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Regulator's Staff Issues New Market Reset Proposal That Requires Affirmative Response From Customer During Recission Period, For Supplier-Initiated Enrollments
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Staff of the Massachusetts DPU have proposed a revised retail electric market reset proposal that, for supplier-initiated enrollments, would require an affirmative response from the customer during the recission period in order for the enrollment to be completed
See background on Staff's initial proposal here
Among other things, Staff had originally proposed that all enrollments occur through Energy Switch MA
Staff's revised proposal still includes that all enrollments utilize the Energy Switch MA website in some manner, either for enrollment itself, or, for supplier-initiated enrollments which are the result of supplier marketing activity, as a means for initiating the exchange of customer information between the EDC and supplier, with the customer required to acknowledge that the customer has reviewed products listed on Energy Switch MA
Specifically, for supplier-initiated enrollments which are the result of supplier marketing activity, Staff proposes as follows:
i. A supplier interacts with a customer through a marketing activity.
ii. If the customer seeks to enroll with the supplier, the customer provides the supplier with the personal information required by the EDC to verify the customer’s identity. This step serves as the first demonstration of the customer’s affirmative authorization to enroll with the supplier for the selected product. See 220 CMR 11.05(4)(b).
iii. The supplier goes to the Energy Switch webpage that lists the supply products available in the customer’s EDC service territory. The supplier selects the supply product for which the customer has provided initial affirmative authorization.
iv. Energy Switch prompts the supplier to enter the personal information provided by the customer and required by the EDC to verify the customer’s identity.
v. Energy Switch communicates the customer’s personal information to the EDC via a secure interface.
vi. Upon the EDC’s verification of the customer’s identity, the EDC communicates back to Energy Switch the customer account information necessary for a successful enrollment (including, but not limited to, the customer’s UAN).
vii. Upon receipt of this information from the EDC, the supplier sends the customer, by a method specified by the customer, the product information required by Department regulations to initiate the recission period. This communication must also include (1) a link to Energy Switch, (2) a way for the customer to acknowledge that they viewed the products listed on Energy Switch; and (3) a way for the customer to indicate whether they authorize the supplier to automatically renew the contract at the end of the contract term
viii. During the recission period, if the customer seeks to continue with the enrollment, they must respond to the supplier, confirming that they have received the required product information, they have reviewed the products on Energy Switch, and indicating whether they authorize the supplier to automatically renew the contract at the end of the contract term.
ix. The supplier may not finalize the enrollment (i.e., submit an enrollment transaction to the EDC) unless the customer affirmatively responds to the communication during the recission period. The supplier must invalidate the enrollment if the customer does not respond accordingly.
Staff said, "allowing for supplier-initiated enrollments requires that additional consumer protection safeguards be inserted into the enrollment journey to guard against deceptive or misleading marketing and sales practices."
"Staff expect that the two-step customer authorization requirement described above would reduce the number of customers who are not aware that they are signing up with a competitive supplier," Staff said
As part of this approach, Staff would require suppliers to list on Energy Switch all supply products being offered to customers.
"This provides a level of transparency that both: (1) promotes customer education and informed decision -making, fundamental building blocks of a well-functioning market; and (2) allows the Department and stakeholders to proactively identify and respond to suppliers that may be engaging in deceptive and misleading marketing and pricing practices," Staff said
Staff would allow suppliers to continue to market their products, but would ban door-to-door and tabletop marketing activities in locations that the Commonwealth of Massachusetts has identified as including "EJ Populations." [Environmental Justice Populations]
Details on areas designated as including EJ Populations in Massachusetts can be found here
Concerning this ban of certain marketing channels in select areas, Staff noted that, "As with many provisions of the Market Reset Proposal, Department staff recognize that the Department’s implementation of this provision is contingent on it being granted the legislative authority to do so."
Staff said that, "The alternative to such a ban is to establish a set of stringent oversight measures that focus on these activities, such as (1) daily notification of supplier’s expected tabletop marketing activities (akin to door-to-door marketing), (2) notice to municipalities where a supplier expects to engage in in-person marketing, (3) requirements related to the recording of in-person marketing interactions and the retention of those recordings (akin to telemarketing), and (4) an oversight system for pro-actively reviewing recordings to check for misleading and deceptive in-person marketing practices."
