Regulator Proposes New License Renewal Process, Would Suspend Supplier's License For Late Filings

Regulator Seeks Comment On Staff Marketing Rules

Staff Proposes That Suppliers Must Record Entirety Of Telemarketing Call

Comments Sought On Changing TPV Process To Interactive Discussion, Requiring Customer To Recite Price & Other Info

Proposal Would Bar Use Of Terms 'Action Requested', 'Urgent Notice About Your Utility Bill/Account' In Marketing

Staff Requests Utilities Develop 'Enroll With Your Wallet' Process

February 6, 2020

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Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Massachusetts DPU has sought formal comments on a variety of Department staff proposals concerning retail energy supplier marketing, enrollment, and licensing rules, in its ongoing retail market investigation in Docket 19-07

Aside from a few discrete changes, nearly all of the proposals were previously reported and more comprehensively discussed by EnergyChoiceMatters.com in several prior stories, including here and here. The discussions below rely on summaries from the notice seeking comment, but interested stakeholders are encouraged to read our prior stories for additional context and details

Issues are designated Tier I issues (near term) and Tier II

However, one new issue first proposed in a hearing officer memorandum (which sought the stakeholder comments) is a new license renewal process, with the suspension of licenses for failing to meet a deadline

Suspension Of License For Late Renewal Filing

Department staff proposes that, if a competitive supplier fails to submit a renewal license application within thirty days of the renewal due date, the Department would suspend its ability to sign up new customers (the competitive suppliers would be allowed to serve its existing customers).

If the competitive supplier submits its renewal license application within 90 days from the renewal due date, the Department would lift the aforementioned suspension. If the competitive supplier fails to submit the renewal application within 90 days, the Department may take further licensure action, pursuant to the procedures set forth in D.P.U. 16-156-A.

For electricity brokers or gas retail agents failing to submit a renewal application within thirty days of the renewal due date, the Department would suspend its license, and would notify competitive suppliers that they can no longer do business with that electricity broker or gas agent until the DPU notifies them otherwise. If the suspended electricity broker or gas retail agent were to submit the renewal license application within 90 days from the renewal due date, the Department would lift the license suspension, and would so notify competitive suppliers. If the electricity broker or gas retail agent fails to submit the renewal application within 90 days, the Department may take further licensure action, pursuant to the procedures set forth in Order Establishing Final Interim Guidelines for Competitive Supply Investigations and Proceedings, D.P.U. 16-156-A (2017).

Tier II Issues

Third-Party Verifications

In D.P.U. 19-07, at 11-12, the Department stated that it seeks to expand the role of the third-party verification ('TPV') process to include confirmation that competitive suppliers have complied with the proposed requirements related to the disclosure of product information. The Department stated that expanding the TPV process in this manner would protect customers from purchasing supply products about which they were insufficiently informed.

As exclusively reported by EnergyChoiceMatters.com, during the November 1, 2019 technical session, Department staff presented a proposal that would require customers, during the TPV process, to affirmatively state the product information included in the contract summary form in order for a competitive supplier to proceed with enrolling the customers.

In addition, to protect customers that are enrolled through telemarketing against 'spoofing,' customers would be required to identify the telephone number and name that appears on the customer’s telephone. Staff seeks comments from stakeholders on the benefits that such a process would provide to customers (i.e., the extent to which the process would protect customers from purchasing supply products about which they were insufficiently informed), and the difficulties that competitive suppliers may have in implementing such a process.

Product Limitations - Automatic Renewal

During the November 1, 2019 technical session, Department staff presented a proposal for product limitations that would apply statewide to customers whose contracts have been automatically renewed.

As previously reported by EnergyChoiceMatters.com, staff proposed that, for auto renewals, renewal prices would not exceed the applicable monthly basic service price (or another specified market price), and that the term of the renewal would be limited to three billing months (or another specified period of time)

Staff does not seek comments on its proposal via the instant hearing officer memorandum. "However, it may be appropriate to discuss such limitations individually with competitive suppliers based on the information provided through the automatic renewal reports proposed [below]," the hearing officer memorandum stated

Product Limitations - Low-Income Customers

During the November 1, 2019 technical session, Department staff presented a proposal for product limitations that would apply statewide to low-income customers

As only reported by EnergyChoiceMatters.com staff proposed that the price that competitive retail electric suppliers charge low-income customers, "not exceed the applicable basic service price."

