Broker: Ban Door-to-Door Marketing in Ohio, Prohibit Soliciting in Communities with Aggregations

An electric broker has recommended that the Public Utilities Commission of Ohio ban door-to-door marketing of retail energy, especially in communities with opt-out municipal aggregations.

Eagle Energy, LLC, a broker which also represents eight communities with opt-out aggregations, "believes a door-to-door approach should be entirely prohibited but especially within communities that have implemented a government aggregation program."

Moreover, "Eagle believes that a CRES should be prohibited from soliciting any community that has a governmental aggregation program in place." Eagle Energy made this comment with respect to 4901:1-21-05, a provision which addresses marketing generally.

"What is frustrating and confusing to many customers are solicitations received during the twenty-one day opt-out process is [sic] taking place. The actual decision and even being aware of the actual supplier is confusing enough without needing to deal with a letter from a CRES with an entirely different price and unrelated to the aggregation process, " Eagle Energy said.

Although Eagle Energy later states that two additions to 4901:1-21-05 relating to rules for door-to-door marketing should be struck in favor of a complete ban, Eagle Energy's stated concerns about the customer receiving other offers during the 21 day opt-out period could conceivably apply to any form of soliciting, such as direct mail and telesales, and it is unclear if Eagle Energy is also seeking a prohibition on these forms of marketing in communities with aggregations (although the use of the term "letter" above suggests that Eagle is, in fact, seeking to prohibit direct mail marketing in aggregation communities, unless the letter refers to a letter presented as part of a door to door sale).

Eagle Energy's comments came in proceedings, first reported by Matters, reviewing the Ohio retail electric rules and retail natural gas rules.

"This [door to door] sales approach is arcane and has not been an effective sales approach since the days of the encyclopedia. The incentivized approach being used by the CRES for their sales 'experts' is a salary for every account number obtained and a larger salary if the customer is convinced to sign a contract. So it is easy to understand the harassing nature of the door-to-door solicitation," Eagle Energy said.

"An example of such marketing techniques and how they influence a customer is the recent experience of a ninety-four year old resident of Green Township. The elderly resident was convinced to switch electric suppliers by a door-to-door sales representative. The resident ultimately could have been charged a higher price than the supplier who was supplying the resident through Green Township's government aggregation program. Thankfully, the resident's children became aware of the situation and were able to return the resident's account to the lower price provided by the government aggregation program CRES," Eagle Energy said.

"Eagle Energy has also encountered situations where the customer is actually charged a price greater than the EDU's Price-To-Compare. Eagle Energy believes such a practice is unconscionable but if that is the pricing strategy of the CRES, then there should be a requirement of full disclosure that specifies the rationale for higher prices so that the customer is fully aware of the higher price. A CRES recently offered a seven-year term with a price higher than the current Price-To-Compare and the likely price for at least a period of one-third of the seven year term. There was no explanation that the price was higher than the existing price. While the current rules require specificity about pricing, the existing rules lack unequivocal information about price comparisons," Eagle Energy said.

"Eagle recommends a provision that requires the CRES provider to clearly notify customers when the price is higher than the EDU's Price-To- Compare (PTC). While the Commission provides some comparison and the EDU generally provides a generic customer's PTC, there needs to be additional information particularly in the case of an EDU that may have a declining block or a seasonal rate that frustrates price comparisons at best," Eagle Energy said.

Separately, Duke Energy Ohio recommended that door-to-door marketing of retail energy not be permitted after dusk. Duke Energy Ohio also asked that suppliers be required to share "plans for mass marketing" with the local utility.