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Retail Suppliers, Public Advocate Reach Consensus on Overhaul to Retail Market Rules

Paves Way For PSC Action on POR

Addresses Earlier Proposal Which Would Have Banned Contracting Via Telesale

Addresses Broader Definition of Broker From Earlier Proposal

Would Adopt 3-Day Accelerated Switch, Addresses "Enroll By Wallet"

Includes Advance Notice of Variable Rate Change

August 16, 2016

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Copyright 2010-16
Reporting by Paul Ring •

** Exclusives Analysis By -- Must Credit **

** Unauthorized Reproduction Prohibited **

The Retail Energy Supply Association and Delaware Division of the Public Advocate have reached consensus on proposed revisions to retail electric supplier marketing and certification rules in Delaware.

The Public Advocate has desired that long-standing proposed revisions to the marketing rules be adopted in Reg. Docket 49 prior to adopting purchase of receivables, which are among other retail market enhancements being considered in Docket 15-1693.

RESA and DPA noted that their consensus proposed rule changes would "eliminate" two issues from consideration in the retail market enhancements docket (15-1693): namely, a three-day accelerated switching proposal (which their proposed rules would adopt), and an "enroll with your wallet" proposal (which their rules would apparently address, though not as directly as accelerated switching, and with a solution perhaps different than enroll by wallet in other states).

RESA and DPA are in consensus on the proposed rule changes save for one issue -- DPA is seeking language requiring Delmarva to include the Price to Compare on customers' bills. RESA opposes this. This is the only remaining open issue between DPA and RESA.

The DPA and RESA proposal is notable for unequivocally allowing a contract to be formed, via oral recording, during telemarketing. As previously reported, proposed revisions to the rule from April 2014 suggested that contracting via telemarketing would be prohibited, due to the requirement that a voice verification had to confirm that the customer "had been" given a copy of the disclosure statement

The DPA and RESA proposal would provide that there are three principal ways in which an electric supplier may obtain a residential or small commercial (defined as Small General Service-Non Demand at Delmarva) customer's authorization to enter into a contract for electric supply service:

• Recorded verbal consent via the telephone;

• Electronic contract; or

• Written contract.

Specifically, when a residential or small commercial customer enrolls with an electric supplier during a telemarketing call, the electric supplier shall record the entire telephone call between the residential or small commercial customer and the electric supplier or its agent, and also record a TPV, the DPA and RESA proposal states

For telesales, supplier agents would be required to begin the conversation by stating the following:

• His or her name and, upon request, his or her agent identification number;

• The name of the electric supplier that the agent is representing;

• The purpose of the telephone call is to sell electric supply service; and

• That he or she is not working for and is independent of the residential or small commercial customer's electric distribution company or another electric supplier.

During the telesale, the supplier would be required to disclose (among other things): all material contract terms and conditions; including, for a variable price; the basis of variability and any limits per new Rule (see below for more extensive discussion) and the first month's variable price; the duration of any introductory price and description of the price after the introductory price ends; how the customer may access future price information; the three day rescission period; and the amount of any early cancellation fees and/or any other charges

One note is that proposed rule would require during telesales that the supplier shall, "Explain the Electric Supplier's TPV process, if applicable." However, as noted above, for a telephonic enrollment, the supplier shall record the entire phone call, "and also record a TPV," meaning a TPV is not optional for telephonic enrollments (e.g. recording the entire call is not in lieu of a TPV). Therefore, the only reason we can imagine a TPV would not be applicable is if, for some reason, the supplier preferred to enroll the customer after a telesale pitch via one of the other enrollment methods (e.g. mailed contract with returned signature).

For door-to-door contracts, the electric supplier may enroll the customer by obtaining a written or electronic authorization, plus a verification process, either TPV or a separate verification process described below (apparently designed to accommodate verification via alternate means, perhaps via mobile/web interface).

