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Regulator Issues "Best Practices" To Retail Suppliers Concerning Fulfillment Of Obligations Under Marketing Rules

Regulator: Retail Supplier Management Has "Obligation" To Ensure Accurate, Non-Deceptive Information To Customers Regarding Offer Terms

Telesales Agents Engaging With Customers Must Be "Fully Conversant" In Consumer Protections Governing Retail Energy, Regulator Says

Regulator Adopts $100,000 Settlement With Retail Supplier That Includes Residential Market Exit

January 3, 2023

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Copyright 2010-21
Reporting by Paul Ring •

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In an order adopting a settlement between Mega Energy of New England, LLC (Mega Energy or Mega) and a Delegated Commissioner of the Massachusetts DPU, the Non-Delegated DPU Commissioners provided guidance and best practices to all retail suppliers, "concerning significant obligations for competitive suppliers to properly operate in the competitive electricity market in Massachusetts."

As part of the approved Settlement Agreement, Mega makes no admission of any violation of law, wrongdoing, or liability. As such, the DPU's order notes that the issued guidance does not make any findings based on the allegations contained in a Notice of Probable Violation (NOPV) issued against Mega in the case

Under the settlement, which had been first reported by in 2021, Mega Energy has agreed to return its residential customers in Massachusetts to default service (excluding incidental residential accounts) and to remain out of the residential market for three years. Mega Energy has agreed to pay $100,000 as part of the settlement

Mega Energy provided the following statement concerning the matter:

"This settlement brings closure to the investigation that was opened as a result of the actions of a third-party marketing vendor that conducted residential enrollments on behalf of Mega Energy in Massachusetts. While the actions of the vendor and its agents were in no way endorsed or authorized by Mega Energy, the settlement reflects that Mega Energy has agreed to accept responsibility for the vendor’s actions. Mega Energy looks forward to moving beyond this unfortunate episode and to continuing to serve commercial customers in the state of Massachusetts."

--- Statement from Mega Energy

The adoption of the settlement resolves all allegations contained in a Delegated Commissioner’s Notice of Probable Violation issued in 2020 and all matters arising in such proceeding (Docket 20-47)

See our prior story here for full details on the alleged violations. In brief, the Notice of Probable Violation alleged that certain of Mega Energy's TPVs did not constitute affirmative consent because, as alleged by the Delegated Commissioner, the TPVs reflected customer confusion or included customer answers that were only provided after "badger[ing]" by the agent.

Concerning the broader retail market and best practices for suppliers, the DPU set forth its guidance as described below.

"[T]he Department takes the opportunity to identify significant obligations for competitive suppliers to properly operate in the competitive electricity market in Massachusetts. Specifically, the Department offers best practices to assist in satisfying the obligations of providing competitive energy supply in Massachusetts," the order states

The DPU noted that, "To ensure that consumers taking part in the competitive electricity supply market in Massachusetts benefit from the Legislature’s retail choice initiative, a consumer’s election of a supplier must be transparent and informed. Consistent with the Legislature’s finding and declaration that, with retail choice, electricity is essential, the regulatory structure governing the competitive electricity supply market includes safeguards intended to ensure the veracity of the customer’s election: verification that a customer affirmatively chose the supplier to provide service; and no competitive supplier may initiate service without first obtaining affirmative choice from the customer ... Evidence of affirmative choice includes: (a) customer-signed letter of authorization; (b) third-party verification; or (c) customer’s providing authorization through a toll-free telephone call to an independent third party operating in a location physically separate from the telemarketing representative who obtained the initial oral authorization from the customer."

The DPU then stated, "Some practices that a competitive supplier should utilize to build proper customer authorization into its operations include: training of employees/agents regarding the supplier’s products and pricing, the importance of clarity in messaging, and the importance of active listening; and effective quality control management including reviewing customer messaging before and after customer contact with timely corrective action where necessary for both the customer and the employee/agent."

"A competitive supplier’s failure to obtain conforming customer authorization is a serious breach of duty. Such a breach causes harm to the customers, contributes to a lack of confidence in the competitive electricity supply market, and can thwart the Legislature’s plan for broad participation in this market with substantial consumer benefits," the DPU said

"Any benefit of a competitive electricity supply market will be destroyed unless information presented through telemarketing, advertising, and other means is accurate and non-deceptive. Telemarketing is an accepted industry communications tool that can be useful channel of sales and communications between a competitive supplier and its customers. The telephone provides competitive suppliers with the opportunity to present customers with relevant and personalized offers in a timely way," the DPU said

"Especially in the competitive electricity supply market, where electricity is essential, the information presented for a consumer’s choice must be clear, accurate, complete, and free from deceptive sales practices and aggressive marketing," the DPU said

"Competitive supplier management has an obligation to ensure accurate, non-deceptive information disclosure to customers about price, service offerings, and terms of service," the DPU said

"To protect against unfair and deceptive practices, competitive suppliers can employ the two internal control practices stated above (training and quality control)," the DPU said

"An additional tool available to meet this disclosure obligation is recruitment. In order to attract and retain the best people, a competitive supplier’s recruitment process should be fair, open, and honest about the nature of the role. Recruitment and hiring must include identifying for applicants the necessity of knowledge of the applicable regulatory requirement governing retail choice in Massachusetts and identifying the legal structure governing telemarketing," the DPU said

"It is important that entities engaging with consumers over the phone regarding competitive electricity supply are fully conversant in the retail choice market in Massachusetts, the consumer protections governing the competitive electricity market in Massachusetts, and the state and federal legal requirements governing telemarketing," the DPU said

"Consumer confidence in any competitive market is based on informed choices ... As with the breach concerning verification of customer authorization stated above, a failure to ensure informed customer choice is a substantial breach of a competitive supplier’s duty of care causing harm to customers and thwarts the Legislature’s intent for consumer benefits from retail choice," the DPU said

"Licensed competitive suppliers in the Commonwealth, including their agents, are presumed to know and are required to adhere to Department regulations and the Interim Guidelines pursuant to which they are authorized to provide service. The allegations in the NOPV, however, highlight a laxity in third-party compliance, which is unacceptable," the DPU said

"We therefore find it necessary to identify the principles governing accuracy in record-keeping applicable to competitive suppliers. Recordkeeping should be complete, reliable, accurate, systematic, contemporaneous, and usable. Records should be maintained in a secure manner to prevent unauthorized access, destruction, alteration or removal. This last principle is of particular importance based on the allegations of the NOPV. A violation of this requirement results of breakdown of confidence in the ability of the breaching competitive supplier to fairly meet its obligations to provide electricity service in Massachusetts," the DPU said

Docket D.P.U. 20-47


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