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Draft Rules Require 30-Day Advance Posting of Variable Rates, Written Notice for Large Increases

January 20, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A proposed first notice order from two Illinois ALJs in a broad rulemaking concerning retail electric supplier marketing and disclosure rules would require that retail electric suppliers make their variable rates available for customer review at least 30 days in advance, and would require suppliers to send written notice of variable rate changes for increases greater than 30%

Proposed rules under the draft first notice order would define "variable rate" to mean, "a charge for power and energy service that is not fixed for six monthly billing periods or longer and the charge for power and energy service does not change more than once a month."

Concerning variable rate disclosure and publication, the draft rules would provide:

(a) At least 30 days prior to the start of a calendar month, each RES [retail electric supplier] shall publish on its website the variable rate(s) for its residential customers applicable for the billing cycle starting during that calendar month. If the billing cycle does not match the calendar month, the dates that the rates will be in effect must disclose the one month period to which the rates will apply. In addition, each RES shall provide such rate information to its variable rate customers who request it through the RES’s toll-free number. The customer’s contract shall contain the website address and toll-free phone number for the customer to obtain variable rate information in accordance with this section.

(b) If the RES uses the utility’s single bill pursuant to Section 16-118(d) of the Act to bill its residential variable rate customers, the RES shall use the allotted space on the bill to disclose the customer’s variable rate that is in effect at the time the bill is received by the customer and the percentage change, if any, of the variable rate from one monthly billing period to the next. Where there is insufficient available allotted space on the bill for the RES to make such disclosures each month, the RES shall ensure that no residential variable rate customer receives consecutive monthly bills which fail to disclose upcoming variable rates in the bill’s message section. If the RES bills its residential variable rate customers directly, the RES shall ensure that those customers’ bills always contain the variable rate information described in this section. If the electric utility’s implementation of Section 16-118(d) prevents a RES from complying with this section, the RES shall be required to include a bill message that contains the toll-free phone number and/or website address where the variable rate information can be obtained by the customer. The requirements of this subsection to provide notifications in customer bills, do not apply if the RES sends the notifications required by this subsection via a written communication.

(c) If a residential variable rate customer’s rate increases by more than 30% from one monthly billing period to the next, the RES shall send a separate written notice to the customer informing the customer of the upcoming rate change.

(d) Subsections (a) through (c) shall not apply to contracts which determine the variable rate solely on a publicly available index or benchmark. Contracts which determine the variable rate solely on a publicly available index or benchmark shall disclose the formula that will allow a customer to determine the variable rate, based on a publicly available index or benchmark. Each RES shall publish on its website sufficient information to identify the inputs to the formula used to calculate the variable rate, including the timing and location of the index prices and any information necessary to calculate the rate. Unless the RES provides the index or benchmark information to the customer free of charge, the RES shall disclose the charge to obtain the index or benchmark on the UDS [uniform disclosure statement] and in the contract. If any portion of a customer’s supply service is subject to a variable rate that is not based on an index, subsections (a) through (c) of this part apply to that variable rate.

(e) If a contract includes a provision that results in a residential customer’s rate plan changing from a fixed rate to a variable rate during the contract, subsections (a) through (c) of this section shall apply on and after the date that the contract changes to a variable rate. The RES shall also send a separate written notice of the upcoming change to a variable rate at least 30 days but no more than 60 days prior to the switch to a variable rate. The rule goes on to define specific requirements for such written notice

(f) For a variable price product, the RES shall disclose on the RES's website and through a toll-free number the one year price history, or history for the life of the product, if it has been offered less than one year. A RES shall not rename a product in order to avoid disclosure of price history.

The draft first notice order would not define the term "fixed" rate, though, as delineated in the definition above for variable rate, a rate that is not fixed for six monthly billing periods or longer cannot be called a fixed rate (e.g. 3 month products cannot be called fixed rates)

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