Proposed First Notice Order on Illinois Marketing Rules Would Omit Post-Bill, No-Penalty Cancellation Period

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February 21, 2011  

An Illinois ALJ has issued a proposed First Notice Order concerning electric supplier consumer protection and marketing standards, which would, among other things, eliminate the earlier proposal granting customers the ability to cancel a contract, without incurring a termination fee, up to 10 business days after receiving their first bill (Docket 09-0592).

As previously reported (10/21), the extended review of the proposed rules, which could not be completed within a one-year deadline for rulemakings, necessitated the withdrawal of the original First Notice Order.  The ALJ's proposed new First Notice Order, issued February 18, is essentially what would have been the proposed order in the case (and is written as such), had the case followed a normal timeline.  However, if adopted, it will instead serve as a new First Notice Order to restart the rulemaking process.

The ALJ's proposed order also did not include the complete set of proposed rules as recommended.  Citing the wealth of parties' comments, and time-consuming nature of reviewing them all, the proposed order states, "the applicable language has not been attached as an appendix to this proposed order.  The appendices will be served under separate cover once the language has been reviewed for accuracy."

While the proposed order does discuss acceptance, rejection, or modification of the proposed rules in light of parties' comments, in some cases it is not precisely clear what is being recommended, as the ALJ combines recommended language from several parties, and it is necessary to view the final language, in context, before analyzing the proposed rules.

However, it is clear from the proposed order that the ALJ is not recommending adoption of the extended no-cancellation-fee period as originally proposed.  This period would have allowed customers to cancel a contract without incurring a termination fee up to 10 business days after their first bill.

"The Commission does not adopt the language as set forth in this proposed section.  We agree with the intervenors and find that the need to grant a one-time per 12-month early termination fee waiver is not reasonable under the circumstance ... The Commission cannot adopt language which would allow the customer to terminate their contract, while recognizing the possibility that the RES [retail electric supplier] may pass those costs on to its other customers.  Section 412.210 already provides the customers an opportunity to rescind their contract within ten days of the enrollment being processed," the ALJ notes.

Furthermore, the ALJ rejected consumer advocates' recommendation for a $50 cap on termination fees.

Regarding the rescission period applicable to residential and small commercial customers, this is an area where parties would benefit from the actual recommended language (which is not included) when evaluating the proposed order and drafting their exceptions (see 8/30/10 for confusion regarding the rescission period).  

However, the proposed order suggests that, as originally proposed, customers will be provided 10 days from the "enrollment date" to rescind a contract.  Absent the actual recommended language, it is not clear if the ALJ is recommending that the 10 days start from the "acceptance" of an enrollment or the "processing" of an enrollment by a utility (though the latter term is recommended by Staff whose recommendation the ALJ supports in part).

Specifically, the ALJ says:

"The Commission finds that a ten-day rescission period from the enrollment date is appropriate here.  We believe the consumer should have a reasonable amount of time to receive the confirmation of enrollment letter and determine whether they wish to rescind the contract.  A three-day rescission period is insufficient for determining when a customer may rescind the enrollment request or contract.  Staff's proposed language will allow for future enrollment start dates without amending the language of the rule.  Therefore we adopt the language set forth in the proposed rule."

It is not clear what, among the many iterations of Staff's recommended language, is being recommended for adoption.  

Notwithstanding the above, the ALJ also offers the following language in describing the requirement to send customers a written uniform disclosure statement, regardless of contracting method.  "We find the customer's rescission period shall not toll until it is he or she has received full disclosure."  Because of an apparent error in the structure of this sentence, it is unclear what this is intended to mean, and whether the intent, as it appears to be as written, is for the rescission period's start to not be delayed by the sending of a written uniform disclosure statement in cases where the customer is not solicited in person.

The proposed order would define residential customer as, "a retail customer of a retail electric utility that receives (i) retail electric utility service for household purposes distributed to a dwelling which receives delivery services of a utility under a residential rate or (ii) retail electric utility service for household purposes distributed to a dwelling unit or units that is billed under a residential rate and is registered by a separate meter for each dwelling unit of 15,000 kWh or less."

The ALJ also recommended maintaining the definition of small commercial customer as a non-residential customer of an electric utility consuming 15,000 kilowatt-hours or less of electricity annually in its "service area," precluding the combination of loads across service areas to determine whether a customer is small commercial.

The ALJ also suggests that all pricing should be expressed in a per-kilowatt-hour form.  "The Commission finds that RESs should fully disclose their pricing components.  We believe it is best to regulate how RESs disclose their pricing information to consumers for the sake of continuity.  The Commission finds that the RES is required to disclose their fixed-price services in a kilowatt per hour comparison to best serve the customer and we reject any language that imposes this responsibility of disclosure on the underlying utility."

Again, parties would benefit from the clarity of actual recommended language; however, based on the history of the case, the reference to "fixed-price services" apparently includes any non-volumetric products for which pricing is a flat amount per month (regardless of consumption), and the recommendation is therefore that even these products must be expressed on a volumetric basis.

The ALJ would also remove "any language" in the applicability section of the marketing rules, "that would serve to afford one type of customer fewer consumer protections than another."

"Although larger commercial and industrial customers may be more sophisticated, the Commission finds all customers should be given the same protection. We find that this language should be drafted to encompass the same consumer protections for all RES customers, while recognizing that the small commercial customer will benefit the most from this provision as drafted," the ALJ said.

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