Innovative Liberty Power Provision Allows Customers to Avoid Termination Fee

Liberty Power has developed what appears to be a unique provision regarding early termination fees for residential electric contracts that waives the termination fee if the customer contacts Liberty Power to terminate the contract, rather than cancelling by contacting the utility or through enrollment with another supplier.

Although other retail suppliers may offer similar provisions, particularly on an ad-hoc basis, Liberty's termination fee waiver provision, featured prominently with its residential offers at Commonwealth Edison and Ameren listed on the Plug-In Illinois site, is the first time Matters has seen the program institutionalized and presented to customers when comparing offers. Specifically, there is no penalty for termination if the customer calls Liberty Power directly to cancel the agreement; otherwise a termination fee of $10 per month remaining on the agreement applies.

The program is innovative in that it is mutually beneficial and aligns customer and supplier interests.

Customers obviously benefit by being able to avoid the termination fee. Furthermore, by calling Liberty to end the contract, customers may receive a better retention price than if they had simply submitted a switch via a new supplier or the utility.

Liberty benefits from having an opportunity to retain the customer, and may also receive customer feedback on the customer's reasons for switching.

Moreover, to the extent retention fails, Liberty still benefits from the advance notice of the drop, and the waiver of the termination fee incents customers to provide this advance notice. With advance notice, Liberty can begin rebalancing its portfolio or making other adjustments to its physical and/or financial hedging as needed, and is also able to adjust its forecasting ahead of time, as opposed to no-notice drops.