Retail Suppliers Propose Study Of Effectiveness Of Renewal Notice Mechanisms, Timing
Uniform Contract Summary, Marketing Script Language Proposed
Consumer Advocates Propose Requirements For Supplier Oversight Of Third-Party Agents
July 31, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
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Various stakeholder groups have filed proposals in the Massachusetts DPU's retail electric marketing investigation (19-07) addressing renewal notices, contract summaries, agent oversight, and other issues
Testing Renewal Notice Mechanisms
A stakeholder group of retail suppliers filed with the Massachusetts DPU a proposal to test variations on the transmittal and timing of contract renewal notices for contracts that transition from a fixed price to a variable rate, with the goal of informing the Department’s decision-making regarding the formal adoption of such a requirement by rule or practice
The group proposes to test the: (1) method for notice delivery, and (2) timing of notice delivery
To test the method of notice delivery, the group proposes:
Method For Notice Delivery
• One or more suppliers would volunteer to participate in the test. Participation would require agreeing to test at least two methods of notice delivery and to share the results of the test with DPU staff on a confidential basis.
• The methods of notice delivery for suppliers to choose among would be:
1. US Mail
• Where a participating customer does not currently send an end-of-term notice, the supplier’s customers who are not part of the test would act as the control group, with the percentage of customers in that group making an affirmative choice at the end of their term forming the baseline against which the performance of other methods is measured.
• The notices sent by the different methods would be the same, to the extent possible. The group understands that as one moves from US Mail to email to text, the length of the text a recipient will tolerate gets shorter. A subgroup of stakeholders in the working group process should be tasked with drafting standardized versions of the US Mail notice that could be used for email and text.
• Participating suppliers would send the different notices to subgroups of their customers for a period of time that would allow a meaningfully large group of customers to receive each type of notice to be tested.
• Participating suppliers would gather information on two aspects of their customers’ response to the different notices:
1. Number of customers making an affirmative choice for some period of time following receipt of the notice. (This information would likely be captured using the reporting template circulated by Department Staff before the last working group meeting.) The actions tracked would be affirmative renewal with current supplier, switch to a different supplier, return to basic service, and no action.
2. Number of customers affirmatively acknowledging receipt of the notice. All of the form of notice under consideration here can be acknowledged in some manner. Acknowledgement is clearly easier with email and text and probably more closely tracks the number of customers who actually read a notice than would be the case with a written notice, the group said. Where acknowledgement is relatively easy to send and receive, as is the case with email and text, the percentage of customers acknowledging receipt would be a helpful data point in trying to understand the full picture of customer behavior. For example, one open question in this area is how many customers who reach the end of their fixed term and take no action are, in fact, making an affirmative decision to take no action, the group said. Identifying how many customers acknowledge receipt of a notice and yet take no action would help illuminate the behavior of this group, the supplier group said.
• Department Staff and the stakeholders participating in the working group would reach some agreement about the manner in which the data collected by Staff would be analyzed and made available to the group. Confidentiality of customer information would be paramount, as would be the protection of aspects of the data collected that the participating supplier would consider to be proprietary. Participating suppliers would be encouraged to design their tests in a way that would be least likely to require the results to be kept from the rest of the working group.
• Using the available data, the working group would attempt to reach a recommendation regarding a preference for the method of notice that would be either required or recommended for use by suppliers generally. This group’s preliminary recommendation, however, is that suppliers not be required to use a method that they are currently unable to implement from a technical perspective.
Concerning timing of notice delivery, the group proposes that one or more participating supplier would simply send half of the notices 60 days before the end of the fixed price term and the other half 30 days before the end of the fixed price term. The report from that supplier to the Department would note, for each customer, when the notice was sent. This would allow Department Staff and other stakeholders to observe whether the difference in timing made any material difference in the behavior of the customers involved in the test, the group said.
Separately, a supplier working group proposed that any competitive supplier seeking to automatically renew or convert a residential customer from a fixed price to a different price or pricing structure provide the customer with notice of the expiration, and proposed items to be included in the notice.
The proposed items to be included in the renewal notice include those typically required in other states, but of note include:
• The date that the current price for electricity supply service is expiring
• Information regarding the price and duration of the contract as renewed that will apply if the customer takes no action
• Statement that additional information about competitive supply, published by the Commonwealth of Massachusetts, is available at EnergySwitchMA [web address listed]
The group proposed that such notification shall be provided to the customer no earlier than 60 days and no later than 30 days prior the initial contract’s expiration date. Suppliers may send such notice by US mail or electronically, if the customer has agreed to receive electronic communications, the group proposed
Supplier Marketing / Agent Scripts
A supplier working group filed a proposal concerning scripts for marketing
For telemarketing, the group proposes at the start of the call, "or at latest within the first minute of the call (as permitted by State telemarketing laws," the following information should be conveyed:
• 'My name is [first name only of the telemarketing agent],
• 'I am calling on behalf of [name of electric supplier], a licensed electric supplier', and
• '[Supplier name] is not affiliated with the local electric utility'.
The group proposes that the telemarketing closing script include the language that, "If you change your mind, you will have three days after receipt of the written materials to cancel the contract without any fees or penalties. Cancellation details will be in the written materials."
The working group proposes that the door-to-door scripts be materially the same as the telemarketing scripts, except modified to change references from 'call' to terms applicable to an in-person sale with a follow up TPV call. The above telemarketing scripts meet both of the requirements established in the May 4, 2018 DPU 14-140-G order, and both include a short and plain statement of both introductory and closing remarks common to a reasonable sale. As an alternative, the working group would be amenable to including some or all of the script elements in a leave behind document that the customers could review after the sale.
Retail Supplier Contract Summary
A supplier working group proposed language and format for a standard contract summary.
