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Adopted First Notice Order On New Retail Energy Marketing Rules Includes Broad Definition Of In-Person Solicitation

Requires Suppliers To Disclose Utility Price To Compare In Various New Situations

August 19, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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The Illinois Commerce Commission today issued a first notice order which includes proposed revisions to marketing and related rules applicable to alternative retail electric suppliers and alternative gas suppliers

The rules will now be submitted to the Illinois Secretary of State to begin the first notice period

Unless otherwise noted in this story, both the electric and gas rules are substantively identical, and the story may only quote one of the sets of rules for illustrative purposes, for brevity.

Notably, the first notice order rules define "In-person solicitation" to mean, "any sale initiated or conducted when an ARES Sales Agent is physically present with the customer."

In-person solicitations are subject to various additional disclosure and related requirements.

In adopting the definition for in-person solicitations, the ICC said, "The Commission agrees with Staff that the existing definition for 'In-person solicitation' describes the acts regulated in Sections 412.120 and proposed 512.120. RESA suggests a second sentence describing what 'In-person solicitation' is not. The Commission agrees that this proposed sentence adds nothing to the definition, which requires 'a sale' to be initiated or conducted. The existing definition in Part 412 is clear, and that plain language should control."

Notably, the ICC further said, "If a discussion cannot result in an enrollment, then it is not a 'sale[,]' but the Commission agrees with Staff that the timing of that enrollment need not be immediate. The Commission therefore further agrees with Staff that an in-person conversation by a sales agent that is meant to later induce the consumer to enroll by other means should receive the same oversight and quality control by retail supplier management and Commission rules as more direct in-person solicitations. The Commission has been explicit in its prior Orders in Docket No. 15-0512, about its authority to regulate certain 'dinner-table' type conversations."

One area where the electric and gas first notice order rules are different is which marketing materials must include adequate disclosures concerning prices, terms, and conditions, due to different underlying statutory language

Specifically, the ICC ruled that only the gas rules shall include the limitation that the requirement for adequate disclosures concerning prices, terms, and conditions shall only apply to marketing materials, "concerning prices, terms, and conditions of," supply service

The first notice order electric rules will not include this limitation

Specifically, the first notice order gas rules provide, "All marketing materials, including, but not limited to, electronic marketing materials, in-person solicitations, and telephone solicitations, concerning prices, terms, and conditions of retail gas supply service shall contain information that adequately discloses the prices, terms, and conditions of the products or services and shall disclose the Utility Gas Supply Cost and shall disclose the date on which the Utility Gas Supply Cost shall become effective and the date on which it will expire."

In contrast, the first notice order electric rules provide, "All marketing materials, including, but not limited to, electronic marketing materials, in-person solicitations, and telephone solicitations of retail sale of electric power and energy shall contain information that adequately discloses the prices, terms, and conditions of the products or services and shall disclose the utility electric supply Price to Compare ('PTC') statement in subsection (b) of this section."

Both the electric and gas rules include a requirement that all marketing materials (except Goodwill and Institutional Advertising, noted below), including, but not limited to, electronic marketing materials, in-person solicitations, and telephone solicitations, shall include the following statement concerning the utility supply price (electric rule quoted for illustrative purposes):

"(Name of the alternative retail electric supplier) is not the same entity as your electric delivery company. You are not required to enroll with (name of alternative retail electric supplier). Beginning on (effective date), the electric supply price to compare is (price in cents per kilowatt hour). The electric utility electric supply price will expire on (expiration date). The utility electric supply price to compare does not include the purchased electricity adjustment factor. For more information go to the Illinois Commerce Commission's free website at"

However, the first notice order does exempt Goodwill and Institutional Advertising from the price to compare statement quoted above.

"Goodwill and institutional advertising" is defined as, "any advertising either on a local or national basis designed primarily to bring the ARES’s name before the general public in such a way to improve the image of the ARES or to promote the ARES or the industry, and that does not (1) contain information about prices, terms, or conditions of retail electric supply products or services offered by ARES to customers or (2) direct or induce customers to sign up for such products or services."

Under the first notice order, all sales contracts shall include the following statement: "A summary document entitled 'The Uniform Disclosure Statement' (UDS) is attached to this contract. The UDS has important disclosures, including information about your new rate and your right to end this contract without termination fees or penalties other than charges or fees for devices, equipment, or other non-electrical services. Please read both this contract and the UDS carefully."