Staff further proposes, as before, to allow (but no longer require) customers to choose to enroll themselves with a supplier solely through Energy Switch MA (as opposed to Energy Switch MA only being a part of the process for supplier-initiated enrollments described above)
Staff said, "customers must be able to shop for, compare, and select an electric supply product directly through Energy Switch, without requiring any interaction with a competitive supplier or electricity broker."
Staff said that, "Energy Switch must be transformed from a website that simply provides product information to one that has the technical functionality to support: (1) a comprehensive listing of all supplier product offerings, (2) modern web-based comparison-shopping features, (3) a seamless and secure enrollment journey, and (4) measures that provide the Department with supplier oversight."
For customer-initiated enrollments on Energy Switch MA under Staff’s new Market Reset Proposal, the process would be as follows:
i. A customer goes to the Energy Switch webpage to view the supply products available in their applicable EDC service territory. The customer selects a product to initiate the enrollment process.
ii. Energy Switch prompts the customer to enter the personal information required by the EDC to verify customer identity. Energy Switch communicates this information to the applicable EDC via a secure interface.
iii. Upon EDC verification of the customer’s identity, the EDC communicates back to Energy Switch the customer account information necessary for successful enrollment (including, but not limited to, the customer’s UAN).
iv. Energy Switch prompts the customer to: (a) specify the method by which the supplier should provide communications and documentation, and (b) indicate whether they authorize the supplier to automatically renew the contract at the end of the contract term
v. The customer prompts Energy Switch to send the information to the supplier. Energy Switch communicates the above information to the supplier’s website via a secure interface. This step serves as demonstration of the customer’s affirmative authorization to enroll with the supplier for the selected product. See 220 CMR 11.05(4)(b).
vi. The supplier enrolls the customer, subject to the customer’s right to rescind its affirmative choice. See 220 CMR 11.05(4)(d).
Auto-renewals
Auto-renewals, subject to certain limitations, would be permitted under Staff's revised proposal
As noted above, in each enrollment method, the customer during enrollment would have to specifically authorize the supplier to automatically renew the contract at the end of the contract term
Staff's auto-renewal proposal is as follows:
ii. The automatic renewal price cannot exceed the price of the product listed by the supplier on Energy Switch with the same product characteristics (e.g., term, voluntary renewable content).
• If the supplier no longer offers the product that is being automatically renewed (i.e., the product is no longer listed on Energy Switch), the automatic renewal price cannot exceed the price of the product listed by the supplier on Energy Switch for which the characteristics are most similar to the product being automatically renewed.
• If the automatic renewal price exceeds the customer’s existing price, the supplier must obtain confirmation from the customer that they authorize the contract renewal. As part of their automatic renewal notification communications (see below), the supplier would provide the customer with information on the upcoming price increase, along with a link to Energy Switch. By a date specified, the customer must respond to the supplier, confirming that they (1) have reviewed the automatic renewal information provided, (2) have reviewed the products on Energy Switch, and (3) authorize the supplier to renew the contract. If the customer does not respond to the supplier by the specified date, the supplier cannot automatically renew the customer’s contract (instead, the supplier returns the customer to basic service).
iii. A supplier cannot charge a fee for the early cancellation of an automatically renewed product
Staff proposes to adopt an NRG proposal concerning notification to customers of auto-renewals. This proposal would establish a three-part notification journey for existing customers: (1) an initial “heads-up” notification 60 days prior to the automatic renewal date informing the customer of the upcoming contract renewal; (2) a second “review your renewal contract terms” notification 30 days prior to the renewal date, providing details of the automatic renewal contract product; and (3) a third “reminder” notification 10 days prior to the renewal date. These communications should accommodate the customer’s preferred communication method, Staff said
Additionally, Staff said that its latest proposal incorporates the approach presented by NRG that requires customers, during the initial enrollment process, to affirmatively select an automatic renewal option at the time of their initial enrollment
Concerning month to month renewals, Staff had initially sought to eliminate the use of contracts that are automatically renewed from month-to-month, identifying such contracts as a source of high prices. Instead, the initial proposal required customers to re-enroll monthly through Energy Switch. Under this initial proposal, Suppliers would be required to return, to utility basic service, customers that did not re-enroll.
