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Maryland Staff Drops Proposal for New Customer Consent for Any Rate Change; But Eliminates Use of TPV, Voice Verification For Contracting?

January 26, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Filed comments by the Maryland PSC Staff concerning changes to the electric and natural gas customer protection rules (RM54) suggest that Staff is no longer seeking to require suppliers to obtain new customer consent for any rate change (maybe), but also suggest that Staff proposes to cease allowing the use of voice verification, including third-party verification, to show customer consent.

Staff's filing included two sets of COMAR edits (one to the proposed RM 54, and one "clean" copy, which as-filed appears to be a redline of the existing COMAR). However, as far as we can follow the edits, the redlined and clean copies differ in some respects (which will be noted below as applicable). What does seem clear is that both copies appear to eliminate the as-proposed requirement that suppliers obtain new customer consent for any rate change. However, Staff's newly proposed definition for consent could arguably still prevent any change in price absent a new consent.

Staff's redlined proposal strikes language from the draft rule that, in order to continue serving the customer when a price changes, the supplier must, "obtain approval from the customer to maintain the contract under the new rate, terms and conditions." Such language is also absent from the clean version of Staff's proposal.

However, Staff proposes a new definition of consent which would provide that, "Consent for initial enrollment must be affirmative and, except for purposes of pre-enrollment information, must assure that the customer has seen and agrees to all prices, terms and conditions of electric supply prior to providing consent."

While the term "initial" is used, the definition also provides that consent must assure the customer has seen and agrees to "all" prices. We could see this provision being interpreted as not permitting the supplier to change the price of a contract (and therefore requiring new consent for any change), since the original consent would not have assured that the customer has seen "all" prices.

That being said, when taken broadly our sense is that Staff is proposing to eliminate the draft requirement to obtain new consent for any price change, as Staff proposes a series of new notices and an accelerated switching timeline, which would be superfluous if new consent were required for every rate change. Moreover, we do not see any language in Staff's edits that would address how customers are treated if a supplier does not obtain a new consent to continue serving the customer on a new rate (such as language dropping the customer to SOS as provided in the original draft rule).

In a brief explanatory note, Staff says that, "Consent for new contracts must be affirmative."

In contrast, Staff says that, "Consent for evergreen fixed term contracts or variable rate contracts would be governed by a shortened but workable advance notice requirement." Staff notably does not use the term "affirmative" to describe the consent require for such continuation of service.

While, "[t]he burden is on the supplier to assure that a contracting customer is aware of all prices, terms, and other conditions of a contract," which may make suppliers hesitant to change a customer's rate absent affirmative customer consent, Staff's model appears to be that so long as the customer receives notice of the rate change (under the new guidelines proposed by Staff), the supplier may continue to serve the customer without obtaining a new affirmative consent.

"Staff recommends that a minimum advance notice of 10 days be required for all contractual changes with customers. The 10-day advance notice precedes the shortened switch period and will allow customers an opportunity to assent to any proposed contract change or to switch either to another supplier or back to SOS or Sales Service. Hence two notices are required prior to the renewal of a fixed term contract with an evergreen clause: (1) a notice of 45 days before the automatic renewal is scheduled and (2) a second notice received no less than ten (10) days prior to contract renewal. When a customer is being served by variable rate contracts, only the second notice is required. This modification ensures that customers know the rates, terms, and conditions of any upcoming contract with enough time to switch to a different provider or service before becoming liable for the current contract," Staff said

To allow customers to quickly react to the price change notices, Staff proposes reducing the switching timeline to 3 days for gas and 1 day for electricity

"The purpose of this modification is to ensure that customers have enough time to switch to a different provider or service, in the event the customer determines the rates, terms, and conditions of current service are no longer desirable," Staff said.

This implies that the customer would remain with the supplier under the new rate absent the customer electing to take advantage of the accelerated switching process.

Regarding the use of voice verification to provide consent, both of Staff's filings remove the term "voice recording" as a means of providing consent. "Consent" would mean an agreement with an action communicated, "by a written document or electronic document."

Staff also proposes deleting the new definition for third party verification from the draft rule.

In the section devoted to telephone contracting, Staff's redlined rule includes the new provision that the supplier must, "Obtain a complete signed written contract prior to enrollment." However, this statement is absent from Staff's clean version of the rule.

Furthermore, Staff's redlined rule retains a reference to a "TPV" in discussion of the new disclosure statement (which may be an oversight).

It should be noted that only a small subset of telephonic solicitations may currently be completed via voice verification in any case, as contracts resulting from cold calls require a written contract and signature.

Docket RM 54

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