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N.Y. Utilities Seek Additional Marketing Regulations for ESCOs

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November 16, 2010

The joint New York utilities have recommended changes to the Uniform Business Practices (UBPs) beyond the currently pending changes addressing door-to-door sales (98-M-1343, 11/15), "because the purpose of the amendments are to protect consumers and to help them to make informed decisions about their energy supplies."

"To address one marketing tactic at the exclusion of others that exist today or will exist in the future creates a loophole through which vulnerable customers could be deceived," said the joint utilities, which include Central Hudson Gas & Electric, Consolidated Edison, Orange and Rockland, National Fuel Gas Distribution, National Grid, New York State Electric & Gas, and Rochester Gas & Electric.

To begin, the utilities proposed that a definition for marketing be added to the UBPs, which would define marketing as, "[t]he publication, dissemination or distribution of informational and advertising materials regarding the ESCO's services and products to the public by print, broadcast, electronic media, direct mail or by telecommunication."

The joint utilities, "intend that electronic media be interpreted broadly to include the Internet, e-mail, etc." Similarly, telecommunication should be interpreted to include wireless communications and Social Media, including for example, text messaging, Facebook and Twitter, the utilities added.

Utilities proposed the addition of a new §10.C.1.c to the UBPs holding that:
"An ESCO representative shall not dress in uniforms, wear any apparel or display any badges or other items that contain any branding elements that are similar to that of the distribution utility (including logo) nor shall any ESCO representative possess any item containing the distribution utility's logo including, but not limited to, clip boards, utility bills and/or statements, or other items that could be interpreted by the customer to imply a relationship between the ESCO and distribution utility that does not exist. In this context, an ESCO representative is defined to be any person acting on behalf of an ESCO, whether employee, contractor, or independent agent."

Further, utilities said that a new subsection should be added relating to ESCO marketing to customers via traditional mail.

"In recent months, utilities have observed mailings to potential customers with envelopes addressed in a fashion to imply that they were sent by the utility," the joint utilities said.

Joint Utilities proposed a new §10.C.3, Contact with Customers via Mail:

3. Contact with Customers via Traditional Mail

a. No part of an ESCO mailing should be labeled, colored, or marked in any manner that would make the envelope appear to be from the distribution utility, that would imply a relationship between the ESCO and distribution utility that does not exist, or that would otherwise appear ambiguous as to the source of the mailing;

b. No part of an ESCO mailing should reference the name of the distribution utility (or derivative thereof) that in any way would imply a relationship between the ESCO and distribution utility that does not exist;

c. The ESCO's name and address should be clearly visible on the front of the envelope in [the] area customarily designated for a return address;

The joint utilities also proposed new §10.C.4, Contact with Customers via Internet or Other Electronic Means:

4. Contact with Customers via Internet or Other Electronic Means
With regard to ESCO web sites, email messages, text messages, radio, television and any other electronic communication media:

a. Such communications should not utilize Uniform Resource Locators (URL), links, analogous addressing, phone numbers or subject designations that would make the ESCO's marketing message appear to be from the distribution utility;

b. ESCO web sites used for marketing should contain a clear and conspicuous link to the ESCO Consumer Bill of Rights;

c. Other than to identify utility territories in which an ESCO is authorized to provide service, ESCO web sites used for marketing purposes should not be structured in any manner nor reference the name of the distribution utility (or derivative thereof) that would imply a relationship between the ESCO and distribution utility that does not exist;

The utilities further proposed language requiring ESCOs to, "[d]escribe distribution utility services in a factual and neutral manner."

The joint utilities said that existing 10.C.2.c should be interpreted broadly so as to prohibit telephone numbers and/or auto-dial voice mail messages that are constructed in a manner to imply that they were originated or authorized by the utility.

The joint utilities opposed suggestions that the ESCO Consumer Bill of Rights should only be provided to customers agreeing to take ESCO service. "With the proposed limitation, residential customers and customers approached through door-to-door sales and who are subject to sales tactics by an ESCO sales representative in violation of the law, but who do not agree to purchase energy supply from the ESCO, will never receive a copy of the Bill of Rights. This defeats one of the purposes of N.Y. Gen. Bus Law sec. 349-d, as the law defines the ‘customer’ to whom the Bill of Rights must be provided as ‘any person who is sold or offered an energy services contract by an ESCO for (I) residential utility service, or (II) through door-to-door sales.’ N.Y. Gen. Bus. Law sec. 349-d(1)(C), (2) (emphasis supplied by joint utilities)," the utilities said.

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