However, the ICC rejected an earlier proposal that would have required an LOA, TPV, and the sales agent to each repeat substantially the same statement concerning the UDS

The ICC said that, absent its striking of the additional statements concerning the UDS, "these new additions [would have] require[d] the contract to include four separate iterations of the same basic disclosure."

Regarding direct mail, the uniform disclosure statement and information concerning the rules' minimum contract terms and conditions are only required to be included if the direct mail solicitation includes a written Letter of Agency ('LOA')

The first notice rules include new requirements for suppliers to disclose the utility's supply rate in various situations

Every supplier that issues a single (consolidated) bill for delivery and supply shall include the electric utility's price to compare (PTC) on the bill [or utility's gas supply cost for consolidated bills issued by gas suppliers].

Additionally, the first notice rules require that, if a residential variable rate customer's rate increases by more than 20% from one monthly billing period to the next, the supplier shall send a separate written, dated, notice to the customer, informing the customer of the upcoming rate change and shall include the utility’s Price to Compare [or gas supply rate].

For suppliers offering variable rates, including on a fixed to variable rollover basis, in addition to the existing requirement for the supplier to post the variable rate history on the supplier's website, the supplier must also disclose on the supplier's website the utility supply rate.

The first notice order provides that, if a contract includes a provision that results in a change to the residential customer's rate plan, including a change from a fixed rate to a variable rate, the supplier shall send a separate written, dated, notice of the upcoming change at least 30 days, but no more than 60 days, prior to the switch.

More broadly, the first notice rules require that, "Each ARES shall make publicly available on its website, without need for customer's login, the rates currently available to its residential customers, including but not limited to fixed periodic charges and per kWh charges."

In adopting this rule, the ICC said, "The Commission agrees with ICEA that references to 'currently available' should refer to those generally available to the public at this time. Dictionary[dot]com defines 'current' in several ways: (1) belonging to the time actually passing; (2) prevalent or customary; and (3) present; most recent. The plain language of the rule in subsections (a) of Parts 412 and 512 should be the obvious interpretation, but also a reasonable disclosure to customers; moreover, an ARES or AGS should have no incentive to market or present an offer that is not truly available."

The first notice order implements a prohibition on early termination fees for residential and small commercial customers.

The electric rules, only, under the first notice order specifically provide that, "The caps on early termination fees and penalties shall not apply to charges or fees for devices, equipment, or other services provided by the utility or alternative retail electric supplier."

The first notice order defines "ARES Sales Agent" to mean, "any employee, agent, independent contractor, consultant or other person who is engaged by an ARES to solicit customers to purchase, enroll in or contract for electric power and energy service on behalf of an ARES. ARES Sales Agent does not include any Agent, Broker or Consultant, licensed under Section 16-115C of the Public Utilities Act which is acting as agent for the customer and not soliciting enrollments on behalf of any individual ARES."

The first notice order declines to define the term "consumer group." Under the first notice rules, a supplier may not state that it is endorsed by or acting on behalf of a, "consumer group"

ICC Staff had originally proposed a definition for the term "consumer group" because there are instances in the rule which forbid an ARES from making statements on behalf of certain entities, but this prohibition does not extend to trade associations or member organizations. Retail suppliers supported Staff's definition

AG/CUB opposed Staff's definition and Staff later withdrew it. Suppliers still sought to define "consumer group" to mean, "an entity that has appeared or intervened in a contested proceeding before the Commission within five years but is neither (i) an industry or trade organization or association nor (ii) a membership organization or association that exists for a purpose other than the purchase of electricity [220 ILCS 5/16-115A(g)]."

The ICC declined to adopt a definition for "consumer group".

"The Commission agrees with the AG/CUB that Staff’s proposed definition is too limiting. There are other consumer groups that represent ratepayers in proceedings at/before the Commission. The Commission declines to adopt the definition," the ICC said

In the first notice rules, the Commission declined to include a requirement that an ARES disclose REC vintage as part of their renewable energy offerings

The first notice order rules also implement other various previously reported provisions of the recent HEAT Act (SB0651), such as: a ban on early termination fees; a ban on service to assistance program customers except where savings are guaranteed; provisions concerning auto-renewals; new rate reporting obligations to the AG; and other provisions. See our prior story here for details concerning provisions under the HEAT Act

Dockets 17-0857, 20-0457

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