Staff does not seek comments on its proposal in an instant hearing officer memorandum. "However, it may be appropriate to discuss such limitations individually with competitive suppliers based on the information provided through the competitive supplier enrollment renewal reports proposed [below]," the hearing officer memorandum states

Customer Account Number, Enroll By Wallet

In D.P.U. 19-07, at 12-14, the Department stated that it seeks to address barriers that detract from the value that the competitive retail supply market can provide to customers. The Department identified a potential barrier to be the requirement that competitive suppliers provide a customer’s distribution company account number, information that customers may not have readily available, in order to successfully enroll the customer. The Department sought stakeholder input on the reasonableness and appropriateness of approaches that would allow competitive suppliers to enroll customers when they may not have ready access to their account number.

During the November 1, 2019 technical session, the Competitive Supplier Group identified other states in which processes have been developed that enable competitive suppliers to enroll customers with the information typically available from a customer’s wallet. These processes allow competitive suppliers to utilize this information to enroll customers either through distribution company portals and/or through customer information lists.

As the next step in examining this issue, Department staff requests that the distribution companies work jointly to develop a process by which an 'enroll with your wallet' approach could be most effectively and efficiently implemented in Massachusetts, while considering the distribution companies’ existing customer information systems and electronic business transaction infrastructure.

Tier I Issues

Automatic Renewal - Supplier Reports

Department staff proposes to require that competitive suppliers report periodically on the number of residential customers they serve through automatic renewal provisions that are included in the customers’ contracts.

Each competitive supplier would report both on the number of customers that were automatically renewed during the specified period, as well as the total number customers that the competitive supplier was serving through an automatic renewal provision on the last day of the specified period. Competitive suppliers would also report on the method of delivery of the notification during the specified period.

Staff proposes that competitive suppliers initially report this information on a quarterly basis, with the expectation that staff would revisit the frequency of such reporting at a later date.

Automatic Renewal - Reporting

Department staff proposes to require that competitive suppliers report periodically on the number of residential customers they serve through automatic renewal provisions that are included in the customers’ contracts.

Each competitive supplier would report both on the number of customers that were automatically renewed during the specified period, as well as the total number customers that the competitive supplier was serving through an automatic renewal provision on the last day of the specified period.

Competitive suppliers would also report on the method of delivery of the notification during the specified period

Staff proposes that competitive suppliers initially report this information on a quarterly basis, with the expectation that staff would revisit the frequency of such reporting at a later date.

Automatic Renewal - Customer Notification

Consistent with the Competitive Supplier Group Revised Proposal, Department staff proposes to require competitive suppliers to provide customers with automatic renewal notifications between 30 and 60 days prior to the expiration of contracts that have such provisions. Department staff’s proposed language and format for the notifications is shown in Attachment 3, 'Department Staff Proposed Automatic Renewal Notification Template' on page 28 in the request for comments (link)

The Department would require all competitive suppliers to use staff’s proposed language in the upper portion of their notifications, while being allowed to use the lower portion of the notifications to present competitive supplier-specific branding, language, and style.

Recording of Marketing Interactions

Staff proposes that competitive suppliers be required to record telemarketing calls, as they do for their third-party verification calls. "Just as the recording of third-party verification calls serves as a tool in ensuring that customers have given their affirmative authorization for the applicable transaction, the recording of the underlying marketing call would serve as a tool in identifying any misleading or deceptive marketing. Staff sees no reason why the recording of marketing calls would be more unreasonable or more burdensome than the recording of third-party verification calls," staff said

"In considering the issue of the recording of marketing interactions, Department staff distinguishes between telemarketing and door-to-door marketing interactions," staff said

"At this time, staff does not propose to require competitive suppliers to record their door-to-door marketing interactions. While staff recognizes that the recording of these interactions can provide the same value as the recording of telemarketing calls, we are swayed by the comments of the Competitive Supplier Group that such a requirement may place an unreasonable burden on competitive suppliers. Staff notes that the proposed requirements put forth in this Hearing Officer Memorandum related to the disclosure of product information [] and an enhanced third-party verification process [] are intended to ensure that marketing vendors provide customers with accurate and useful information about the supply products being offered. This is particularly true for door-to-door marketing interactions during which vendors would be required to disclose product information in written form. As such, Staff considers it reasonable to defer consideration of mandatory recording of door-to-door marketing interactions until the issues related to these other proposed initiatives are resolved," staff said

