State Rules on Whether "Friends and Family" Approach to Retail Energy Sales Requires Licenses for Each Referring Individual, in Granting New License to North American Power

A state PUC has ruled on whether individuals marketing retail energy under a "friends and family" referral approach require an individual electric license, in addressing an application for licensure from North American Power and Gas LLC.

Specifically, the Maine PUC granted North American Power and Gas LLC (NAPG) an electric supplier license to serve all customer classes in all service areas.

North American Power's plans to enter the Maine market, and several additional states, in the coming months had been first reported by Matters.

In granting a license to North American Power, the PUC noted that NAPG's filing raises the question as to whether the certain marketing individuals are required to obtain a competitive electricity provider (CEP) license under Maine law.

The PUC noted that NAPG plans on using a "friends and family" type of marketing approach, referred to as independent sales representatives and network marketing individuals (marketing individuals). As summarized by the PUC, these individuals promote NAPG to friends and family and are compensated upon customer enrollment with NAPG through up front and residual commissions to marketing individuals using a multi-level or network marketing commission structure. To receive commissions from NAPG, representatives must complete various types of training and agree to abide by all NAPG rules and all applicable laws and regulations. The marketing individuals will not actually act to sign up customers with NAPG and, would instead, only direct customers to the NAPG website.

"We conclude that the activities of the marketing individuals as described in NAPG's marketing plan do not require a CEP license under Maine law because the marketing individuals will not engage in 'selling electricity to the public at retail,'" the PUC said.

"Rather, under NAPG's marketing plan, the marketing individuals will reach out to individuals and groups to promote NAPG's services and then refer interested candidates to NAPG website, at which point NAPG representatives will market and sell available NAPG products. As such, the marketing individuals do not serve as an 'agent or intermediary in the sale or purchase of electricity' as does a 'broker' under the Maine statutory definition. Moreover, a requirement that each of the marketing individuals obtain CEP licenses would likely be impractical and preclude this type of marketing in Maine regardless of reasonable customer protections that could be put in place," the PUC said.