Specifically, a door-to-door sale must include a completed TPV or other process established by the electric supplier to verify the transaction. A process other than a TPV shall:

• Be separate from the sales transaction process and initiated only after the sales transaction has been finalized;

• Be initiated only after the agent has physically exited the residential or small commercial customer's premises

The RESA/DPA proposal provides that door-to-door sales at a residential dwelling shall be conducted by an electric supplier's agent between the hours of 9 a.m. to 8 p.m. EST [note "EST" is listed in the proposed rules, which means the clock hours would change during DST]. When a local ordinance has stricter limitations, an electric supplier shall comply with the local ordinance

Door-to-door agents would be required to undergo criminal background checks. Per the RESA/DPA proposal, the electric supplier, or the independent contractor or vendor it utilizes, would be required to obtain and review the criminal history results from the following searches:

• Delaware state and county courts;

• A nationwide federal criminal court search, such as the Federal Public Access to Court Electronic Records (PACER) System;

• The U.S. Department of Justice National Sex Offender Public Registry; and

• Every other state in which the Agent resided during the last twelve (12) months.

For a current agent who conducts door-to-door sales, an electric supplier must obtain a criminal history record for such individual not later than ninety days after the effective date of the new rules, the RESA/DPA proposal provides

The RESA/DPA proposal would require suppliers to submit notices of door-to-door sales activity to the PSC, DPA, and utilities. When an electric supplier engages in door-to-door sales, the electric supplier shall notify PSC Staff and DPA no later than the morning of the day that the activity begins. The notification shall include general, nonproprietary information about the activity, the period involved and a general description of the geographical area. An electric supplier shall provide the EDC with general, nonproprietary information about the door-to-door activity that caused the electric supplier to provide notice to PSC Staff and DPA. The electric supplier shall provide this general information to the EDC no later than the morning of the day that the sales and marketing activities begin

Regarding internet enrollments, the RESA/DPA proposal only provides that, for electronic contracting on the internet, the electric supplier's website must be configured to prompt the residential or small commercial customer to review and agree to the contract and contract summary before the contract is final, and to print or save the contract and contract summary

The RESA/DPA proposal thus drops problematic language from the PSC's December 2015 proposed rules which would have required that, "An Electric Supplier that contracts with a Customer by means of the internet shall confirm the identity of the Person authorizing the Contract." (see earlier story)

The RESA/DPA proposal would require suppliers to include a new Contract Summary for small volume customers.

The proposed rule language for the Contract Summary for variable price contracts appears to include a scrivener's error concerning a reference to variable rate disclosures required for the contracts themselves. However, we believe the intent is to provide that the Contract Summary for variable price products shall disclose the following from Rule (the text references rule which does not exist):

• An explanation of the basis(es) on which the Price will vary and any limits on price variability;

• If there is a limit on price variability, such as a specific price cap, a maximum percentage increase in Price between billing cycles or minimum/maximum charges per kilowatt-hour for electricity during the term of the contract, the electric supplier shall clearly explain applicable limits;

• If there is not a limit on Price variability, the electric supplier shall clearly and conspicuously state that there is not a limit on how much the price may change from one billing cycle to the next

The proposed variable rate Contract Summary shall also include a telephone number and internet address at which a residential or small commercial customer may obtain the supplier's previous 24 months' average monthly billed prices for that customer's rate class and EDC service territory

Additionally, the proposed variable rate Contract Summary shall list how the residential or small commercial customer can access variable price changes, which must be provided in advance (as discussed below).

The RESA/DPA proposal specifically states that if the contract is completed through a telephone solicitation, the electric supplier shall "send" the contract summary with the contract to the residential or small commercial customer (note the use of the term "send" rather than "mail", although there is no explicit language allowing email of the contract summary for telesales)

As noted above, for variable price contracts (note, the RESA/DPA proposed rules define fixed products as having a minimum 3-month term), the RESA/DPA proposal would require that the electric supplier shall make available to the residential or small commercial customers the variable price for the next billing period as follows:

• 7.1.1 The Variable Price shall be made available at least 12 days prior to close of the customer's billing period;

• 7.1.2 The Variable Price shall be made available in a clear, easy to access format prescribed by the Electric Supplier;

• 7.1.3 The Electric Supplier shall promptly provide the residential or small commercial customer written directions on how to access the Variable Price [at various times, such as contracting, contract summary, etc.]

