Payless Power, the US’s largest payless power retailer, has been fined $2.5 million by the US Securities and Exchange Commission.
The company has agreed to pay $7 million in penalties, which is more than double the amount it had to pay in 2014, and pay back more than $2 million in loan funds.
The SEC is also investigating whether Payless improperly used its power buying and distribution business to pay for goods and services without properly disclosing those arrangements to customers.
The penalties, announced on Friday, are the largest fines ever levied against an energy company.
“The company’s actions were unconscionable and, to be clear, were contrary to the requirements of federal securities laws,” the SEC said in a statement.
The $2 billion fine is a significant blow to the company, which has been struggling to rebound from a major financial collapse in 2016.
The agency cited Payless’s failure to disclose that it used its financial leverage to buy power from customers at inflated prices.
Payless also failed to disclose the fact that the company paid customers based on the number of kilowatt-hours they had on their power contracts.
The fine also is the biggest penalty ever for a company that does business in the US, the SEC noted.
The charges were filed in a complaint filed in February 2018.
PayLESS has been under investigation since then.
The US government is also probing whether the company engaged in fraudulent conduct to obtain power contracts, including offering a discounted power contract to customers at an artificially low price.
“Payless Power’s conduct is a direct result of a fraud scheme and, based on information we have obtained, we believe it is also in direct violation of the Truth in Lending Act,” the agency said in its statement.
Payless said in an emailed statement to the AP that it has not been fined.
The commission’s investigation into Payless comes as the US is trying to rein in soaring energy prices and is struggling to get consumers back into the power market.
The Department of Energy (DOE) has said it plans to invest $5 billion in new, clean energy technologies in the coming years.