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Aggregation Group Tells Regulator To Ban Oral Authorization For Energy Contracts

March 7, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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PowerOptions, Inc. recommended to the Massachusetts DPU that the DPU should eliminate the "predatory practice" of oral authorization for the initiation of retail energy supply service.

PowerOptions' comments came in a DPU investigation reviewing the retail energy market and various customer protections, the opening of which had been first reported by EnergyChoiceMatters.com (see story here).

"The Department can improve its ability to investigate suppliers’ marketing activities by banning the practice of oral authorization for electricity contracts. This practice is outdated and allows telemarketers to easily take advantage of customers," PowerOptions said in its comments

"While oral authorization can, in theory, produce efficiencies in signing customers up for desired supply services, in practice it often becomes a predatory marketing practice. Oftentimes the person giving oral authorization is not aware that they are actually agreeing to supply terms without ever signing a contract. Thus, 'affirmative choice' should exclude oral authorization and should require written authorization from the customer," PowerOptions said

"PowerOptions strongly advocates for revisions to 220 C.M.R. §11.05(4)(c) that would eliminate the predatory practice of oral authorization for supply contracts. Several PowerOptions members have been switched by electricity brokers under this regulation, resulting in thousands of dollars in penalties and increased supply costs for these nonprofits. One PowerOptions member recently sought our assistance after being taken advantage of under this practice. Specifically, a broker had contacted an administrative assistant at the member organization to discuss competitive supply. The administrative assistant verbally agreed, despite not having approval from management. As management was unaware that the organization had been verbally entered into a contract for supply, they renewed their expiring supply arrangement through the PowerOptions program. The member was then served with a $12,000 early termination bill for prematurely ending the supply arrangement that management did not even know existed, since it was authorized by an employee without the proper authority. Experiences like this are all too common, especially for residential and small C&I customers, and it simply could have been avoided if the broker was required to obtain a signature from an authorized representative of the member organization. There is no reason to still allow oral authorization in a world where e-signatures are just as quick and provide greater consumer protections. Thus, in order to protect customer interests, the Department should revise 220 C.M.R. §11.05(4)(c) to eliminate the practice of oral authorization and require a signature from an authorized representative of the customer before supply service may be initiated," PowerOptions said

PowerOptions described itself as follows: "PowerOptions is a not-for-profit energy purchasing consortium formed in 1996. Its over 400 nonprofit commercial and industrial ('C&I') members in Massachusetts include hospitals and healthcare systems, colleges and universities, community and human service agencies, K-12 public and private schools, museums, as well as municipalities and housing authorities, with approximately one billion kWh of annual load, 200 MW of peak load, and 11 million dekatherms of annual gas usage. PowerOptions’ electric members represent over 3,200 C&I accounts and over 4,200 residential accounts that are in the name of a commercial customer

D.P.U. 19-07

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