The proposal follows typical requirements and formats used in other states
Of note, the group proposes the following fields and requirements for the contract summary:
Price Stricture: Fixed or variable. If variable, based on what? If variable, how often is the rate expected to vary? If variable, give any applicable ranges/ceilings. If no ranges/ceilings, a plain language statement indicating this fact. If variable, describe when the customer will receive notification of price changes in relation to time of month, final monthly meter read, billing cycle or when the price takes effect.
Generation/Supply Price: $/kWh or ¢/kWh. If variable rate, the first billing cycle’s rate. Any introductory rate with length of term.
Statement Regarding Savings: Plain language that the supply price may not always provide savings to the customer or if savings are guaranteed, under which circumstances
Contract Start Date: Plain language regarding start of Competitive Supplier service (meter reads/billing cycles/etc.)
Cancellation/Early Termination Fees: Yes or no. If yes, describe the amount of the fee and how to avoid that fee, if possible.
Renewal Terms: Treatment of customer at end of contract or term. Timing of notices. No cancellation/early termination fees. In plain language
Rate Web Site Information: Web address of EnergySwitchMA site
The consumer advocate stakeholders, specifically the Massachusetts Attorney General’s Office ('AGO') and National Consumer Law Center ('NCLC') submitted to the DPU a straw proposal for retail supplier oversight of third-party marketers
As has already been proposed by DPU Staff in the proceeding (see EnergyChoiceMatters.com's exclusive story here), the consumer advocates proposed that each interaction between a salesperson and a potential customer or a customer should be recorded, in a manner that complies with the requirements of federal and state law including the Massachusetts wiretap law, G.L. c. 272, § 99.
"In-person (door-to-door) and over the phone (telemarketing) interactions should be recorded. Each potential customer or customer should be asked for permission to record the interaction; if the customer or potential customer refuses, the salesperson must end the conversation but may offer written marketing materials to the customer. The customer or potential customer must be at least eighteen years old, otherwise the salesperson must end the conversation and leave the premises," the consumer advocates said
"The supplier should be required to maintain all recordings for a period of five years, and to identify each recording with the date, time and address or account number of the customer or potential customer," the consumer advocates said
The consumer advocates also said that third-party verification call recordings should be retained by suppliers for a period of five years.
Furthermore, the consumer advocates said that the DPU should clarify that the term "independent third party" (under TPVs) means: (1) a vendor whose compensation is not tied in any way to the success, or lack thereof, of customer enrollments or retentions and (2) a vendor who is not affiliated with the supplier or any third-party marketer who markets, or has marketed, on behalf of the supplier.
The consumer advocates propose that if a supplier discovers that deceptive, misleading or false information was provided to a customer or prospective customer in a marketing phone call or a door-to-door interaction, or that the contract was not signed by the customer of record, the supplier should terminate its agreement with the vendor or agent, void and refund any residential energy sales contracts that originated as a result, and report the incidents to the Department and AGO within five business days.
Similarly, the consumer advocates propose that if the supplier learns that any vendor or agent is using 'spoofed' phone numbers which identify a party other than the supplier or vendor, the supplier must immediately terminate the business relationship with the vendor and report the spoofing incidents to the Department, AGO, and the Massachusetts Department of Telecommunications and Cable or other appropriate agency.
"Consumers continue to report unwanted competitive energy supply telemarketing calls, including calls from false or 'spoofed' phone numbers. It is common for Massachusetts consumers to receive calls that appear to be from a distribution utility’s customer service phone number, but are actually spoofed calls by energy supply marketers. Suppliers should act as soon as possible to exercise stricter oversight of the practices of their vendors or sales agents who use telemarketing. All telemarketing and sales calls made by suppliers and their agents must be in compliance with all applicable state and federal laws, include the Massachusetts Telemarketing Solicitation law at G.L. c. 159C," the consumer advocates said
The consumer advocates proposed the following modifications to the current Notice of Door-to-Door Marketing that suppliers are required to file with the Department, including to require the notices to be filed with the AGO, and for earlier filing of the notices. Specifically, the consumer advocates proposed the following changes to the Door-to-Door Marketing Notices:
• In part 8, in addition to the City/Town Name, also provide the zip code of the area where the marketing campaign will be conducted.
• In 'Notice of Door-to-Door Marketing Filing Requirements,' part A, add that the notice shall be emailed to a representative of the Office of the Attorney General in addition to the Director of the Department’s Consumer Division.
• In 'Notice of Door-to-Door Marketing Filing Requirements,' part B, change the amount of notice that must be provided from '5:00pm the day before the start of a door-to-door marketing campaign...' to 'at least two business days before the start of a door-to-door marketing campaign...'
The consumer advocates proposed that supplier licensing proceedings be public, with, among other information, suppliers required to file with the DPU the following documents:
• All third-party vendor and/or marketer contracts, including any and all sub-contractors who market on the supplier’s behalf. The obligation to provide this information shall be on a rolling basis, but no later than (30) days following the effective date of the contract or the date the contract is fully executed, whichever is earlier.
• Copies of the supplier’s marketing materials (or the vendor’s marketing materials, as applicable), including, but not limited to, mailings; online postings/offers; telemarketing scripts; door-to-door marketing scripts; pamphlets/handouts; contract summaries; contract documents; and welcome letters. The supplier should update the marketing materials on a rolling basis, as they become available, but no less than quarterly.
"As with other parties who appear in front of the Department, any material that the supplier believes to be confidential should be submitted in redacted form and accompanied by a motion for confidential treatment. Moreover, the AGO should receive an unredacted copy of each document and correspondence submitted by the supplier to the Department," the consumer advocates said
The agent oversight proposal will be discussed at the next meeting of the Customer Protection Stakeholder Working Group, on Tuesday, August 6
A further August 8 work group meeting will address the various other straw proposals