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RESA: PSC Staff Seeking "Market-Killer" Changes To Supplier-Consumer Advocate Consensus Retail Supplier Rules

September 7, 2016

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

Proposed changes from Delaware PSC Staff to a consensus proposal (from the Retail Energy Supply Association and the Delaware Public Advocate) to revise the retail electric marketing rules in Delaware are "market killers" that will keep suppliers out of Delaware, Brian Greene, counsel for RESA, said during a PSC meeting yesterday.

As only reported by EnergyChoiceMatters.com, RESA and DPA reached a consensus on long-standing proposed changes to electric supplier marketing, contracting, certification, and other rules under Reg. Docket 49.

However, Staff offered extensive changes to the RESA-DPA consensus proposal, including changes that RESA has consistently warned are, "market killers," Greene said

Adopting the Staff proposal, "is going to cause suppliers to stay away from Delaware," and likely cause existing suppliers to reconsider, Greene said. Greene is managing partner at GreeneHurlocker, PLC

The PSC was addressing a procedural issue yesterday (noted further below), and Greene did not elaborate in his comments to the Commission on the nature of the market-killing Staff proposals

However, upon review of the Staff proposal, it appears that the Staff proposal -- through ambiguity or intent -- retains an earlier proposal that affirmative consent is required for all contract renewals -- including renewing from fixed to a rollover monthly variable rate.

Specifically, Staff's proposal provides:

7.1 An Electric Supplier shall provide Residential and Small Commercial Customers with Written Notice of pending renewal of a Contract not less than thirty (30) days before the end of the Contract term is scheduled to occur.

7.2 The Written Notice required under Rule 7.1 shall:

     7.2.1 Inform the Residential or Small Commercial Customer that the customer must affirmatively respond to the Written Notice in order to renew the Contract;

Furthermore, Staff's 7.2.5, a subpart applicable to a Fixed Price Contract that renews to a non-hourly Variable Price Contract, which is also subject to 7.2.1 above, contains additional notices concerning the variable rate, and any limitations (or lack thereof) of changes to the rate.

Notably, Staff's proposal defines, "Contract" to mean, "the total legal obligation resulting from the parties’ agreement as effected by these Rules and other applicable law."

Monthly rollover service would presumably meet this definition, and therefore apparently would require affirmative consent

However, Staff's 5.3.2.7.4, concerning requirements for contracts, states that the contract shall include, "A statement regarding Contract renewal procedures, including automatic renewal if applicable," suggesting auto-renewal is permissible. [Note that 5.3.2.7.4 appears to be mis-formatted, as it is grouped with subpart language concerning rescission requirements, and likely should be numbered 5.3.2.X]

Additionally, Staff's 5.3.2.7.5 [again likely mis-numbered] states that the customer shall be provided in the contract, "A statement that describes the notices and contents of any notice concerning renewal of a contract or change in material contract terms at the end of its stated term of service. The renewal notification shall include the applicable Contract Summary for the new Contract or change in Contract terms offered by the Electric Supplier. If the Contract and Contract Summary include a material change in terms, no Electric Suppler shall automatically renew a contract based on a Customer’s failure to respond to renewal notice. A Customer must either affirmatively agree to the material change or the Electric Supplier shall return the Customer to SOSS at the end of the Contract. No Electric Supplier shall renew any Variable Price Contract with a Residential or Small Commercial Customer for a period longer than 12 consecutive months without issuing a renewal notice and current Contract Summary."

This suggests auto-renewals are permitted, except where a material change occurs. It is not clear whether a fixed contract, whose contract at the time of enrollment explicitly provides for a monthly rollover to a variable rate, would trigger a material change when the fixed term ends and monthly variable rollover service begins. The Staff proposal is not clear if any change in price constitutes a material change

Additionally, Staff's 5.3.2.7.5 limits variable rate renewals to 12 months.

Another area where the Staff proposal departs from the RESA-DPA proposal is that the Staff proposal (5.4.6) provides, "If the Electric Supplier makes substantive changes for Electric Supply Service to Residential or Small Commercial Customers that alters and/or modifies the Rates, terms and/or conditions of service to the Customer, including but not limited to, changes to the Electric Supplier’s name and/or changes in product offerings. The [sic] Electric Supplier must notify the Commission Staff at least fifteen (15) Business Days prior to offering the revised Contracts in Delaware to allow for review and comment," with Staff granted authority to mandate changes if such changes are inconsistent with rule

The term "Rate" is defined as, "all charges (excluding taxes), including Fixed or Variable, to be charged by the Electric Supplier for Electric Supply Service pursuant to the Contract."

While the intent of this provision may be to require suppliers to file updates to their standard T&C's for Staff review, the provision could be read as requiring suppliers to seek approval of individual changes in rates, and other terms, in customer contracts (provided such changes are "substantive") -- certainly an unwieldy requirement, particularly if variable rate changes are deemed a "substantive" change in Rates.

Another potential barrier to enrollments under the Staff proposal is the ambiguous provision that, "An Electric Supplier that contracts with a Customer by means of the internet shall confirm the identity of the Person authorizing the Contract. An Electric Supplier may use a distinct username and password to confirm the identity of the contracting Customer."

While not market-killing, Staff's proposal also appears inconsistent with respect to whether telesales are required to be TPV'd

At 11.1.3, Staff's proposal provides, "Verbal authorization provided over the telephone as a result of telemarketing or as a result of a Door-to-Door Sale must undergo a Verification Process. The Electric Supplier may choose an independent third-party verification system or the Electric Supplier shall implement its own audio recording system which includes the entire conversation with the Customer."

This appears to allow a choice of TPV, or a recording of the entire call.

However, at 11.3, Staff's proposal provides, "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," clearly requiring both the full call recording, plus a TPV.

Another notable provision from Staff's proposal is that it would set a seven business day rescission period, versus three business days in the RESA-DPA proposal.

In addition to its proposed changes to the RESA-DPA proposal, Staff had argued that the PSC should republish the rules (using Staff's changes) for comment.

RESA and DPA, noting that their proposal amounted to comments on the previously published rules from an earlier publication of the proposed rules, said that publishing the rules again is unnecessary, and that the rules were ripe for Commission action. RESA and DPA further noted that revised supplier rules have been published several times under the tortuous, years-long Reg. 49 proceeding, and asked that the PSC adjudicate the rule changes at its meeting yesterday.

The PSC found that the rules should be subject to another publication and comment period; however, the PSC ordered that the RESA-DPA proposal should be published, not Staff's proposed changes to the RESA-DPA proposal

The PSC is to finally resolve the rule changes at its October 18 meeting. As a result, the PSC has indefinitely delayed consideration of retail market enhancements under consideration in other proceedings, such as POR, until final action on the rules in Reg. Docket 49

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