As noted above, the RESA/DPA proposal would set the rescission period for residential or small commercial customers at three business days. The current rescission period is 10 calendar days

In what is apparently addressing "enroll by wallet" proposals, the RESA/DPA proposal would provide that the EDC shall send, upon the supplier's receipt of customer authorization, "Pre-Enrollment Information" for the customer. What is not explicit in the rule is how suppliers may request such information, and what customer-specific info will be needed to receive access to the info (e.g. customer name and address), but it appears that the account number would not necessarily be needed, as the account number is to be one of the data pieces made available under the Pre-Enrollment Information (hence, this could be the mechanism to facilitate enroll by wallet). However, the mechanism for providing this information, and whether it would be workable in a remote sales environment (e.g. mall kiosk) is not addressed in the rule

The RESA/DPA proposal would include in the rules more extensive provisions regarding customer lists (current rules only briefly provide that customer lists shall be available to suppliers). Under the RESA/DPA proposal, an EDC shall make a customer list available to electric suppliers on a secure password-protected web portal. An EDC shall update the list on a monthly basis. A customer may elect to opt out of the list.

As noted above, the RESA/DPA proposal would require accelerated switching and require that that an EDC shall process an electronic enrollment or drop from an electric supplier to be effective within 3 business days after receipt of the electronic transaction.

As part of the new switching timelines, an electric supplier may not require that a customer provide the supplier with advance notice, written or otherwise, before the customer switches to another supplier or to SOS

The RESA/DPA proposal would maintain the current rule, at Delmarva, allowing the supplier to offer supplier consolidated billing, in addition to using dual billing or utility consolidated billing

The RESA/DPA proposal would prohibit the transfer of an electric supplier license without notice and approval of the PSC.

Additionally, under the RESA/DPA proposal, no electric supplier shall cease doing business within the state unless it has provided at least 60 days written notice to the PSC, the DPA, the affected EDC(s), and its customers

Furthermore, at least 30 days prior to the effective date of any assignment or transfer of an electric supplier contract from one electric supplier to another, the electric suppliers shall jointly provide written notice to the customers of the electric supplier, the Commission, the EDC, and the DPA of the assignment or transfer

The RESA/DPA proposal would maintain the initial security amount of $100,000 for suppliers, but provides that the PSC may grant modifications of this amount commensurate with the nature and scope of the business the applicant anticipates conducting in the state upon submission of information in support of the modification. A request for modification of the initial security amount may be made in conjunction with the filing of the supplier license application.

After the initial year, the required security amount shall equal $100,000 or five percent (5%) of the electric supplier's annual revenues from sales of electric supply service to residential and small commercial customers in Delaware over the prior calendar year, whichever is greater, the RESA/DPA proposal states

Regarding advertisements, "An Electric Supplier's solicitation, advertising and marketing materials must include the name, toll-free telephone number, and address of the Electric Supplier," the RESA/DPA proposal states [emphasis added]

The definition of "broker" (which are required to be licensed) in the RESA/DPA proposal eliminates broader language from earlier proposals that could have ensnared affinity marketing channels or MLM agents.

Specifically, the RESA/DPA proposal defines broker as, "an entity or Person that acts as an agent or intermediary on behalf of the Customer in the sale or purchase of, but that does not take title to, electricity for sale to retail electric Customers." [emphasis added]

Apart from adding language limiting brokers to those working on behalf of the customer, the RESA/DPA proposal drops earlier language that would have defined broker as including, "anyone who conducts marketing activities including, but not limited to, promotion and sales of electricity and related services to Retail Electric Customers." (see earlier story)

RESA and DPA asked that the PSC consider their changes at its September 6 meeting, which, if adopted as final at such meeting, would allow the other retail market enhancement docket (including POR) to move forward

Reg. Docket 49

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