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Illinois ALJs Issue Proposed Order On Applicability Of New Rules To Various Types of In-Person Solicitations, "Goodwill" Marketing

May 13, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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

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.

See our prior story for background on the rules and first notice order, which the ALJs are proposing to adopt and/or modify

The proposed second notice order would not change the definition of goodwill and institutional advertising, and thus would require all sales not meeting this definition to comply with the disclosure and other requirements in the rule

The proposed second notice order would define "goodwill and institutional advertising" to mean, "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."

The proposed second notice order states, "The Commission agrees with Staff that subset (2) of the definition accurately describes advertising that would not be consistent with 'Goodwill or institutional advertising.' If such language encourages customers to sign up for energy supply, that advertising is not 'Goodwill or institutional advertising.'"

The proposed second notice order would also decline to revise the definition of in-person solicitation, which is proposed to mean, "any sale initiated or conducted when an ARES sales agent is physically present with the customer."

Retail suppliers had proposed additional language stating that an in-person solicitation, "does not include contacts by an ARES agent which cannot result directly in an enrollment."

The proposed second notice order rejects this proposal and maintains the analysis from the first notice order, which had held, "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 proposed second notice order would decline to adopt recommendations from the Attorney General to require disclosure of the uniform disclosure statement (UDS) during marketing. Specifically, while the minimum terms and conditions require the supplier to disclose to customers the presence of the UDS, the supplier is not required to separately inform customers of the UDS as part of marketing during in-person solicitations, telemarketing, inbound enrollment calls, and direct mail.

The proposed second notice order notes that the AG had proposed such a requirement prior to the first notice order (in which it was rejected), and states, "no other party presented any new arguments that would warrant the Commission adopt a modified version of the AG’s proposal."

The proposed second notice order would also again reject the AG’s proposal to require all minimum disclosures on direct mail that do not include a LOA.

The proposed second notice order would decline to adopt changes to required supplier variable rate and utility price to compare disclosures included in the first notice order (see details on such requirements in our story here)

Among other things, the proposed second notice order would reject a supplier proposal that would allow suppliers to provide a range for variable rates on their websites to comply with the requirement to publish on the supplier's website their currently available rates. Suppliers had noted that they offer a myriad of products, with differing prices due to suppliers offering customized pricing based on a customer’s particular usage profile, in which case the rates available to the customer may be within a range but undefined for that particular customer until they begin the enrollment process.

The proposed second notice order would also reject a proposal to allow suppliers to provide the rate disclosures through a customer's specific online "my account" section of their website (which would require a customer log-in).

"[T]o allow ARES and AGS to provide new rates to customers on its website or through the customer’s online account limits the Commission’s ability to monitor rates that are being offered to contract renewals," the proposed second notice order states

Concerning the required price to compare disclosure, the proposed second notice maintains such disclosure and notes, "RESA argues the comparison of the suppliers’ price to the utility’s default price is not an apples-to-apples comparison as it does not consider the appropriate allocation of costs when bundles with incentives such as conservation measures, rebates, or gift cards. The Commission finds the Act does not preclude an ARES or AGS from including additional information on its website explaining why the PTC may differ and other factors associated with the ARES or AGS rate."

The proposed second notice order agrees with recommendations from retail suppliers to further address supplier concerns regarding the proposed requirement that supplier disclosures (by agents and in writing) must affirmatively state that they are not representing, endorsed by, or acting on behalf of a consumer group or consumer group program.

Suppliers had said that such prohibition contradicts a statutory carve-out allowing suppliers to offer affinity and similar programs to trade associations or other organizations.

Initially, suppliers had proposed to define the term "consumer group" to address this issue, but such proposal was opposed by the Attorney General and CUB, and the ICC did not adopt the definition in the first notice order

Suppliers then proposed language, to be included in the sections requiring the "no endorsement" disclosure, to exclude situations in which a supplier is offering service pursuant to the trade association affinity statutory carve-out, and the proposed second notice order would adopt this approach

Specifically, various sections requiring the "no endorsement" disclosure would add language (or substantially similar language depending on specific section) stating that the "no endorsement" disclosure statement with respect to consumer groups is required, "unless the ARES [or AGS] is, through the consumer group, offering services at prices, terms and conditions that are available solely to members of that organization[.]"

The proposed second notice order also further refines the "no endorsement" disclosure statement with respect to government bodies to make further clear such disclosure is not required when a supplier is acting pursuant to a municipal aggregation

The proposed second notice order would adopt a recommendation from a retail supplier to drop the phrase "in plain language" from the requirement that the supplier, during in-person solicitations, shall disclose the required disclosures under the minimum contract requirements, "in plain language."

However, the disclosures already must be "in plain language", and this requirement remains in the second proposed notice order.

The proposed second notice order agrees that the additional "in plain language" phrase for in-person disclosures of the minimum contract term disclosures is vague

The proposed second notice order states, "The phrase was added during the initial workshop stage and appeared uncontested; the change was adopted in the FNO. FNO at 38. The Commission finds, however, that since the sale agent is directed to 'verbally disclose the items listed in Section 412.110(a) and (c) through (n),' the phrase 'in plain language' adds nothing to the subsection and is repetitive. The subsections (a) and (c) through (n) were crafted to be easily understood, and the directive to disclose them verbally to customers is sufficient. Moreover, the additional reference to 'in plain language' in Sections 412.110 and 512.110 renders any future references duplicative. Similar changes are made to situations where the agent is speaking directly to a customer, as in Sections 412.130(c) and 412.140(c) and Sections 512.130(c) and 512.140(c)."

Dockets 17-0857, 20-0457

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