Staff Of State Regulator Propose "Product Limitation" For Automatic Renewals -- Cap On Monthly Renewal Prices

Staff: "Counter-Intuitive" That Customer Who Signed Up For Fixed Rate Would Expect Their Auto-Renewal Would Be Variable

Staff Propose Entire Sales Conversation Be Recorded (Not Just TPV)

Staff Propose GPS Requirement For Door-to-Door Agents

Staff Propose That Municipal Aggregation Rates Be Posted On State's Shopping Website, At Top Of Results

June 14, 2019

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

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During a recent technical session concerning the Massachusetts DPU's current investigation into the retail electric market, DPU Staff made several proposals regarding auto-renewals and marketing requirements

Auto-Renewals

In a presentation outlining Staff's "proposed principles," Staff said that, "Automatic renewal should serve as a mechanism to provide suppliers with an opportunity to enroll customers to a new fixed-price product (should be short-term in nature)."

Staff said that, "It is reasonable to assume that customers are unaware that they need to opt-out at the end of their contract term to avoid the automatic renewal provision."

"In addition, with respect to contracts that renew to monthly-price products, it is counter-intuitive that a customer that affirmatively selected a fixed-price product would now seek to receive one for which the price changes monthly on an on-going basis," Staff said

Staff proposed addressing three areas regarding automatic renewals:

• Notification

• Product limitation

• Supplier reporting

With respect to notification, Staff said, "For renewal to monthly-price product, customers should receive notification of upcoming monthly prices (in time for them to opt-out)."

"Staff feels strongly that notification of monthly price changes is an essential customer protection tool," Staff said

"[I]t is counter-intuitive that a customer would need to 'navigate'” a supplier’s website to identify the monthly price they will pay," Staff said

"Staff is not swayed by supplier comments that sending monthly price notifications to customers will create confusion," Staff said

Regarding product limitations, Staff said that while Staff's proposed notification requirements are necessary, "they do not provide sufficient protection to customers."

"Staff considers it reasonable and appropriate to establish limits on the products/prices to which a fixed-price contract can automatically renew," Staff said, as Staff proposed the following product limitations:

• Suppliers should set their prices equal to, or less than, a specified market price (e.g., monthly prices could be set at the applicable monthly basic service price) -- to protect consumers from unwittingly paying 'above-market' prices

• Suppliers should limit the automatic renewal to a specified period of time (e.g., three billing periods)

Staff further said that all suppliers should report on the number and percent of customers that have/have not opted-out of automatic renewal (both to fixed-price and monthly-price products). "This information will be helpful in evaluating effectiveness of notifications," Staff said

Marketing Requirements

For door-to-door marketing, Staff proposed that suppliers (and their third-party marketing vendors) should be required to provide a written document that clearly summarizes product information: (i) price, (ii) term, (iii) early termination fee, (iv) automatic renewal, (v) renewable energy content (electric only), and (vi) other products/services

The language and format should be uniform, Staff said, to be developed by a working group

Staff proposed that the requirement regarding written disclosure of product information should apply equally to direct mail marketing and kiosks

Furthermore, Staff proposed that telemarketers should disclose same product information as door-to-door marketers. A working group is to develop a "disclosure of product information" script for telemarketers

Staff proposed that for door-to-door marketing, "all 'conversations' should be recorded, with permission of customer (not just TPV)"

Similarly, for telesales, Staff proposed that, "All calls should be recorded in their entirety (with permission of customer), not just TPV."

Notably, Staff proposed that all door-to-door marketers should have "GPS capability" to allow for ready identification in case of allegation of misbehavior

With regard to the provision of information concerning the Energy Switch MA energy shopping website and rate board, Staff said that, "Staff recognizes validity of supplier comments, however, written product disclosure form (discussed above) appears to be a reasonable vehicle way to create greater awareness of the website through a Department message."

Staff proposed language for supplier marketing materials stating that, "The Massachusetts Department of Public Utilities recommends that consumers visit the Energy Switch website to view the broad range of available electric supply products. You can visit the website at ..."

Energy Switch MA Website Changes

Staff proposed that municipal aggregation offers be included in the list of rates posted on the Energy Switch MA shopping website, only for those residents of the applicable municipality

Notably, on the initial "Start Shopping" page, Staff proposed that municipal aggregation product(s) will be displayed directly below basic service in the results list. The basic service rate is the top rate displayed in the rates.

Working Groups, Further Meeting

Two working groups were developed

One working group will address "Customer Awareness/Protection" initiatives: (1) automatic renewal; (2) public posting of customer complaint data; (3) marketing standards of conduct; (4) supplier enrollment reports; and (5) Energy Switch MA awareness.

A second working group will address improvements to the Energy Switch website, including but not limited to the display of municipal aggregation products.

The Department intends to convene the initial meeting of the working groups during the week of June 17th.

Department expects to convene a second technical session during summer to provide stakeholders with updates from working groups and to address "Tier Two" issues in the proceeding

As exclusively reported by EnergyChoiceMatters.com, Tier Two issues include:

• "Do not switch" mechanism

• Third Party Verification (TPV)

• Enrollments - Timing

• Enrollments - Account #

• Customer information

• General education

Docket D.P.U. 19-07

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