PUC Drops Proposal That Variable Rates Be "Reasonably Reflective" of Market Conditions, And Only Based on Index or Formula

The Maine PUC issued a final order adopting revisions to its customer protection rules, and in doing so declined to adopt an earlier proposal that would have required variable rate changes to be "reasonably reflective" of market conditions, and which would have only allowed variable rates if they were based on an index or formula

Instead, the PUC will continue to allow variable rates that are not based on an index or formula, and will not constrain variable rate changes in any way. However, suppliers will have to disclose various information about variable rates, including the lack of any cap, and past rates.

The new rules establish two types of variable products:

Indexed Variable Rate or Charge: any rate or charge that varies over the duration of the term of service where the rate or charge is reasonably related to a public index or otherwise reasonably determined through a readily accessible formula.

Non-indexed Variable Rate or Charge: any rate or charge that varies over the duration of the term of service other than an Indexed Variable Rate or Charge.

For variable rates, suppliers must abide by the following:

a. Must clearly specify in the Terms of Service document and on its webpage the formula and/or market indices by which the Variable Rate or Charge will be calculated or disclose that there is none for a Non-indexed Variable Rate or Charge;

b. Must clearly specify in the Terms of Service document and on the webpage whether there is any limit on how high the rates or charges may rise;

c. Must provide on the webpage the Indexed Variable Rate or Charge that the formula and/or index would have produced over the immediately prior 12-month period;

d. Must provide on the webpage the Non-indexed Variable Rate or Charge that would have been applicable over the immediately prior 12-month period; and

e. For rates that are established prior to the billing period, the rates must be posted on the competitive electricity provider’s website at least one week in advance of any change in the applicable rate or charge.

Another key change in the new rules are conditions placed on termination fees.

Termination fees must now be a fixed dollar amount, and may not be established by formula.

The PUC will allow customer authorization for a switch to occur via a customer-signed letter of authorization, third-party verification, or through electronic authorization. Authorization may not occur through a telephone recording which is not third-party verified.

Suppliers must provide the customer with a single document that contains, among other information, the applicable price term and length of obligation. A welcome letter with a separate standardized T&Cs document will not meet this requirement.

Suppliers must provide customers a minimum of five calendar days from the provision of the Terms of Service document to exercise the right of rescission. Suppliers must provide customers a minimum of 8 calendar days if the Terms of Service document is mailed to the customer. The competitive electricity provider shall not enroll a customer until the rescission period has expired.

Customers must affirmatively consent to continued service under any modified terms of service. However, the PUC struck an earlier proposal which would have required the supplier to continue serving the customer under the existing terms of service absent affirmative consent.

Auto-renewals of contracts will be permitted. However, under new renewal notice provisions, the renewal notices must include a standardized notice form, setting forth the requirements of the terms of service document upon renewal. The PUC will develop such standardized renewal form in a future order.

Retail supplier security for licensing shall equal the lesser of 10% of revenues or $1,000,000.

Docket No. 2014-00214