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Proposed First Notice Illinois Rules Include Broad Definition For In-Person Solicitation

Utility Price To Compare, History Must Be Included In Supplier's Disclosure Statement

"Rates" Can Not Change Under Contract Assigned To Another Supplier During "Remainder Of The Time Covered By The Agreement" (Variable Rate Problem)

May 20, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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Two Illinois ALJs have released a proposed Illinois Commerce Commission first notice order concerning sales and marketing rules for the retail natural gas market. Unless otherwise noted, the proposed rules discussed below would apply only to residential and small commercial customers

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In-Person Solicitation Definition

Among the contested issues in the proceeding is the definition of "in-person solicitation". The proposed first notice definition would track the broad definition used in the previously adopted retail electricity rules.

Specifically, the proposed first notice order would define "in-person solicitation" to mean, "any enrollment attempt initiated or completed when the AGS [alternative gas supplier] agent is physically present with the customer."

Retail supplier groups, including RESA, had sought to include language that excludes from the definition contacts by an AGS agent which is not intended to result directly in an enrollment, e.g. "dinner table discussions."

The ALJs rejected this proposal, recommending that the ICC adopt the following language in an order, "The Commission adopts Staff’s proposed definition for 'in-person solicitation.' Similar to the definition adopted in Part 412, the proposed definition is simple, concise, and covers all types of face-to-face interactions. With the understanding that many ARESs are also AGSs, Staff’s Draft Rule does not create a distinction between the two which may lead to confusion for ARESs, AGSs and customers."

"The Commission does not agree with RESA and ICEA that specific exceptions should be adopted that exclude conversations between an AGS and a potential customer that is not intended to directly result in an enrollment," the ALJs recommended

In reply comments, the Attorney General proposed an even broader definition of just "solicitation" (not just in-person), to include "statements" and "reminders" that AGSs may communicate to customers

Specifically, the AG had proposed that "solicitation" shall mean, "any enrollment attempt initiated or completed when the AGS attempts to induce any person to enter into any obligation, regardless of whether or not the agent is physically present with the customer. Solicitations include, but are not limited to, any inducements otherwise described as an 'invoice,' 'bill,' 'statement,' or 'reminder,' to create an impression of existing obligation when there is none or other language to mislead any person in relation to any sought after commercial transaction."

The ALJs noted that, "The Commission understands the AG’s proposed language was initially presented in its Reply. The Commission urges the parties to comment on this matter further in their respective Briefs on Exceptions."

Price To Compare Disclosure On Uniform Disclosure Statement

The ALJs recommend that the uniform disclosure statement (UDS) required to be used by suppliers shall include the utility supply price in cents per therm and identified by month for the consumer’s gas utility, as posted on the ICC's website, that was or will be in effect for three (3) consecutive months that begin or end within a 90 day period inclusive of the solicitation date, for which said rates are known; provided, however, that for solicitations made after the fourteenth day of any month, one of the three (3) consecutive months must be the month during which the solicitation occurs.

The ALJs would recommend an alternative proposed by the Illinois Competitive Energy Association, which had recommended that suppliers provide customers with the Commission’s website and the phone number of the Commission and the utility to aid customers in accessing the utility historical monthly supply prices.

The ALJs said, "Many AGS/customer interactions are conducted in a manner in which the customer does not have the time or ability to carefully read the information being presented and access the Commission’s website to find the utility historical monthly prices. Although some parties argue the historical gas supply prices are not particularly good or reliable indicators of future pricing, it is the customer who ultimately determines what information may or may not be useful at the time of enrollment. Including the gas utility’s PTC on an AGS’s UDS would provide customers with a meaningful metric upon which to establish a better picture of gas market variations and prompt questions about the offer as it relates to the market and customer’s expected utility charge."

The Price to Compare information is not required on the electricity uniform disclosure statement

Notably, the ALJs recommend that the Commission direct Staff to file a Staff Report, within 90 days from the date of a final order on the gas rules, with the Report recommending whether the electric rules (Part 412) should be reopened to address this difference across rules.

