Final Order Prohibits Retail Supplier Guaranteed Savings Plans Extending Beyond Date Of Known Default Service Rate

Order Requires Retail Suppliers To Record Entirety Of All Door-to-Door, Telemarketing Sales

Final Order Drops Proposal That Suppliers Must Disclose Default Service Rate In TPV

Suppliers Required To Seek Regulator's Approval For Contract Assignments (Book Sales, etc.)

May 7, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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The Connecticut PURA has issued a final decision on new electric supplier marketing standards, with the order requiring that suppliers record the entirety of all telesales and door-to-door sales. The final order does omit a prior proposal that the utility Standard Service rate must be disclosed during third party verification (TPV)

While suppliers argued that current statutes and regulations are sufficient, the final order says that the new marketing standards are needed by stating, "the Authority would not have had to issue almost $4 million in penalties in 2018 alone, were the current standards contained solely within the statutes sufficient."

Recording Of Sales Interactions

The final order provides that, "Each Electric Supplier shall record the entirety of all inbound and outbound telesales calls and door-to-door marketing lasting thirty seconds or longer with all residential customers or potential residential customers, and shall retain such recordings for three years after the date such recording was made."

The final order provides that, "Any accompanying TPV must be retained for three years after the date of such TPV recordings and shall be supplied to PURA upon request. In the event that an Electric Supplier is unable to comply with the Authority’s request, the underlying customer contract will be deemed null and void with no ETF or cancellation fee permitted."

Door to Door Marketing

With respect to door to door marketing, the order provides that, "When conducting door-to-door calls to all residential customers or potential residential customers, each Electric Supplier shall begin by immediately stating: (A) That they are a representative of the full name of the Electric Supplier conducting the call; (B) that the purpose of the sales call is to switch the customer’s electric supply service to the full name of the Electric Supplier conducting the call; and (C) that such Electric Supplier does not represent and is not affiliated with the customer’s local utility company."

The order provides that electric suppliers engaging in door-to-door sales must provide customers with a document that states among other things, that, "the individual engaging in door-to-door sales is not an employee or member of the customer’s EDC and is not acting on behalf of the EDC.."

The order requires that door to door marketers inform customers of the Standard Service utility supply rate.

Specifically, the order provides that, "When conducting door-to-door calls to all residential customers or potential residential customers, prior to initiating the third-party verification, each Electric Supplier shall inform the customer or potential customer: (A) that if the customer or potential customer assents, the door-to-door call will result in the customer or potential customer immediately entering into a contract with the Electric Supplier; (B) of the customer’s right to rescind the contract with the Electric Supplier without penalty as required by 16-245o(f)(2); (C) what the standard service rate is on the date of the door-to-door call in cents per kilowatt hour, and, if the door-to-door call is being conducted within 45 calendar days of a change to the standard service rate, the date that the standard service rate will change and what the standard service rate will be on that date in cents per kilowatt hour; and (D) of all material contract terms, as defined by the Public Utilities Regulatory Authority in its decisions."

The order prohibits use of certain language concerning marketing.

The order provides that, "When conducting door-to-door calls to all residential customers or potential residential customers, each Electric Supplier is prohibited from: (A) representing that such Electric Supplier or its offer is affiliated with any state or utility program; (B) representing that any state program encourages or requires Connecticut electric customers to obtain an Electric Supplier; (C) representing that the local electric utility encourages or requires Connecticut electric customers to obtain an Electric Supplier; (D) representing that the standard service rate is a variable rate; and (E) representing that standard service will increase, unless the Authority has approved the upcoming standard service rate and the upcoming standard service rate is greater than the current standard service rate."

The order prohibits suppliers from requesting an account number or bill from the customer until immediately before contract verification

Specifically, the order states, "When conducting door-to-door calls to all residential customers or potential residential customers, no Electric Supplier may request the account information from a potential customer or request that a potential customer retrieve account information or the potential customer's electric distribution company bill until immediately before the customer or potential customer is being transferred to the TPV, or other means of contract verification indicated by statute."

Under the order, Electric Suppliers must fit all door-to-door marketers with GPS monitoring devices that allow the supplier to track, and later verify, the marketer’s location during door-to-door sales. Upon request from the Authority, an Electric Supplier must identify the individual who conducted the door-to-door visit to a customer that resulted in a complaint received by the Authority. In the event that an Electric Supplier cannot identify the individual who conducted the door-to-door visit upon a request by the Authority, the customer contract in question will be deemed null and void with no early termination fee (ETF) or cancellation fee permitted.