Marketing Materials

Department staff proposes that competitive suppliers be required to submit updated versions of their direct mail marketing materials (including the envelope) for Department review prior to the use of such materials. Consistent with the marketing scripts and disclosure of product information requirements set herein, such materials should: (1) display the competitive supplier name and logo at the top of the document (thus clearly identifying the competitive supplier as the sender); (2) clearly state that the competitive supplier is not affiliated with the customer’s utility; (3) clearly communicate that the notice is an advertisement for the sale of a product; (4) disclose pertinent information about the product(s) being marketed; and (5) not use false or misleading headers or subject lines, such as 'action requested' or 'urgent notification about your utility bill/account.' The Department would respond to the competitive supplier within ten business days. If the Department does not respond within this period of time, the competitive supplier would be able to proceed with using the mailing.

"While Department staff sees value in requiring competitive suppliers to provide the Department with all up-to-date marketing material, we recognize that requiring this for all marketing channels on a rolling basis would be unwieldy for both the competitive suppliers and the Department. Staff believes that other marketing guidelines proposed in this memo will improve customer protection in this area," staff said

Identification of Third-Party Marketing Vendors -- Potential Sharing Of Information About "Problematic" Vendors

Department staff proposes to require competitive suppliers to provide the Department, on an ongoing basis, with updated lists of their third-party door-to-door and telemarketing vendors. Such lists would include information related to background checks and standards of conduct that competitive suppliers currently provide through their door-to-door notifications. Staff proposes that competitive suppliers provide this information to the Attorney General on a confidential basis. Staff seeks comments on whether competitive suppliers should provide this information to other stakeholders on a confidential basis.

Staff seeks to work with stakeholders to develop a process by which staff could pro-actively identify potentially problematic marketing vendors (see discussion based on a prior staff presentation on this issue here). The proposed reporting requirement set forth above is intended to serve as an initial step in this process

Reports - Low-Income Customers, Channels

Department staff proposes to require competitive suppliers be required to report periodically on the total number of residential customers and the number of low-income customers they enrolled during the specified period through: (1) door-to-door marketing; (2) telemarketing; and (3) other marketing channels.

In addition, competitive suppliers would report on the total number of residential and low-income customers they are serving as of the last day of the specified period. Competitive suppliers should provide this information separately for each distribution company service territory in the Commonwealth.

Staff proposes that competitive suppliers initially report this information on a quarterly basis, with the expectation that staff would revisit the frequency of such reporting at a later date.

Door-to-Door and Telemarketing Scripts

Department staff proposes to adopt the previously reported scripts included in the Competitive Supplier Group Revised Proposal (see discussion here), with the caveat that at no time during door-to-door and telemarketing interactions shall the marketing agent identify the name of a customer’s distribution company – for telemarketing, this applies equally to both the 'live' interactions and the recordings that may precede such interactions.

All door-to-door and telemarketing shall be conducted in a language that the customer can understand; otherwise, the marketing vendor would be required to terminate contact with the customer. Uniform marketing scripts, and the disclosure of product information requirements discussed herein, are important customer protection initiatives that help insure that customers are provided useful information regarding both the marketers/competitive suppliers that are offering them products and the products that are being offered, Staff said. As discussed herein, the Department seeks to develop an enhanced third-party verification process that would further protect customers from purchasing supply products about which they are insufficiently informed.

Disclosure of Product Information

Department staff has issued a proposed template and language for a contract summary form. Under the proposal, the Department would require competitive suppliers to use this template and language for all products, with the following exceptions:

(1) for products for which the price varies on a monthly basis, competitive suppliers should use language in the price and term sections that describe the applicable price structure and term of the product;

(2) for products for which the renewable content exceeds the minimum requirement, competitive suppliers may use language that describes the renewable resources that comprise the 'voluntary' component of the product;

(3) for products that include fees other than an early cancellation fee or enrollment fee, competitive suppliers should include language that describes such fees; and

(4) for products that include additional incentives or 'value-added' products and services, competitive suppliers should include language that describes such incentives.

In these instances, competitive suppliers would be required to submit their contract summary forms for Department review. The Department would respond to the competitive supplier with revisions within ten business days. If the Department does not respond within ten business days, the competitive supplier would be able to proceed with using the form.