Direct Mail Disclosures

Departing from an ICC Staff proposal, the ALJs propose that all direct mail solicitations shall include all of the disclosures required to be disclosed under the section of rules setting forth "minimum contract terms and conditions". Among other things, such required disclosures include rates and fees, term length and renewal provisions, early termination fee, conditions for any savings guarantee, rescission information, and a statement that the AGS is not the utility

Staff had proposed a more limited set of disclosures for direct mail pieces that do not contain a letter of agency and which are not, in Staff's view a solicitation. Retail suppliers generally supported Staff's proposal, which suppliers saw as addressing mail which may not include a specific offer (e.g. postcards)

The ALJs disagreed, recommending language stating that, "The Commission disagrees with Staff that some direct mail is not a solicitation. Any communication between a business and a potential customer is conducted with an intent to solicit, even if the customer must affirmatively contact the company to enroll. The goals of this rulemaking are to ensure that potential customers have the required information prior to making a decision as to whether they will enroll in service with an AGS. The Commission does not find that requiring AGSs to disclose the minimum terms and conditions to be “unduly burdensome” on AGSs. Moreover, the Commission does not find the argument that AGSs send postcard-size mailers which do not permit extensive disclosures persuasive, as AGSs may use myriad types and forms of direct mail; they are not required to adhere to any specific size and shape so long as they disclose the pertinent information."

Early Termination Fees

The ALJs recommend denying proposals from consumer advocates that would allow customers to cancel any door-to-door contract without any termination fee within six billing cycles of enrollment

The proposed rules from the ALJs regarding termination fees mirrors the current statute. Any early termination fee or penalty shall not exceed $50 total, regardless of whether or not the agreement is a multi-year agreement. Any contract containing an early termination clause shall provide the customer the opportunity to contact the AGS to terminate the contract without any termination fee or penalty within 10 business days after the date of the first bill issued to the customer for products or services.

Non-Contested Issues

Proposed rules which were not contested but which are still notable include the following:

An AGS that is certified to serve residential or small commercial customers shall not assign an agreement with a customer to any alternative natural gas supplier, unless, among other things, "the rates, terms, and conditions of the agreement being assigned do not change during the remainder of the time covered by the agreement[.]"

While the language includes the plural term "rates" as well as terms and conditions (and the issue was apparently not raised by suppliers during the proceeding), the language could still be problematic for variable rate contract assignments, if interpreted to mean that the current variable "rate" applicable at the assignment cannot change during the remainder of the assigned "agreement", and the agreement, while including a monthly variable rate, is not month-to-month but rather a term (e.g. 12-month) agreement, due to a customer reward based on completion of the term

In-person solicitations that lead to an enrollment require a third-party verification (TPV). The TPV shall obtain the customer's acknowledgement that he or she understands the disclosures required by the rule. Each disclosure must be made individually to obtain clear acknowledgement of each disclosure. The AGS agent must be in a location where he or she cannot hear the customer while the TPV is conducted. The AGS shall not approach the customer after the TPV for a period of 24 hours unless contacted by the customer.

Any telemarketing solicitations that lead to a telephone enrollment must be recorded and retained for a minimum of two years. All telemarketing calls that do not lead to a telephone enrollment, but last at least two minutes, shall be recorded and retained for a minimum of six months. Recordings of a customer who has completed a telephone enrollment shall also be provided to that customer upon request.

For telemarketing that leads to a completed telephone enrollment, a third party verification must be used to authorize a customer's enrollment. The third party verification must require the customer to verbally acknowledge that he or she understands the disclosures required by the rules. Each item must be disclosed to the customer individually to obtain clear acknowledgment of each disclosure. An AGS sales agent initiating a 3-way conference call or a call through an automated verification system shall drop off the call and shall not participate in or listen to the call, but shall not cause the call to be terminated once the 3-way connection has been established.

All inbound enrollment calls that lead to an enrollment shall be recorded, and the recordings shall be retained for a minimum of two years. An inbound enrollment call that does not lead to an enrollment but lasts at least two minutes shall be recorded and retained for a minimum of six months.

In solicitations and disclosures, if an AGS represents that a customer will realize savings under any conditions or circumstances, the AGS shall provide a written statement, in plain language, describing the conditions or circumstances that must occur in order for the savings to be realized. The statement shall disclose the entity or entities and price or prices to which the AGS is comparing its own offer for purposes of assessing or calculating savings

Disclosures shall include a statement that the customer may contact the AGS or the Gas Utility to rescind the contract and the pending enrollment within 10 business days after the Gas Utility processes the enrollment request

Disclosures shall include a statement that the AGS is an independent seller of natural gas certified by the Illinois Commerce Commission and that the AGS is not representing, endorsed by, or acting on behalf of, a utility or a utility program, a consumer group or consumer group program, or a governmental body or program of a governmental body

For a variable rate product, the uniform disclosure statement (UDS) shall state that the current rate per therm price and a one-year price history, or history for the life of the product, if it has been offered less than one year, are available on the AGS’ website and at a toll-free number. An AGS shall not rename a product in order to avoid disclosure of price history.