Telemarketing

The order prohibits the use of inaccurate or misleading caller ID info, or caller ID blocking.

The order provides, "No telephone solicitor acting on behalf of an Electric Supplier may cause to be installed or may use any blocking device or service to circumvent a consumer’s use of a caller identification service or device. No such telephone solicitor may transmit inaccurate or misleading caller identification information, such as, but not limited to, the EDC name, 'Disconnection', 'Emergency', Electric Choice' or 'Customer Service'. Rather, the telephone solicitor shall ensure that the caller identification information displays the Electric Supplier’s name (or an appropriate abbreviation thereof) and that the phone number that appears on the customer’s caller identification information is accurate and allows for the customer to call back. The Electric Supplier shall ensure its telephone solicitors do not employ devices that cause a telephone number to appear as if it is from a local area code.."

The new telemarketing rules are largely similar to the door to door requirements discussed above

The order provides, "When conducting outbound telesales calls to all residential customers or potential residential customers, each Electric Supplier shall begin by immediately stating: (A) that they represent the full name of the Electric Supplier conducting the call; (B) that the purpose of the call is to switch the customer’s electric supply service to the full name of the Electric Supplier conducting the call; and (C) that such Electric Supplier does not represent and is not affiliated with the customer’s local utility company."

The order provides, "When conducting both outbound and inbound telesales calls to all residential customers or potential residential customers, prior to initiating the third-party verification, each Electric Supplier shall inform the customer or potential customer: (A) that if the customer or potential customer assents, the telesales call or will result in the customer or potential customer immediately entering into a contract with the Electric Supplier; (B) of the customer’s right to rescind the contract with the Electric Supplier without penalty as required by Conn. Gen. Stat. § 16-245o(f)(2); (C) what the standard service rate is on the date of the telesales call in cents per kilowatt hour, and, if the telesales call is being conducted within 45 calendar days of a change to the standard service rate, the date that the standard service rate will change and what the standard service rate will be on that date in cents per kilowatt hour; (D) the phone number of the Electric Supplier; and (E) of all material contract terms or other items defined by the Public Utilities Regulatory Authority in its decisions."

The order provides, "When conducting outbound and inbound telesales calls to all residential customers or potential residential customers, each Electric Supplier is prohibited from: (A) representing that such Electric Supplier or its offer is affiliated with any state or utility program; (B) representing that any state program encourages or requires Connecticut electric customers to obtain an Electric Supplier; (C) representing that the local electric utility encourages or requires Connecticut electric customers to obtain an Electric Supplier; (D) representing that the standard service rate is a variable rate; and (E) representing that standard service will increase, unless the Authority has approved the upcoming standard service rate and the upcoming standard service rate is greater than the current standard service rate."

The order provides, "When conducting outbound telesales calls to all residential customers or potential residential customers, no Electric Supplier may request the customer’s account information or request that a potential customer retrieve account information or the potential customer’s electric distribution company bill until immediately before the customer or potential customer is being transferred to the TPV, or other means of contract verification indicated by statute."

Third Party Verification

The order includes requirements and questions that must be asked during a residential TPV

Most notable is that the final order omits from the TPV an earlier proposed requirement that the TPV must, "State the applicable standard service rate and confirm the customer is aware that if they were on standard service they would pay that rate (Customer must respond yes/no)."

Also notable in the final order's TPV questions are two questions for which the potential customer must provide a narrative answer, and for which the customer may not simply answer yes/no

Specifically, under the order, the TPV shall include the following (among other questions):

• "Confirm customer’s account number, name, service address, and telephone number (The customer must read the information directly from their bill; the TPV provider cannot read the information to the customer and receive a yes/no response);"

• "Confirm the customer on the call is authorized to change the generation service provider on the electric bill (Person on the call must state their relationship to or employment position with the customer listed on the bill)"

The order provides that, "All TPVs must demonstrate that the customers have a clear understanding of the services offered and the customer’s consent to enroll with the Electric Supplier must be both voluntary and unequivocal. If at any time during a TPV the customer cannot answer a question, the verification process must end and the TPV call with the customer must terminate."

The final order omits a draft provision which had stated, that, upon termination of a TPV due to a customer's failure to answer a question, "a subsequent verification process involving the potential customer may not be attempted for a minimum of 24 hours thereafter."

