Retail Supplier Seeks Waiver Of Cost Disclosure Rule For Marketing Materials To Market Flat Bill Plan
April 24, 2018 Email This Story Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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Astral Energy, LLC filed a petition with the Public Utilities Commission of Ohio asking PUCO to waive application of Rule 4901:1-1-21-05(A)(4) with regards to Astral’s "Ultimate Power Plan" (UPP), which is a flat bill product
Astral currently provides retail electric service to commercial customers in Ohio through fixed-rate kWh contracts.
For residential customers, Astral has developed the UPP, which is currently offered by Astral in several states, to supply residential competitive retail electric service (CRES) through a flat-rate plan customized to each customer’s energy usage.
Astral currently offers the UPP in the States of New Jersey and Pennsylvania and is now providing residential CRES to customers in those states under UPP contracts.
Under the UPP, the customer pays a flat-rate dollar amount per month for CRES for a six month contract period. Astral determines the customer’s monthly flat-rate price based on a propriety algorithm that analyzes the customer’s historic usage, peak vs. off peak usage, and other factors. Thus, the flat rate charged is unique for each UPP customer.
The mechanics of signing a customer up for a UPP plan work as follows: a prospective customer first contacts Astral to request a quote for a UPP plan. Astral obtains permission from the customer to access the customer’s generation usage history. Astral then uses its propriety algorithm to determine the flat-rate UPP offer, which typically takes 48 hours to generate. Astral contacts the customer with the flat-rate UPP offer and provides the customer with a proposed UPP contract with the flat-rate monthly dollar amount to be charged specifically listed. The customer then decides whether to accept the offer and execute the proposed UPP contract or to decline the offer. If the customer executes a UPP contract, once its six-month term has expired, the customer may choose to drop or switch service from Astral Energy without penalty or fee.
Before expiration of the UPP contract, Astral may choose to offer the customer a renewal of the contract for a new six-month term. In determining the new flat-rate price if Astral does offer a renewal, Astral takes into consideration whether the customer’s usage during the contract term was less than his or her historic usage.
Astral noted that Rule 4901:1-1-21-05(A)(4) provides that each competitive retail electric service (CRES) provider that offers retail electric generation service to residential or small commercial customers shall provide, in marketing materials that include or accompany a service contract, sufficient information for customers to make intelligent cost comparisons against offers they receive from other CRES providers. By rule, offers shall at a minimum include, for flat-monthly rate offers, "a specific listing of the rate to be charged per month for the duration of the contract."
Astral sought a waiver due to the requirement for this "specific listing of the rate to be charged per month" with regards to marketing materials. Such marketing materials are provided before Astral obtains permission from the customer to access the customer’s generation usage history, which as noted above is used to generate a customer-specific offer that is then communicated to customers via a proposed UPP contract with the flat-rate monthly dollar amount to be charged specifically listed therein
Astral said that while the UPP is a flat-rate offer, by the nature of the program the flat-rate charged can be different for each customer. "Thus, it is not possible to identify a specific dollar amount in marketing materials for the UPP as Rule 4901:1-1-21-05(A)(4) requires. In addition, due to the number of factors that Astral’s propriety formula uses to determine the flat-rate offer, it could be misleading to provide a dollar amount in marketing materials that is identified as an 'average household' price," Astral said
"For example, a retired resident who is at home all day might use electricity from 7:30 AM to 9 PM Monday through Friday and may be quoted a different price compared to an individual who uses the same amount of electricity Monday through Friday, but primarily during the hours of 5 AM to 6:30 AM and 7:30 PM to 10 PM. The flat-rate charged would almost certainly be different for two such individuals, with retired individual likely paying a lower monthly rate due to more of his or her usage being off-peak," Astral said