Bill Banning Door-to-Door Retail Electric Sales Offered As Alternative To Prohibition On Residential Electric Choice

January 30, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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A bill prohibiting residential door-to-door electricity sales in Maine has been offered as an alternative to a complete end of retail electric choice for residential customers

Maine LD 1853 would provide that electric suppliers serving residential customers, "May not solicit residential consumers using door-to-door sales practices."

Any violation of such door-to-door prohibition would require that the PUC suspend the competitive electricity provider's license to operate for a period of no less than one year and the competitive electricity provider shall refund to all residential consumers contracted with that competitive electricity provider any amount paid for retail energy service in excess of the price of standard offer service since the competitive electricity provider's commencement of door-to-door sales practices.

At a recent hearing for LD 1853, a witness for the Maine Office of the Public Advocate testified in support of the bill, which OPA said that it offered as an "alternative" to a complete prohibition on retail electric choice for residential customers (which OPA also supports), and also as a measure that could be implemented immediately during the implementation of LD 1917 (which would not require the elimination of residential choice until January 1, 2022)

OPA in its testimony said that, "Marketers frequently target vulnerable populations, including low income and elderly customers, making false representations."

OPA said that these representations from one supplier have included:

• Posing as representatives of Central Maine Power Company and claiming that rates are about to increase or are fluctuating and offering to lower or freeze customers' rates.

• Claiming to be auditors working to correct CMP high bill problems, seeking to lower or freeze customers' rates pending the resolution of the billing investigation.

• Claiming to be checking customer meters to ensure being billed properly in relation to CMP high bill problems.

• Claiming that CMP's rates are about to increase and representing that customers can protect themselves by locking into a reduced rate with the supplier.

"These practices appear to be exacerbated by some suppliers' use of contractors to perform the marketing who are compensated, at least in part, through commissions," OPA said

AARP and Barbara Alexander also testified in support of the bill.

Alexander testified that, "the actual conduct of sales agents at the door is not easily regulated. Unlike, telemarketing sales, there is no recording of what the sales agent said to induce the enrollment. In my experience, the basic training that suppliers are required to conduct for third party sales agents is typically useless."

At the hearing, a witness for NRG testified in opposition to the bill, and recounted the various current regulations applicable to retail suppliers and consumer protection that are already in place

A memo distributed at the request of NRG which was provided at a recent public hearing stated, "LD 1853 may be an unconstitutional restriction on commercial speech under the First Amendment because it seeks to prohibit CEPs [competitive electric providers] from using door-to-door marketing when less restrictive measures could be used to advance the government's interest."

"Before the Legislature attempts to pass a bill like LD l853 into law to prohibit CEPs from door-to-door marketing, the Legislature needs to consider that LD 1853 may violate the First Amendment and should also consider less restrictive solutions that could advance the government's interest. For example, if a CEP engages in misleading or fraudulent conduct during door-to-door solicitations the PUC could (1) revoke that CEPs permission to perform door-to-door marketing, (2) revoke or suspend that CEPs right to do business, or (3) assess monetary fines. It appears that the PUC is already authorized to implement each of these remedies. To the extent, that the PUC does not have this authority, then these are types of less restrictive solutions that Legislature could consider as alternatives to LD 1853," the memo distributed at the request of NRG said

LD 1853 remains before the Committee on Energy, Utilities and Technology. A work session is scheduled for February 6

LD 1917 - Prohibition On Residential Choice

LD 1917 would completely prohibit residential electric choice, and place all residential customers on Standard Offer service

The bill provides, "Beginning no later than January 1, 2022, all residential consumers must be served by standard-offer service. Beginning no later than December 1, 2020, competitive electricity providers are prohibited from adding new residential consumers, including any former customers who are not current customers as of December 1, 2020. For purposes of this subsection, 'residential consumer' means a consumer defined as residential under the terms and conditions of the consumer's transmission and distribution utility."

Providing testimony neither for nor against the residential choice prohibition, the PUC offered testimony citing a prior study concerning rate under electric choice

"In the report, the Commission found that customers that received electricity supply service from a CEP over the three-year period 2014 through 2016 paid approximately $77.7 million more than what they would have paid for standard offer service. On average, customers served by CEPs paid approximately 56% more than they would have paid for standard offer service in 2016; 60% more in 2015; and 12% more in 2014. On a dollar per customer basis, on average, customers served by CEPs paid approximately $245 more than they would have paid for standard offer service in 2016; $278 more in 2015; and $67 more in 2014," the PUC said

"The differences in costs between standard offer and CEP service described above is obviously substantial and calls into question whether retail choice offers benefits to residential customers. Alternatively, service on a CEP may present desirable attributes and options for customers, for example, choices about length of service term or a more preferable mix of supply resources. Thus, LD 1917 raises an important issue of public policy to be determined by the Legislature," the PUC said

The Office of the Public Advocate testified in support of LD 1917

"The OPA has offered LD 1917, proposing the elimination of retail marketing of electric supply to residential customers, to end the failed experiment of retail competition in this market segment," the OPA testified

Discussing rates in the market, OPA testified that, "The suppliers rely on a 'set it and forget it' mentality among customers, that allows the suppliers to jack up prices after guarantees run out."

OPA further testified that, "LD 1917 includes provisions to improve and enhance the standard offer selection process to obtain more competitive and lower prices. The elimination of retail competition in the residential sector may lower standard offer prices, by reducing the risk of serving as the standard offer supplier, for instance those risks related to variations in the number of customers and size of the load served."

NRG testified in opposition to LD 1917

NRG cited its various value-add products and services offered in Texas and said, "However, we are seeing retail electricity markets in the East under increasing threat due to the limited way choice has been made available to customers."

"In contrast, a market structure like ERCOT allows -- no encourages -- NRG to meet changing customer needs as discussed above. This market approach should be available for all consumers," NRG testified

"NRG believes that policymakers should take a lesson from the Texas market model and adopt a fully restructured competitive market that would allow competition in the provision of real-time personal energy usage management tools, energy home infrastructure financing, renewable content, and innovative bill structures (such as fixed total bills and retail demand response products)," NRG said

The bill would also require the PUC to consider contract term lengths of up to 10 years for standard offer service, and fixed and variable pricing proposals.

LD 1917 remains before the Committee on Energy, Utilities and Technology. A work session is scheduled for February 6

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