In the final order, the Authority said that it recognized the Supplier Group’s point that not all TPVs have a live third-party verifier, and altered the requirement regarding date and time of the call to require that the TPV must indicate the date and time, not that the TPV agent must state the date and time.

Limit On Guaranteed Savings Plans

The order prohibits guaranteed savings products whose term extends beyond the end date of the known Standard Service rate (Standard Service rates change every 6 months)

The order provides, "If offered or advertised by the Electric Supplier, savings guarantees must be made for the duration of the contract, may be made only through a direct comparison of the supplier’s rate with the current standard service rate or future standard service rate that has been published by the Authority, and may be made only on offers with terms that do not exceed known standard service rates (e.g., a twelve-month supplier rate could not make a savings guarantee because a customer entering into a twelve-month offer could not know the standard service rate for the next twelve months)."

As such, longer "percent off" or minimum guaranteed savings plans are prohibited under the order

Other Issues

Under the order, all of an Electric Supplier’s generally available rates must be posted to the Rate Board. "Generally available rate" means a generation rate that is offered to customers taking service under a rate tariff or to an entire class or specific subset of residential or business customers. Offers that are displayed on a supplier’s website are deemed to be generally available.

Under the order, Electric Suppliers must update all verbal and electronic marketing materials disclosing the EDC standard service price immediately upon PURA’s approval of a new standard service price. The use of printed marketing materials with the expiring EDC standard service price must be updated to reflect the new standard service price or be discontinued within five (5) days of PURA’s approval of the new standard service price.

Under the order, an Electric Supplier shall not misrepresent its affiliation, connection, or association of any services or business establishment. Electric suppliers may not in any way represent or imply that they are associated with the EDCs, the State of Connecticut, a state program, or PURA. All advertisements must clearly display the name of the Electric Supplier making said offers and all advertisements offering service must have an expiration date of the offer and/or terms, if applicable.

For renewals, the order provides that the renewal notification must state the renewal rate and offer as a comparison the standard service rate applicable at the time the renewal rate will become effective.

The final order drops a proposed requirement for a "disclosure statement" to new customers concerning suppliers' prior highest and lowest variable rates. Under a draft, a disclosure statement was proposed to be required in all written residential "offers," stating that, "Licensed Electric Suppliers are required to post the highest and lowest generation service charge rate that was billed to their customers under a variable rate offer in each of the preceding 12 months [with links to how to obtain this info]".

PURA dropped this proposed highest and lowest variable rate disclosure statement, stating, "While it is concerning to the Authority that some customers remain on a variable rate despite the legislature’s codified intention of requiring fixed rate contracts for all residential customers, the Authority does not find it useful for suppliers to disclose variable rates to new residential customers since new residential customers cannot be charged variable rates. To the extent a new customer wishes to educate herself as to whether she is doing business with a supplier continuing to impose variable rates on legacy customers, she can find such information on the Authority’s website and on the supplier’s website. As a result, the Authority has examined the need for a disclosure statement and determines it is no longer necessary due to the change in circumstance regarding variable rates for residential customers and the availability of a supplier’s variable rates in other locations."

The order provides that Electric Suppliers must send all enrollments to the electric distribution company (EDC) within seven (7) business days after the date of the sales transaction in which the customer requests to enroll unless the customer specifically requests that the enrollment not process in such timeframe. Electric Suppliers must maintain an audio recording and/or signed documentation, containing either an electronic or a wet signature, of the customer’s request that the Electric Supplier delay the enrollment.

Assignment Of Customers

The order requires that suppliers seek approval for an assignment of customers

Prior to assigning or transferring any customers to another supplier, an Electric Supplier must file a 'Notice of Assignment' with the Authority no later than sixty (60) calendar days prior to the date of assignment or transfer. The Electric Supplier must include the following information in the Notice of Assignment:

Under the order, customer assignments or transfers must be approved or modified by the Authority within fifteen business days of the Authority’s receipt of a completed notice from the supplier, unless the Authority and Electric Supplier agree to a specified extension of time. The Authority may assess additional licensing fees to pay the administrative costs of reviewing a request for such transfer or assignment