While Staff does not explicitly offer an alternative to this original approach, Staff's filing contemplates that a structure allowing month-to-month auto-renewals could be developed, but Staff recognizes challenges in such development
"Staff recognize that incorporating monthly-price products into the Market Reset Proposal would require significant redevelopment of Energy Switch to list and support such products. Staff would work with stakeholders on the redevelopment efforts, as well as the rules that would govern the enrollment and automatic renewal process for these products," Staff said
Voluntary renewable products
For voluntary renewable products, Staff would require that as the threshold for a product to be listed on Energy Switch as a voluntary renewable product (and, as noted, all products would be required to be listed on Energy Switch MA), the voluntary component of the product must be composed entirely of resources that are Green-e certified products.
Furthermore, Staff proposes voluntary renewable products would be categorized on Energy Switch as follows:
• Good: the voluntary component is composed entirely of Green-e certified products, affiliated with projects located in New England;
• Better: the voluntary component is composed entirely of Green-e certified products, affiliated with projects located in Massachusetts;
• Best: the voluntary component is composed entirely of Massachusetts RPS Class I certificates; and
• Prime: the voluntary component supports new resources
Interim Requirements
Staff notes that implementing the proposed changes to Energy Switch MA may take months or years.
As such, Staff proposed the following interim measures to be generally applicable, with additional measures for low-income customers and EJ communities discussed below:
i. By a date to be specified, suppliers must list all products on Energy Switch.
ii. By a date to be specified, suppliers must waive early cancellation fees for all products.
iii. Initial enrollments - By a date to be specified, a supplier may not charge a product price that exceeds the price listed by the supplier on Energy Switch for that same product.
iv. Automatic contract renewals - Suppliers may automatically renew a fixed-price contract only to another fixed-price contract for which the term does not exceed the term of the existing contract. The automatic renewal price may not exceed the price listed for that product by the supplier on Energy Switch. This applies to both initial fixed-price contracts and fixed-price contracts that previously were automatically renewed.
If the automatic renewal price exceeds the customer’s existing price, the supplier must obtain confirmation from the customer that they authorize the contract renewal, in the manner forth ... above. If the customer does not respond to the supplier by the specified date, the supplier cannot automatically renew the customer’s contract (instead, the supplier returns the customer to basic service).
v. Monthly price products - For customers currently on monthly-price contracts, by a date to be specified, the supplier must obtain confirmation from the customer that they authorize the supplier to renew the contract monthly, in the manner set forth ... above. If the customer does not respond to the supplier by the specified date, the supplier must place those customers on the fixed-price product listed by the supplier on Energy Switch with the shortest contract term.
vi. Voluntary renewable products – By a date to be specified, (1) suppliers must comply with the requirements set forth ... above, related to the content of products’ voluntary renewable energy component, and (2) Energy Switch would list voluntary renewable supply products according to the approach set forth ... above.
With respect to vulnerable customers during the interim period, Staff proposes that suppliers may not enroll customers receiving service under the EDCs’ low-income rate classes or customers living in an EJ Population.
Additionally, for such customers currently on automatically renewed fixed-price contracts, by a date to be specified, Staff proposes that suppliers must reset the automatic renewal price to a price that does not exceed the price listed by the supplier on Energy Switch for a product with the same characteristics (term, voluntary renewable content).
Supplier Financial Requirements
Staff proposes that bonding requirements for competitive suppliers (retail suppliers) must be $5 million per year per licensee.
Staff proposes that annual license fees for competitive suppliers must be at least $10,000.
Staff states that, "Staff would work with stakeholders to establish annual license fees and bonding requirements for electricity brokers."
Other Issues
Although Staff's proposal is not explicit, the reset proceeding is generally addressing the residential retail electric market. However, application of any adopted standards to other customer classes (small C&I) and/or the natural gas market remains a specific question previously raised by the DPU which has not yet been determined
Concerning the revised proposal, Staff said, "The new Market Reset Proposal is not intended to serve as a 'take-it-or leave-it' offer. Instead, it is intended to provide a framework for the supplier community and Consumer Advocates to use as they develop their proposals."
In terms of stakeholder feedback, a hearing officer memo stated, "The Department emphasizes that it does not seek either high-level comments or specific critiques of the new Market Reset Proposal. Instead, the Department seeks specific proposals from the supplier community and the Consumer Advocates that track, to the extent possible, the Market Reset Proposal presented herein."
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i. A fixed-price contract can only be automatically renewed to another fixed-price contract (with the same pricing structure) for which the term does not exceed the existing term;
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