A third-party electric supplier is facing penalties after the Massachusetts Department of Public Utilities found that the company failed to properly notify potential customers about itself and what it was selling.

In a settlement announced on Jan. 5, DPU announced that Direct Energy Services, a thirdparty competitive electricity supplier in the state, had agreed to pay more than $100,000 in penalties and halt its telemarketing operations for a year after it was found to be at fault in over 400 calls with potential customers.

The agreement, which was officially signed in late December, came after an update to Direct Energy’s telemarketing system unintentionally omitted part of a marketing script that is now required by DPU.

The Legislature created the third-party electric market in 1997 in an effort to promote competition and reduce electricity rates. Such companies purchase electricity on the wholesale market and sell it to customers in place of regulated utilities, in exchange for fixed rates or more options to have their electricity sourced from renewable energy. But DPU didn’t begin requiring scripts mandating that suppliers to properly identify themselves until 2020, after the company received complaints and reports from customers.

“[They would] end up signing up for something, not realizing what it is they’re signing up for or who they’re signing up with,” said DPU Commissioner Liz Anderson. “That basic information was determined as necessary to make sure that consumers were aware what it was that they were signing up for.”

Direct Energy Services didn’t respond to repeated requests for comment.

Under the settlement agreement, Direct Energy will pay into Boston Medical Center ‘s (BMC) Clean Power Prescription Program. Established in late 2023, the program is a way for the hospital system to treat a social determinant of health, or a non-clinical element that nevertheless impacts someone’s health. Through it, doctors “prescribe” patients a reduced utility bill to help relieve them of any financial burdens associated with paying for electricity. With the “prescription,” BMC allocates renewable energy credits to patients’ bills. These credits serve as discounts for generating renewable energy as part of the electrical grid, as BMC does with solar panels on its buildings’ roofs.

By having Direct Energy pay into this system, “We want to make sure that the funds are going to help people in need, especially people that might be most impacted by this market,” Anderson said.

In total, Direct Energy will pay $101,750 to BMC — a $250 fee for each of the 407 documented instances during which the marketing script was omitted.

This is not the first time that a third-party competitive electric supplier has faced scrutiny. Since 2018, the Massachusetts Attorney General’s Office (where Anderson previously worked) has released near-annual reports on the competitive electric supply market.

The 2025 report, which covers the period between July 2023 and June 2024, found that customers who got their electricity through third-party suppliers lost nearly $74 million compared to those who were with basic utility companies. That number since 2015 is over $651 million in losses.

Some allege that low-income customers and those who speak English with less proficiency are particular targets of third-party companies. The 2025 report found that the average loss to low-income households enlisted with thirdparty companies compared to basic utility was $217. That figure when household earning wasn’t a factor was $185. The year before, the average household saved $80 by signing up with these companies, but the average low-income household lost $10.

Supporters of the competitive electric market have argued against the state’s report, alleging that it fails to factor in discounts for low-income consumers. They also claim the report doesn’t acknowledge third-party suppliers that might offer 100% renewable energy, which generally comes at a higher cost.

Some of those issues are the target of new legislation proposed by Gov. Maura Healey. If passed, it would end rate contracts where costs can shift frequently with market factors and would prevent automatic renewal without the customer’s written consent. It would also ban commissions and compensation for enrolling customers as well as cancellation or early termination fees.

At the same time, a separate bill at the State House, filed by Sen. Brendan Crighton of Third Essex district, would ban thirdparty suppliers altogether. “I don’t believe it’s the case of a few bad apples,” Crighton said, “I think overall the industry is intended to make money off the people we represent.”

The bill would exempt municipal aggregation programs, a separate style of third-party electric supply where a city or town negotiates rates with the electricity wholesaler and then acts as the supplier for residents who sign up, offering them lower rates and the ability to get more of their energy from renewable sources. Of the state’s 351 municipalities, 225 offer such a program and nearly 50% of households across the commonwealth were enrolled in 2024.

Crighton said he’s open to compromise or alternative suggestions to solve the issues he sees in the market, but said he thinks the easiest protection is to ban the market.

“This the legislative process — there’s going to be compromises and pieces of competing legislation and we want to get something at the end of the day that will protect our consumers, but we think the simplest path there is to ban the industry,” he said.