For in-person sales, in the absence of local ordinances or regulations, AGSs and their sales agents shall not conduct in-person solicitations at residential dwellings before 9:00 a.m. and after 7:00 p.m. or civil dusk, whichever is earlier.

Upon a customer's request, the AGS shall not conduct any further marketing to that customer until the customer requests to receive further marketing. The AGS shall notify its agents of the customer’s request not to be solicited.

Each AGS shall perform criminal background checks on all employees and agents engaged in in-person solicitation. The AGS shall maintain a record confirming that a criminal background check has been performed on its employees or agents in accordance with this Section.

Each AGS shall make available on its website, or through the customer's online account, the variable rates currently in effect for residential customers. Additionally, when a customer’s rates change during the term of an agreement or contract, the AGS shall make the new rates available to that customer on its website, or through the customer’s online account, at least 30 days prior to the effective date of any rate change. The AGS must disclose the period to which the rates will apply. In addition, each AGS shall provide the rate information to its residential variable rate customers who request it through the AGS’ toll-free number. The customer's contract shall contain the website address and toll-free phone number through which a customer may obtain variable rate information in accordance with this Section.

If the AGS charges for residential variable rate customers are included on the utility’s bill, the AGS shall use the allotted space on the utility’s bill to disclose the customer's variable rate that is in effect at the time the bill is received by the customer and the percentage change, if any, of the variable rate from one monthly billing period to the next. When there is insufficient available allotted space on the utility bill for the AGS to make these disclosures each month, the AGS shall ensure that no residential variable rate customer receives consecutive monthly bills that fail to disclose upcoming variable rates in the bill's message section. If the AGS bills its residential variable rate customers directly, the AGS shall ensure that those customers' bills always contain the variable rate information required by rule. If the natural Gas Utility's implementation of Section 19-135 ('single billing') prevents an AGS from complying with this provision, the AGS shall include a bill message that contains the toll-free phone number and/or website address where the variable rate information can be obtained by the customer. The requirements of this subsection to provide notifications in customer bills do not apply if the AGS sends the notifications required by this subsection via a written communication sent at the same time as the customer's monthly bill.

If a residential variable rate customer's rate increases by more than 20% from one monthly billing period to the next, in addition to any notice required as described above, the AGS shall send a separate written notice to the customer, informing the customer of the upcoming rate change.

The variable rate notice requirements described above shall not apply to contracts that disclose the formula that will allow a customer to determine the variable rate based on a publicly available, whether for free or a fee, index or benchmark. In such case, the AGS shall provide sufficient information to the customer to perform such calculation (including any adders), and the AGS shall provide clear and unambiguous information on the index or benchmark and any risks represented by the potential volatility (price spikes) involved in the rate calculations

An AGS that currently (i) enrolls residential customers on a variable rate product for three consecutive months in any Gas Utility's service territory, including products that automatically switch or convert to a variable rate during the term of the contract, and/or (ii) automatically renews customers on a variable rate product for three consecutive months in any Gas Utility’s service territory, must, for each such variable rate product, publicly disclose on the AGS’ website and make available through a toll-free number, the one-year variable rate price history, or history for the life of the product if it has been offered less than one year. An AGS shall not rename a product in order to avoid disclosure of price history.

No AGS sales agent shall make a record of a customer's Gas Utility account number unless: the customer has agreed to enroll with the AGS; the AGS has secured consent from the customer to obtain customer-specific information for the purposes of pricing a product through a verifiable customer consent or another Commission-approved method; or the 'record' is a recording required by Section 19-115(c)(4) of the Act and Sections 512.130 and 512.140 of the rules (relating to telemarketing)

An AGS must retain, for a minimum of two years or for the length of the contract, whichever is longer, verifiable proof of authorization to change suppliers for each customer. Upon request by the Commission or Commission Staff, the AGS shall provide authorization records within seven business days.

An AGS shall not utilize the logo of a Public Utility in any manner. An AGS shall not utilize the name, or any other identifying insignia, graphics or wording that has been used at any time to represent a Public Utility company or its services, to identify, label or define any of its natural gas power and energy service offers.

The rules also provide for requirements governing supplier agent training and complaint handling, as well as renewal notice timing

Docket No. 17-0857

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