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PUC Opens New Inquiry In Retail Electricity Marketing

Asks Whether Door-to-Door Marketing Should Be Banned

Asks Whether Use Of Third-Parties For Marketing Should be Banned

Asks Whether New Customer Protections Should Apply To Small C&I Customers

October 17, 2017

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Copyright 2010-17
Reporting by Paul Ring •

The Maine PUC has opened an inquiry into transparency and marketing practices in the electricity supply market

The docket will also serve as a rulemaking to incorporate new consumer protections recently adopted by the legislature, including whether such protections, which were limited to residential customers by statute, should be extended to small commercial customers

As previously reported, the recent legislation (LD 803) provides that, among other things, a supplier may not renew a contract for generation service at a fixed rate that is 20% or more above the contract rate in the expiring contract without the express consent of the residential consumer

Suppliers, per the law, must disclose to the customer where the customer may obtain information on SOS pricing

See more details on the new law here

The PUC also said that the inquiry is prompted by complaints against suppliers, including complaints driven by door-to-door marketing or the use of third-party marketing agents.

The PUC in its notice opening the inquiry said, "Additionally, the Commission’s Consumer Assistance and Safety Division (CASD) has recently and repeatedly over time experienced an increase in consumer and utility complaints with regard to the door-to-door marketing practices of CEPs [competitive electric providers]. It appears the CEPs are at times utilizing third-party companies to solicit sales door-to-door and that this marketing practice is resulting in violations of Chapter 305. For example, CASD has received complaints that CEP salespersons fail to identify the company for whom the salespeople work, make unreasonable repetitive sales visits to the same home, make sales visits at unreasonable hours of the day, provide false or misleading information regarding electricity rates and the purported benefits of contracting with a CEP for electricity supply service, and provide false or misleading information regarding the difference between who is delivering electricity and who is supplying the electricity."

The PUC proffered draft changes to its existing rules to implement LD 803.

Notably, under the draft, to comply with the requirement to advise customers about SOS pricing information, the PUC proposes that suppliers make such disclosures in writing, with such disclosure including a link to the Commission’s standard offer rates website page.

The PUC would also require bills issued by retail electric suppliers (dual billing) to include:

a. The website address and telephone number of the Office of the Public Advocate where customers can access information that provides independent information that allows customers to compare terms, conditions, and rates of electricity supply.

b. A statement that directs the customer to the competitive electricity provider for more information on the customer’s Terms of Service, including its specific terms, and that provides the telephone number of the competitive electricity provider.

The PUC also proffered redline language providing that, if express consent is not obtained for a renewal situation for which such express consent is required, the customer must be transferred to the standard-offer service.

The rules then set forth numerous examples which explicitly provide that express consent is not required, notably for such standard auto-renewals such as fixed onto variable month to month. In the draft redline, only certain renewals prohibited by statute without express consent -- renewal onto a fixed rate with a greater than 20% rate change (with the PUC proposing to use an average of the prior term's rate for the comparison), or a term longer than the original contract or longer than 12 months, whichever is shorter -- require express consent

The PUC sought comment on the following questions and issues implementing LD 803

1. Given the Commission’s historical policy of providing residential and small commercial customers the same consumer protections under Chapter 305, the Commission anticipates applying the recently enacted consumer protections to both residential and small commercial customers, even though the legislation on its face refers only to residential consumers. 35-A M.R.S. §§ 3203(4-B), (4-C)

2. With regard to the new legislative requirement that CEPs provide prospective customers with information regarding the standard offer service, should CEPs be required to provide prospective customers with the actual standard offer prices, both current and, if available, for the next standard offer term? 35-A M.R.S. § 3203(4-B)(A).

3. The Commission preliminarily interprets the requirement that utility bills provide certain notices to be applicable regardless of whether customers are receiving one utility bill from the transmission and distribution (T&D) utility or a separate bill from the CEP. 35-A M.R.S. § 3203(4-C).

4. Pending adoption of amendments to Chapter 305 to conform to the recent legislative changes, should CEPs and T&D utilities be required to provide notice through utility bills of the website and telephone number of the Office of the Public Advocate, as set forth in the attached redline of Chapter 305, to comply with the requirements of 35-A M.R.S. § 3203(4-C)(A)?

5. With regard to the requirement that CEPs obtain express consent prior to renewing a Terms of Service at a fixed rate that is 20% or more above the rate of the expiring Terms of Service, the Commission preliminarily interprets the 20% to require a calculation of an average rate over the term of a Terms of Service that contained a variable rate. 35-A M.R.S. § 3203(4-B)(C).

More broadly concerning electricity marketing, the PUC also asked for comments on the following questions, which, among other things, ask whether door-to-door marketing should be prohibited, or whether the use of third-party marketing agents should be prohibited

The PUC asked:

1. Should additional regulatory requirements be put in place with regard to third–party marketing companies to ensure compliance with Chapter 305? For example, would express training requirements improve CEP compliance with residential consumer protection standards? If such regulatory requirements are put into place, should the Commission require formal verification of the training for each person that will be marketing for the CEP, whether employed by the CEP or by a third-party company?

2. Can or should the practice of selling electricity door-to-door be prohibited in Maine, either outright through rule or through the licensing process for CEPs? Does the Commission have the statutory authority to adopt such a prohibition?

3. Does the practice of third-party companies working on commission impact compliance with Chapter 305? If yes, can or should this practice be prohibited through the licensing process?

4. Should additional security be required as a prerequisite to CEPs engaging in door-to-door marketing practices?

5. Should CEPs who engage in door-to-door marketing practices be required to submit advance notice to the Commission as to the targeted geographical locations for door-to-door sales and/or submit quarterly reports detailing door-to-door activities? If yes, what specific information should be included in the reports?

6. Should third-party verification requirements be modified where customers have been contacted through door-to-door marketing? If so, how should it be modified?

7. Are there other types of marketing activities that the Commission should take note of that might require additional regulatory/reporting requirements?

8. To what extent could the Commission’s regulation of CEP marketing practices be informed by the statutory regulation of transient sales, 32 M.R.S. §§ 14701-14716, and consumer solicitation sales, 32 M.R.S. §§ 4661-4671. Explain whether similar provisions ought to be incorporated into the Commission’s regulation of CEPs.

9. Comments on other issues not identified above but relevant to customer protection standards are also requested.

Docket No. 2017-00268

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