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AG Seeks To Prohibit Plans Which Renew Onto Monthly Rate From State Shopping Website

May 20, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Massachusetts should require that retail electric supply plans, which include an automatic renewal, that are posted on the state's forthcoming electric shopping website renew for a term of at least 12 months, the Massachusetts Attorney General told the DPU

The AG was submitting comments on proposed rules issued by the DPU for a forthcoming electric shopping website and rate board. As first reported by EnergyChoiceMatters.com, proposed rules include that only fixed price offers may be posted to the site (at least "initially"), and that such fixed prices may not include a pass-through of costs that may arise from changes in regulation during the fixed term

Click here for our story on the proposed rules

While the AG supported the listing of only fixed offers, the AG said that restrictions on auto-renewal terms must be added to make this provision meaningful.

"Per the Proposed Rules, competitive suppliers may market fixed-price contracts that last for as little as three billing cycles. See Proposed Rules II.C.1. A contract that 'automatically renews' into a variable rate after the expiration of three months is functionally identical to a variable rate contract with an 'introductory' or 'teaser' rate that lasts for three months. Such rate plans would thus undermine the Department’s clear and express intention to forego offering variable rates on the Website in the initial period. Indeed, consumers are likely to be confused and frustrated by rate plans that are marketed as 'fixed,' but quickly transition into variable rates. This could discourage customers from participating in the competitive electricity supply market," the AG said

"[T]he Attorney General’s Office respectfully requests that the Department further strengthen its commitment to start with only fixed rate contracts by placing reasonable restrictions on the types of contracts sold through the Website that can 'automatically renew' without consumers’ affirmative consent. Specifically, the Attorney General’s Office recommends that the Department require that electricity supply agreements can only include an 'automatic renewal' provision if they have a term of a year or more," the AG said.

As a reminder the AG has previously said that "managed" variable electric rate products that set prices based on "market conditions" or "discretion" or similarly vague language violate regulations promulgated by the Attorney General

Click here for our story on the AG's guidance on variable plans

D.P.U. 14-140

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