for a violation of the Choice Act or the Commission’s regulations, including imposing a civil penalty, ordering a refund or credit to a consumer, imposing a moratorium on adding or soliciting additional customers, or even revoking or suspending the electricity supplier’s operating license.

PU § 7-507(k)(1). The statutory definition of “just cause” includes an electricity supplier’s violation of “any other applicable consumer protection law of the State.” Id. § 7-507(k)(3)(viii). Thus, under the plain language of the Choice Act, the Legislature has granted the Commission the authority to “investigate” electricity suppliers to determine whether a penalty or other remedy should be levied for “just cause,” which exists if the supplier violated the consumer protection laws of Maryland. We agree with the Appellate Court that the Commission has the authority to ensure that electricity suppliers, such as SmartEnergy, “comply with specific consumer protection laws, under which the MTSA falls.” In re SmartEnergy, 256 Md. App. at 42.

We further observe that the Commission’s enforcement authority under the Choice Act is consistent with the enforcement authority granted to state agencies under the MTSA and the MCPA. The MTSA states that violations of its provisions can be enforced by “any remedies . . . available at law.” CL § 14-2205. Certainly, the Commission’s statutory authority to impose remedies on an electricity supplier when it finds, upon its own investigation, that the supplier has violated Maryland’s consumer protection laws, would constitute “remedies available at law” to the Commission. Moreover, as noted above, a violation of the MTSA constitutes an unfair or deceptive trade practice under the MCPA, see CL §§ 14-2205(1), and can be enforced as a violation of the MCPA, see id. § 13- 41 301(14)(xiv).

And as we also discussed above, although the Division is the agency that has primary public enforcement authority of Maryland consumer protection laws, the MCPA also expressly confers enforcement authority upon “each agency of the State within the scope of its authority.” Id. § 13-103(c). Indeed, the Choice Act recognizes the overlapping enforcement authority granted to the Division and the Commission over violations of the consumer protection laws by electricity suppliers. See PU § 7-507(q). It is clear from the provisions of these interrelated statutory schemes that the General Assembly did not intend to confer exclusive jurisdiction on the Division for the enforcement of consumer protection statutes where the entity under investigation is an electricity supplier under the regulatory authority of the Commission.

Accordingly, we hold that, under the plain language of the Choice Act, the General Assembly granted the Commission the express authority to determine whether electricity suppliers under its jurisdiction have violated Maryland’s consumer protection laws, including the MTSA, and to impose statutory remedies when it determines that the supplier has violated any applicable consumer protection law of this State. 2. Whether SmartEnergy’s Business Practices Fall Within the MTSA Having concluded that the Commission has the jurisdiction to interpret and enforce the MTSA, we must determine whether SmartEnergy’s business practices—mailing postcards that prompt customers to call SmartEnergy, which in turn, result in SmartEnergy’s agents making electricity sales during a telephone call—fall within the 42 scope of the MTSA. In considering the parties’ competing interpretation of the MTSA, we apply the following principles of statutory interpretation. “The cardinal rule of statutory interpretation is to ascertain and effectuate the real and actual intent of the Legislature.” Lockshin v. Semsker, 412 Md. 257, 274 (2010) (citations omitted). “We begin with an examination of the text of a statute within the context of the statutory scheme to which it belongs.” Nationstar Mortgage LLC v. Kemp, 476 Md. 149, 169 (2021) (citations omitted). “We neither add nor delete language so as to reflect an intent not evidenced in the plain and unambiguous language of the statute, and we do not construe a statute with forced or subtle interpretations that limit or extend its application.” Lockshin, 412 Md. at 275 (internal quotation marks and citations omitted). Rather, we construe the statute “as a whole so that no word, clause, sentence or phrase is rendered surplusage, superfluous, meaningless or nugatory.” Koste v. Town of Oxford, 431 Md. 14 , 25–26 (2013) (internal quotation marks and citations omitted).

We “do not read statutory language in a vacuum, nor do we confine strictly our interpretation of a statute’s plain language to the isolated section alone.” Lockshin, 412 Md. at 275 (citations omitted). In other words, “[r]eview of the text does not merely entail putting the words under the microscope by themselves with a dictionary at hand, because words that appear clear and unambiguous when viewed in isolation may become ambiguous when read as part of a larger statutory scheme.” Kemp, 476 Md. at 169 (internal quotation marks and citations omitted); see also Johnson v. State, 360 Md. 250, 265 (2000) (explaining that the Court must analyze the statute “in its entirety, rather than independently construing its sub- parts[]”). “We presume that the Legislature intends its enactments to operate together as a 43 consistent and harmonious body of law, and, thus, we seek to reconcile and harmonize the parts of a statute, to the extent possible consistent with the statute’s object and scope.” Lockshin, 412 Md. at 276 (citations omitted). As this Court has explained, [w]here the words of a statute are ambiguous and subject to more than one reasonable interpretation, or where the