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PUC Rule Proposes To Ban Commission-Based Compensation For Door-to-Door Sales

PUC Rule Proposes Requiring Retail Suppliers To Record Entirety Of Door-to-Door Interactions

Would Extend Proposed Rules To Small Commercial Service

March 12, 2018

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Maine PUC opened a rulemaking governing retail electricity marketing rules that would, among other things, ban commission-based compensation for door-to-door sales and would require the entirety of door-to-door interactions to be recorded.

The proposed rulemaking would also apply all of the proposed disclosure and marketing rules discussed below to small non-residential service, in addition to residential service. Small non-residential customer means a non-residential customer taking service from an investor-owned transmission and distribution utility under terms and conditions that do not include a demand charge or a non-residential customer that is taking service from a consumer-owned transmission and distribution utility with a demand of 20 kilowatts or less.

Notably, the proposed rules would provide that, for in-person sales, competitive electric providers (CEPs) shall, "Not pay or otherwise compensate its employee or representative based on whether a potential customer accepts the CEP’s service."

Additionally, the proposed rules would provide that CEPs, for in-person sales, shall, "Record by audio all communications with the potential customer, commencing when the initial contact is made with the potential customer and ending when the employee or representative leaves the potential customer’s premises."

As discussed further below, the proposed rules also address recent legislative requirements such as CEPs' obligation to provide notice of the Standard Offer rate, and renewal provisions.

The PUC said in proposing the rules that, "the Commission has been delegated broad regulatory authority over CEPs to protect consumers, and the Commission is not persuaded at this time that lacks statutory authority in Title 35-A to adopt these regulatory requirements."

Regarding the need for the rules, the PUC said, "Additionally, during calendar year 2017, the Commission’s Consumer Assistance and Safety Division (CASD) experienced repeated and increased consumer and utility complaints regarding the door-to-door marketing practices of CEPs. 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."

More specifically, the proposed rules provide that, a CEP, or its representative, soliciting a potential customer in person at the customer’s premises shall:

a. Provide written notice to the Commission and the local police department prior to commencing in-person solicitation of customers, which notice shall state the dates and times when the in-person solicitation will occur and identify the individual employees or representatives who will conduct the in-person solicitation;

b. Produce identification, to be visible at all times thereafter, which prominently displays in reasonable size type the full name of the CEP and the employee or representative, as well as the CEP’s telephone number for inquiries, verification, and complaints, and shall leave such identification with the potential customer upon request;

c. Clearly state that the employee or representative is not working for and is independent of the potential customer’s electric utility;

d. State that if the potential customer purchases electricity from the CEP, the potential customer’s electric utility will continue to deliver the potential customer’s electricity and will respond to any outages or emergencies. This requirement may be fulfilled by an oral statement to the potential customer, or by written materials left with the potential customer;

e. Terminate the in-person contact with the potential customer when it is apparent that the potential customer’s language skills are insufficient to allow the potential customer to understand and respond to the information conveyed, or where the potential customer or another third party informs the CEP, or its representative, of this circumstance;

f. Record by audio all communications with the potential customer, commencing when the initial contact is made with the potential customer and ending when the employee or representative leaves the potential customer’s premises. The recording shall include the potential customer’s name and address and be maintained by the CEP for at least 12 months after the date of the solicitation and shall be made available in a format amenable to electronic conveyance to the Commission upon request;

g. Require its employee or representative to leave the potential customer’s premises prior to any third-party verification call during which customer enrollment is confirmed; and

h. Not pay or otherwise compensate its employee or representative based on whether a potential customer accepts the CEP’s service.

Regarding the obligation to disclose to customers the Standard Offer, the proposed rules provide that, "Before entering into an agreement to provide service, each competitive electricity provider shall disclose in writing to the customer where the customer can obtain information with which to compare the service provided by the competitive electricity provider and the standard-offer service."

"The written comparison disclosure shall include information regarding how a customer can obtain information about standard-offer service rates, including a link to the Commission’s standard offer rates website page," the proposal states

Furthermore, the proposed rules provide that, "The bill for a customer that elects to receive generation service from a competitive electricity provider must contain," must contain, among other things, "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."

This obligation would extend to CEP bills in cases of dual billing.

The proposed rules also revise the renewal procedures, largely to reflect legislative limits on renewals onto fixed rate products without customer authorization

Regarding renewals, the PUC said that it interprets certain recently adopted statutory limits on renewals as applying to only fixed rate contracts and thus intending to prevent CEPs from raising the rate at the time of renewing a fixed rate contract at 20% or more from the prior fixed rate without the express consent of the customer. Accordingly, concerns about having to use an "average" rate to apply the 20% trigger for non-fixed products that had been raised in a prior notice of inquiry are not applicable, and instead the 20% trigger would be based upon the fixed rate of the expiring contract, and the renewal provisions of the proposed rule do not require averaging.

Regarding renewals, the proposed rules provide that if a customer does not provide the express consent where required by the rule as noted further below, the customer must be transferred to the standard-offer service.

Further regarding renewals, the proposal provides:

a. "Each competitive electricity provider must provide written notice to its customers two times between 30 and 60 calendar days in advance of a renewal of service. The two written notifications shall be made electronically or by US Postal Service, but one of the notifications shall be by US Postal Service," the proposal states, with the USPS requirement being new. "The words 'contract renewal notice' must be included in bold at either the top of a paper notice or in the subject line for notices sent electronically. Copies of the two written notifications, either in hard copy or electronically, shall be retained by the competitive electricity provider for at least 12 months from the date the second notice is sent. The renewal notices must include a standardized notice form, setting forth the requirements of the terms of service document upon renewal. The Commission or the Director of Electric and Natural Gas Industries shall by order specify the standardized form."

b. Terms of Service providing service at a fixed rate may automatically renew without the express consent of a customer at a fixed rate provided the term is not longer than the term of the expiring Terms of Service or 12 months, whichever is shorter. A competitive electricity provider may not, however, renew the Terms of Service at a fixed rate that is 20% or more above the rate of the expiring Terms of Service without the express consent of the customer obtained in accordance with subsection 4(B)(5).

c. Terms of Service providing service at a fixed rate that will renew at an Indexed Variable Rate may automatically renew without the express consent of the customer obtained in accordance with subsection 4(B)(5), provided that the term of the renewed Terms of Service does not exceed the term of the currently existing Terms of Service or 12 months, whichever is shorter

d. Terms of Service providing service at a fixed rate that will renew at a Non-indexed Variable Rate may automatically renew only on a month-to-month basis

e. Terms of Service providing service at a variable rate that will renew at an Indexed Variable Rate may automatically renew without the express consent of the customer obtained in accordance with subsection 4(B)(5), provided that the duration of the renewed Terms of Service does not exceed the duration term of the currently existing Terms of Service or 12 months, whichever is shorter.

f. Terms of Service providing service at a variable rate that will renew at a Non-indexed Variable Rate may automatically renew only on a month-to-month basis

g. Terms of Service providing service at a variable rate that will renew at a fixed rate may renew automatically without the express consent of the customer obtained in accordance with subsection 4(B)(5), provided the duration of renewed Terms of Service does not exceed the duration term of the currently existing Terms of Service or 12 months, whichever is shorter.

Competitive electricity providers shall not impose a termination fee for any Terms of Service that was renewed without the express consent from the customer obtained in accordance with subsection 4(B)(5), the proposal states.

Docket No. 2018-00056

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