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Texas Staff: REP's Enrollment Method Sought Under Rule Waiver, "Fail[s] To Adequately Protect The Customer"

October 5, 2015

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

Staff of the Public Utility Commission of Texas again opposed a good cause exception of the door-to-door enrollment rules sought by IGS Energy to enable its tablet-based door-to-door marketing, stating that IGS's procedures, "fail to adequately protect the customer from potential confusion and improper influence."

"Further, any procedures to incorporate the use of a handheld, electronic device without meeting the authorization disclosures and verification requirements of the rule are better developed in a rulemaking proceeding," Staff said in a brief

As previously reported, IGS Energy (Accent Energy) is seeking a good cause exception to the rule to allow customers solicited door-to-door the option of choosing a retail electric product via a hand-held electronic device without requiring the customer to participate in a recorded third-party verification voice telephone call. Under IGS Energy's iPad-based door-to-door sales and enrollment process, the customer would verify their consent to the terms and conditions via their electronic signature that is captured as a digital image.

Click here for more specifics on the IGS Energy enrollment process

"Because a handheld, electronic device is used once the sales representative is engaged with the consumer, the inherent pressure of door-to-door solicitation remains the same, regardless of the technology," Staff said

"The principal difference between online enrollment and door-to-door online enrollment is that it is a guided tour performed by a trained sales representative rather than a consumer's internet search done solely on the interest, timing and leisure of the consumer. While IGS Energy uses prepared materials that are similar to what a consumer might find on the internet and uses a similar process, there is the added pressure of having an HEC [IGS home energy consultant] standing over them during what would usually be a more relaxed situation. Using the IGS Energy proposed process, the door-to-door component has no method of verifying that the sales representative has followed the designed script as presented in IGS's RFI responses. If the sales representative has followed the designed script, there is still the risk of additional high-pressure sales tactics that could result in an unwanted purchase by the consumer. In traditional door-to-door sales, the consumer is protected by having a third party call them for verification that the customer actually wants to enroll," Staff said

"IGS Energy's procedures fail to address the human element that is inevitable in door-to-door sales ... IGS Energy asserts its proposed procedures remove the incentives for high-pressure sales because the HECs are salaried employees of IGS Energy and not independent contractors. IGS Energy's HECs are employees of the company, but still receive a commission based upon number of sales in addition to a base salary. Thus, the HECs still have an incentive to make a sale in order to earn a commission, rather than focusing on clearly and adequately explaining the consequences of enrollment," Staff said

In its brief, IGS Energy countered that, "This case presents a classic regulatory question of how to interpret and apply long-standing rules to a type of technology that did not exist at the time those rules were written."

"IGS Energy seeks to ensure that customers in Texas do not get left behind and have the option to take full advantage of technological innovations available in the market," IGS said

"The consumer protection rules for retail electric service in Subchapter R of 16 TAC § 25 were initially adopted by the Commission on December 7, 2000, nearly a decade before the iPad became the first computer tablet device with a mobile internet connection to be widely marketed in the United States. There could not have been any direct original intent with respect to the language of the rules regarding door-to-door enrollments (i.e., 16 TAC § 25.474(f)(2) and (3)) as applied to the technology used in IGS Energy's mobile internet enrollment process. Therefore, the Commission must apply the standard principles of construction to ensure that the public policy objectives of the rule are met and that customer protection is assured," IGS said

"16 TAC § 25.474(f)(2) requires that the enrolling REP comply with the authorization disclosure requirements of either 25.474(e)(5), which applies to written enrollments, or (h)(1)- (4), which applies to telephone enrollments. The rule has no provision for internet enrollments that are being completed in-person, because the technology that allows enrollment through IGS Energy's mobile internet enrollment process was not available at the time the rule was written. Nonetheless, the IGS Energy process complies with 16 TAC § 25.474(e)(5) in almost every respect," IGS said

"IGS Energy's mobile internet enrollment process complies with the requirements of 16 TAC 25.474(d) regarding internet enrollment. In addition, IGS Energy's mobile internet enrollment process complies with 16 TAC § 25.474(f)(1) regarding 'Solicitation Requirements,'" IGS said

"Because IGS Energy's mobile internet enrollment comports with the requirements of 25.474(d)(5)(j) which allows for verification by sending an e-mail stating the right of rescission and provision of the contract documents by email, and the application of mobile internet enrollment could not have been contemplated when the rule was written, the Commission has the authority to interpret 16 TAC § 25.474 to allow the customer the option for mobile internet enrollment without a separate third-party verification call where the customer has the option of hard-copy paper enrollment with the third-party verification call," IGS said

"The requirement for a customer to participate in a recorded voice telephone call is incongruent with the use of technology and innovation associated with mobile internet technology such as the iPad and is contrary to the preferences of many of IGS Energy's customers who are accustomed to performing transactions quickly and with minimal personal communications via the internet," IGS said

Docket 44518

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