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State Releases Revised Draft For Rules Governing Assignment Of Customers From One Retail Supplier To Another

August 6, 2015

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

The Massachusetts DPU has issued a revised draft of rules governing the assignment of a retail supplier's customers to another retail supplier.

Click here for provisions of the original proposal regarding customer assignment rules

Among the notable changes under the new draft is a change concerning the application of early termination fees.

The original draft had provided that for customers whose contracts include an early termination fee provision, the Department proposed that the competitive supplier to which the contracts are assigned agree to waive that provision, and allow these transferred customers to cancel their contract at any time with no fee during the term of the contract.

The revised draft provides that the acquiring supplier is not required to waive early termination fees for customers that decline to transfer. However, the DPU encourages Acquiring Suppliers to waive early termination fees as needed, and on a case-by-case basis.

Regarding acquired customers with automatic renewals, the revised draft states, "The Acquiring Supplier will notify customers of an upcoming automatic contract renewal no later than 30 days prior to the date of the contract renewal. The notification of the contract renewal will be through an information disclosure label, rather than through an Automatic Renewal Notification letter."

Another notable change from the earlier draft assignment rules is that the assigning supplier does not need to obtain DPU approval of a required Notice of Assignment letter that shall be sent to customers, as initially proposed

However, the revised draft explicitly governs the content of such Notice of Assignment letters to be sent to customers.

Under the new draft, the Assigning Supplier must send the Notice of Assignment letter to customers no later than: (1) 30 days prior to the intended transfer date; or (2) 24 hours after signing of the final acquisition contract, whichever is later.

The revised proposal requires the assigning supplier include the following information in the Notice of Assignment letter to customers:

1. Name of Assigning Supplier;

2. Name of Acquiring Supplier;

3. Date of customer assignment;

4. Statement that the transfer will not interrupt the customer’s electricity service;

5. Statement that the assignment is allowed, per the terms and conditions of the customer’s contract;

6. Statement that there will be no changes in the terms and conditions as set forth in the customer’s contract;

6. [sic] Statement that no action is required from the customer for the transfer to occur;

7. Date that customer inquiries should be made to the Acquiring Supplier;

8. Statement that a customer may decline to be transferred to the Acquiring Supplier;

9. Amount of early termination fee, if applicable;

10. Statement that if a customer declines to be transferred, the customer will go back to basic service with their local distribution company; and [emphasis added]

11. Contact information for Acquiring Supplier in case the customer has any questions about the transfer.

Note that item #10 contemplates that a customer may not directly switch to another competitive supplier in response to a Notice of Assignment letter. It is unclear if this reflects an assumed timeline that would not allow a customer switch to a new supplier to be effectuated prior to a drop to basic service, or is an oversight.

Additionally, the DPU now proposes that an Assigning Supplier provide each distribution company affected by the customer assignment (i.e., distribution companies with service territories covering customers to be assigned) with the same notifications regarding the assignment provided to the Department

Although not explicit, the notifications provided to the Department are required in advance of the assignment, and, presumably, the new EDC notification would be required in advance of the assignment as well. The revised draft does state that the supplier must notify the EDC of an "impending" assignment, making clear that such notice occurs before the actual assignment begins

Notably, the DPU proposes to require that an Acquiring Supplier submit a Preliminary Notice of Assignment to the DPU no later than 24 hours after the Assigning Supplier and Acquiring Supplier sign a "Term Sheet" (or similar document that precedes a final agreement), followed by a Final Notice of Assignment, to be filed with the Department no later than 24 hours after the Assigning Supplier and Acquiring Supplier execute a final agreement, or contract.

It was not explicit that the notice provided to utilities would not include that Preliminary Notice sent to the DPU, before a final agreement between the suppliers is executed. Indeed, as written, since utilities are to receive, "the same notifications provided to the Department," such notification would include the Preliminary Notice. However, we point out that, as written, it is the responsibility of the Assigning Supplier to notify the utility, and the responsibility of the Acquiring Supplier to notify the DPU, which raises questions of how literally the "same" notice can be provided to each (though the same underlying information could be provided to both)

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