Staff's proposed contract summary form can be found starting on page 24 here (link)

Staff proposed that, "Consistent with the Competitive Supplier Group Revised Proposal, Department staff proposes to require competitive suppliers to provide the Staff Proposed Final Contract Summary Form to customers at the point of sale. For those sales that take place in person or online, competitive suppliers would provide a written version of the Staff Proposed Final Contract Summary Form, as the first page of the contract. For sales that take place over the telephone, competitive suppliers would provide the information in the Staff Proposed Final Contract Summary Form orally, followed by a paper version as the first page of the contract sent by direct mail."

Notification of Door-to-Door Marketing

Department staff proposes that competitive suppliers be required to submit a separate door-to-door marketing notification for each day that they expect to conduct such marketing, no later than two business days prior to the applicable marketing day. The Department would require competitive suppliers to: (1) identify the municipalities where they may be marketing on the applicable day (or, as discussed below, the neighborhoods in which they may be marketing for specified municipalities); and (2) for each municipality, indicate whether (i) the supplier, as of the notification filing date, has obtained and has in its possession the required permits; (ii) the supplier, as of the filing notification date, has not obtained the required permits, but will do so and will have the required permits in its possession as of the marketing date - use of this option should be limited to municipalities that do not issue the required permits until the marketing date; or (iii) no permit is required

Staff proposes that competitive suppliers provide this information to the Attorney General on a confidential basis. Staff seeks comment on whether the Department should require competitive suppliers to provide this information to other entities on a confidential basis.

Staff proposes to limit competitive suppliers to identifying a maximum of three municipalities in each notification. This provision is intended to strike an appropriate balance between ensuring that the notifications serve their intended purpose of identifying where competitive suppliers will be marketing on a particular day, and providing flexibility for competitive suppliers/vendors to respond to changing conditions, Staff said. Staff seeks comment on the appropriateness and reasonable of such a limitation

For specified large municipalities, staff proposes to require competitive suppliers to identify the neighborhoods within the municipality where they expect to be marketing. Each neighborhood would count toward the three-municipality limitation discussed above. Aside from Boston, Staff seeks input from stakeholders on other municipalities for which competitive suppliers would be required to identify specific neighborhoods, and the neighborhoods that should be identified within each municipality

Energy Switch Website - Listing Of Muni Aggregation Rates

Department staff proposes that, except as indicated below, the Website display information on municipal aggregation products in the same manner that it displays information on other competitive supply products. Therefore, the Department proposes:

(1) the listing of municipal aggregation products would be voluntary;

(2) the municipality would input information about its products and would be responsible for ensuring the accuracy of that information;

(3) the Website would only display municipal aggregation products to those customers for whom the products are available (based on the zip code information provided by Website users and the municipal aggregators); and

(4) the Website would display the name and logo of the municipal aggregator.

Staff’s proposed exceptions to the rules that govern the operations of the Website are related to: (1) the order in which the Website lists municipal aggregation products; (2) contract terms; and (3) renewable energy content.

Energy Switch Website - Product Order

Currently, the Website always lists basic service as the top product, followed by competitive supply products (initially sorted from lowest to highest estimated monthly cost). Staff proposes that the Website always list a municipal aggregation’s 'default product' directly below basic service, both in the initial listing of product and after product sorting/filtering (this exception to the Website rules would not apply to a municipal aggregation’s 'non-default' products, which would be listed according to the rules that apply to other competitive supply product).

Energy Switch Website - Contract Term

Currently, the Website displays information related to contract term differently for basic service than for competitive supply products. For basic service, the Website displays contract terms using a specified start and end date (consistent with each distribution company’s basic service pricing terms); for competitive supply products, the Website displays contract terms in number of months. Staff proposes that, for municipal aggregation products, the Website display contract terms using start and end dates, similar to the display of basic service terms.

Energy Switch Website - Renewable Energy Content

Currently, the Website displays information about a product’s 'voluntary' renewable energy content (i.e., the renewable energy resources that exceed the amount required to meet the Commonwealth’s Renewable Portfolio Standards ('RPS')) only for those products that are composed of at least 50 percent renewable energy resources (including the renewable energy resources required to meet the RPS). Staff proposes that, for municipal aggregation products, the Website display information about the products’ voluntary renewable energy content if the voluntary renewable energy resources: (1) are composed entirely of RPS Class I resources, and (2) represent at least five percent of the product’s total resources. Staff’s proposal is intended to accommodate the renewable energy product options that several municipal aggregation programs offer to their participants. Staff seeks comment on whether the DPU should apply this same rule to other competitive supply products.

D.P.U. 19-07

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