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RESA Opposes "Unprecedented Recommendation" That Threatens to Shut Down Telemarketing of Retail Energy Sales in Pennsylvania

Says Initial Decision Ignores Statute, PUC Regulations; Would Harm Customers

July 28, 2016

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

The Retail Energy Supply Association filed exceptions to an initial decision in a complaint case against Blue Pilot Energy which is before the Pennsylvania PUC, as RESA opposed an initial decision's finding that failing to obtain a customer signature on a written contract after a cold call telesale would violate the state's Telemarketer Registration Act (TRA) and therefore also violate the PUC's regulations

EnergyChoiceMatters.com was first to report earlier this month the shocking initial decision which contains a conclusion of law that would unequivocally state that, "When Blue Pilot enrolled customers via telemarketing, Blue Pilot failed to obtain customers’ signatures agreeing to enrollment in violation of 52 Pa.Code §111.10(a)(1) [which requires compliance with the Telemarketer Registration Act]."

As more fully discussed in our prior stories, the Telemarketer Registration Act, at 73 P.S. Section 2245(a)(7), makes it illegal to fail to reduce any sale of goods or services made during a telemarketing call to a written contract and makes it illegal to fail to obtain the consumer's signature on the written contract

All telesales must reduce the sale to writing, with such material sent to the customer. However, within the TRA, there are certain exceptions to the requirement to obtain the customer's signature on the written contract sent to the customer.

Certain of these exceptions are inapplicable to either cold calling (such as for calls in response to an advertisement or calls following a sales pitch at a store) or the electric industry, but relevant here is the exception that, "A signed, written contract is not needed if ... [t]he contractual sale is regulated under other laws of this Commonwealth."

RESA said that the initial decision ignores this plain statutory language, as retail electric sales are heavily regulated under other laws of the Commonwealth, in this case, PUC regulations.

The initial decision (I.D.), "threatens to shut down the telemarketing sales channel which will negatively impact the competitive options available to consumers in Pennsylvania," RESA said.

"[I]f the unprecedented recommendation of the I.D. regarding wet signatures is adopted by the Commission, the telemarketing sales channel for EGSs would no longer be a viable option," RESA added.

RESA noted that requiring suppliers to obtain a wet signature for telesale enrollments would delay the customer switching process, contrary to the PUC's efforts to accelerate the process.

"Removing a currently viable and utilized sales channel in the existing market structure that the Commission has already acknowledged poses 'any number of challenges to EGSs' would unnecessarily further hinder 'consumers’ ability to enjoy a functioning competitive market.' Requiring customers to return a signed contract to complete a telemarketing enrollment would also negatively impact consumers. For those customers who would actually return the contract, they would experience an unnecessary delay between enrollment and effective date for the new EGS price -- a delay the Commission spent much time trying to avoid through its accelerated switching process," RESA said

"Thus, the outcome of adopting the recommendation of the I.D. to require wet signatures on telemarketing contracts would negatively impact the efforts of the Commission to foster the development of a workably competitive market (as required by the Electricity Generation Customer Choice and Competition Act, 'Competition Act') and seriously undermine all the work of the Commission and interested stakeholders in developing the Commission's regulations to clearly define the process EGSs are required to follow to successfully enroll customers," RESA said

RESA said that the TRA is, "unambiguous" -- "the TRA wet signature requirement does not apply when the contractual sale is regulated under other laws of the Commonwealth."

"[T]here cannot be any ambiguity in the fact that the sale of electricity is regulated by the Commission," RESA said. "Therefore, applying the time-tested statutory construction principles to the clear and unambiguous terms of the TRA makes clear that the TRA does not require EGSs to acquire a wet signature on contracts formed as a result of telemarketing."

RESA recounted the "comprehensive" regulations adopted by the PUC governing retail electricity sales, including those governing the sales, marketing,, contracting, and verification process.

"These comprehensive regulations of the Commission, enacted pursuant to the Commission's statutory authority under the Competition Act, undercut the legal conclusions of the I.D. in two key ways. First, these regulations make clear that the contractual sale of electricity is regulated by the Commission. Therefore, the exception to the wet signature requirements in the TRA (Section 2245(d)(l)) which states that 'a signed, written contract is not needed if ... the contractual sale is regulated under other laws of this Commonwealth' applies ... [A] read of the TRA and application of statutory interpretation principles makes clear that EGSs are not required by the TRA to acquire wet signatures on telemarketing contracts," RESA said

"Second, a comprehensive review of all the applicable regulations shows that the Commission does not require that a wet signature be acquired for telemarketing contracts. With regard to telemarketing, the Commission's regulations specifically state that suppliers are required to comply with all its regulations. Pursuant to these Commission regulations, the customer can authorize the transfer of his or her account through any established 'written, oral or electronic transaction process.' Similarly, the Commission's regulations do not require that the 'verification' process of the supplier must include a customer's signature on a contract in its list of required information. And, the Commission's regulations specifically permit EDCs to rely on a customer's 'oral confirmation' of his or her desire to begin service with an EGS," RESA said

"Accepting the flawed logic of the I.D. to rely on the Commission's regulations in support of the position [that a wet signature is needed] would require one to believe that the Commission intentionally hid an elephant in a mouse hole meaning that it buried this fundamental, market-altering requirement so deep in its recent regulations that nobody could find it (let alone plan for it)," RESA said. "If the Commission intended to uproot such a long-standing understanding and practice in Pennsylvania, it would not have chosen to do so in such a covert way."

RESA noted that the PUC recently updated its EGS sales and contracting rules, in a process which: (1) spanned almost three and a half years; (2) involved at least ten meetings among Commission staff and industry members; (3) produced interim guidelines adopted only after consideration of formal comments received to a tentative order; and, (4) were finalized in a final rulemaking adopted only after consideration of comments to the proposed rulemaking and after consideration of a petition for reconsideration (and responsive comments).

"At no time was there any discussion of the intent or desire of the Commission to implement a new requirement that EGSs had to acquire wet signatures on telemarketing contracts," RESA noted

RESA's exceptions were limited to the legal interpretation of the TRA, and RESA said that it is not taking any position regarding the specific allegations against Blue Pilot Energy, LLC involving its marketing practices and, to the extent the Commission concludes that Blue Pilot violated the Commission's regulations, RESA said that it supports appropriate action.

Case C-2014-2427655

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