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Retail Energy Regulator Adopts Broad Applicability Of Marketing Rules To "Friends & Family", Other "Goodwill" Marketing That Is Intended To "Induce" A Sale

Suppliers Must List Price To Compare In Certain Rate Increase Notices

June 23, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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The Illinois Commerce Commission adopted a second notice order concerning new 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.

Under the final second notice order, the rules will be submitted to the Joint Committee on Administrative Rules

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

Under the adopted second notice order, "goodwill and institutional advertising" means, "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 ICC explained that if the language, enumerated under subsections (1) and (2) of the definition quoted above, encourages customers to sign up for energy supply, "that advertising is not 'Goodwill or institutional advertising,'"

Furthermore, the ICC declined to revise the definition of in-person solicitation, which is defined 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 ICC affirmed its prior finding that, "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 second notice order declines 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 second notice order also rejects the AG’s proposal to require all minimum disclosures on direct mail that do not include a LOA.

The second notice order declines to adopt substantive changes to the 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)

The second notice order requires that each ARES shall make publicly available on its website, without need for customer login, rates currently available to residential customers, including but not limited to fixed periodic charges and per kWh charges. The ARES must disclose the period to which the rates will apply.

Additionally, when a customer's rates change during the term of an agreement or contract, the ARES shall make the new rates available to that customer on its website and, if applicable, through the customer's online account at least 30 days prior to the effective date of any rate change applicable for that billing cycle.

The ICC clarified that such rates must always be listed on the supplier's website, but if the supplier does not maintain a customer-specific account portal, then the supplier is not required to post rates to a customer portal (with the above-cited "if applicable" language added to the rule)

The second notice order rejects a proposal from retail suppliers 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 second notice order provides that, if a residential variable rate customer's rate increases by more than 20% from one monthly billing period to the next, the ARES shall send a separate written, dated, notice to the customer, informing the customer of the upcoming rate change, and such notice shall include the electric utility’s price to compare (PTC).

The ICC rejected recommendations from retail suppliers to omit the PTC information from such supplier notices

The second notice order addresses concerns from retail suppliers regarding the 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.

The second notice order adds language to the rule stating that the 'not endorsed by' language concerning consumer groups is not required if the ARES is, through the consumer group, offering services at prices, terms and conditions that are available solely to members of that organization

The 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 second notice order adopts 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 themselves already must be "in plain language", and this requirement remains in the second proposed notice order.

The second notice order adopts a requirement that a written notice to customers of an assignment from one supplier to another shall include contact information for the default electric supplier should the customer not wish to take service with the new ARES

Docket 20-0457 et al.

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