"Upon its review of the Notice of Assignment, the Authority may require certain conditions, including but not limited to granting the customer the option to terminate or cancel services with the new Electric Supplier with no cancellation or early termination fee charged to the customer should the customer terminate or cancel service up to seven (7) business days after receiving the first billing statement reflecting charges from the new Electric Supplier, and that RPS obligations from the assigning supplier must be satisfied prior to assignment. Any applicable conditions imposed by the Authority shall be included in all notice letters sent to customers in assignments," the order states

Direct Training Required, Self-Reporting Of Violations

The final order adopted requirements for suppliers to directly train sales agents, adding provisions concerning virtual training, and use of a supplier's parent/affiliate

The final order provides that, "All individuals and entities marketing for an Electric Supplier shall be trained about electric generation service rates and products that they are selling, applicable federal, state, and local laws, regulations, and ordinances, and ethical and responsible sales practices, and cautioned against making misleading representations. All training for everyone marketing on behalf of an Electric Supplier must be performed directly by an employee of the Electric Supplier or an employee of the Electric Supplier’s parent or affiliated company (i.e. a sales representative may not be trained by a representative, agent, independent contractor, broker, marketer, individual, or company acting on behalf of the Electric Supplier), and must be conducted in a manner to allow interaction with and/or questions from the representative being trained. Virtual meetings that are live, face-to-face via a video feed, and allow such interactions and questions are acceptable; although, all virtual meetings must be recorded and preserved for no less than three (3) years from the date of occurrence. The representative should be deemed appropriate for the type of contact they will be having with the public, and must sign a confidentiality agreement to keep personal customer information confidential."

Concerning the use of an affiliate for training, PURA said, "Suppliers argued that many suppliers are under one corporate umbrella and training currently is conducted by parent or affiliated companies. To the extent a supplier’s parent or affiliate is well-versed in a supplier’s specific training materials and qualified to conduct training on behalf of the subsidiary or affiliate, then training conducted by the employee of a parent or affiliated company is permissible. Such training must meet all of the other standards noted herein."

The order requires suppliers to self-report violations

The order provides, "It is the responsibility of every Electric Supplier to ensure that any entity or individual marketing its product and/or acting on its behalf does not engage in false, misleading or deceptive trade practices, nor perform unauthorized switching of customer accounts. If an Electric Supplier discovers: deceptive trade practices affecting more than ten customers, more than three violations for any agent over a three-month period, or any unauthorized switching of customers, the Electric Supplier must notify the Authority in writing as soon as possible, but no later than within ten (10) business days of discovery. Such notification shall include a detailed description of the incident, the current state of the investigation, and the planned resolution, with updates as required by the Authority, and shall be filed as a compliance filing in Docket No. 14-07-20RE01 and in the supplier’s licensing docket."

The order warns suppliers about avoiding self-reporting by not implementing a thorough oversight program for agents

The order states, "the Authority is troubled by the Supplier Group’s argument, 'Rather than face potential sanctions resulting from the reporting of deceptive conduct to the Authority, suppliers may choose to refrain from engaging in the exact oversight and quality control that would lead to the discovery of such conduct in the first instance.' Id. at p. 8; Supplier Group Pre-filed Testimony dated June 20, 2017, p. 13-14. The Authority highly discourages the Supplier Group from pursuing such an unwise, unethical, and illegal course of action. Suppliers currently are required to have mechanisms in place for ongoing monitoring of their marketing, whether conducted in-house or by third-party vendors. See Conn. Gen. Stat. § 16-245o(h)(10). The Authority assumes that suppliers currently are quickly addressing any violations they find as a result of this monitoring. Requiring suppliers to report these findings and remedies to the Authority places minimal burden on a supplier."

The order notes that PURA will exercise its discretion in setting fines for suppliers who self-report versus those who, "bury their heads in the sand."

"As the OCC notes, the Authority maintains discretion as to whether or not to open an investigation against a supplier, and can consider honest and transparent self-reporting when determining the appropriate sanction for any violations. Brief of OCC, p. 9. Suppliers can be certain the Authority will exercise those discretions and most probably impose larger sanctions and fines against a supplier that purposefully buries its head in the sand to avoid self-reporting and most probably may forego sanctions and fines or may impose smaller sanctions and fines when suppliers make reasonable, good faith efforts to comply with their obligations to timely remedy and self-report any violations," the order states

Effective Date

The order provides that, no later than August 6, 2020, all licensed suppliers shall comply with the Marketing Standards contained in the order

Docket 14-07-20RE01

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