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Staff Of Retail Choice Regulator Proposes Capping Rate Charged To Low-Income Customers By Retail Suppliers

Staff Seeks To Establish Process To Accommodate "Sharing" Of Information Among Suppliers About "Problematic" Marketing Vendors

More Details Provided On Transitioning TPV Process To An "Interactive Discussion", Requiring Customer To Recite Price & Other Info, Rather Than Just Answering 'Yes'

November 6, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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At a technical session held last week, Staff of the Massachusetts DPU provided a presentation in which Staff proposed that the price that competitive retail electric suppliers charge low-income customers, "not exceed the applicable basic service price."

In the presentation materials, Staff stated, "Staff proposes that these proposals be implemented in a voluntary manner, with the expectation that suppliers that do not agree to abide by these limitations would be subject to enhanced reporting requirements."

Staff's presentation materials further stated, "In addition, staff seeks to examine the reasonableness and appropriateness of utilizing other entities (e.g., distribution companies, the AG, consumer advocates) of providing additional protections to low-income customers."

Staff's presentation included a variety of marketing and verification issues being evaluated by the DPU in Docket 19-07.

Concerning oversight of third-party marketing vendors, Staff's presentation stated, "Staff seeks to establish a process that accommodates the 'sharing' of information among suppliers about potentially problematic vendors, before the vendor begins marketing on another supplier’s behalf."

Under such process, suppliers could then exercise "due diligence" on the vendor’s past performance before the vendor can "hit the streets," Staff said

Staff proposed that suppliers would provide the Department with an up-to-date list of their d2d and telemarketing vendors (one-time filing), and that, on an ongoing basis, suppliers would provide the Department with advance notice of new third-party marketing vendors (e.g., two-weeks’ notice before the vendor can begin marketing for the supplier)

"Staff seeks to work with stakeholders to better understand the appropriate role of the Department, if any, in facilitating the sharing of information among suppliers regarding potentially problematic marketing vendors," Staff said in the presentation

Staff noted that "the Department periodically receives complaints from police departments regarding the conduct of marketing vendors."

"While suppliers would likely terminate their relationship with such a vendor, there is concern that the vendor would simply 'move on' to other suppliers," Staff said

Staff proposed changes to the current notice of door-to-door marketing required to be filed with the DPU by suppliers

Currently, electric suppliers must identify each city and town in which it (or its 3rd-party vendor) may conduct d2d marketing, and the expected dates it will conduct such marketing. The notice must be filed no later than 5:00 pm the day before the start of a marketing campaign, and is valid for 30 days from the date of filing

Staff said that experience to date shows that the current notification requirements, "are not serving their intended purpose." Staff noted that most suppliers identify a large number of municipalities where they expect to market over the 30-day period, and provide expected dates that often span the full period

As such, Staff proposed revisions under which suppliers (electric and now gas) would submit notices (on an ongoing basis) that identify the municipalities in which they will be conducting d2d marketing two business days hence

For larger municipalities, suppliers would identify the zip codes within the municipality where they will be marketing, Staff proposed

Suppliers would be required to include municipal permits with the notices. For municipalities that do not issue such permits until the actual day of marketing, suppliers would submit the permits on that day

Suppliers would provide notices directly to the AG, Staff proposed

Concerning the proposed requirement that the entire door-to-door or telemarketing sales process be recorded (as proposed by consumer advocates), Staff said that, "The recording of marketing calls/visits can play a key role in ensuring that vendors are not engaged in misleading/deceptive marketing practices."

"Notwithstanding its important consumer protection role, staff proposes to defer consideration of this issue until we have addressed enhancements to the TPV process," Staff said

Reviewing changes to the TPV process has been designated a "Tier Two" issue in the proceeding

Concerning verification of sales, Staff, as previously reported, had proposed earlier in the proceeding that the TPV process become an "interactive discussion", to fundamentally change TPVs from the current structure in which the company asks questioners a series of questions that must be answered 'yes' or the TPV call will immediately fail, to an interactive discussion in which the agent will ask the customer to give oral answers to questions such as what is the agreed-upon fixed price, what are the termination fee provisions, what are the automatic renewal provisions, etc.

"Considering its importance, staff considers the current TPV practice (in which customers simply need to respond 'yes' to a series of questions to confirm an enrollment) to be insufficient," Staff said

Under the Staff Proposal, all (outgoing) telemarketing calls and door-to-door marketing interactions that result in a sale would be confirmed by a TPV call

For an enrollment to be considered successful, a customer would be required to affirmatively identify the name of the supplier, as well as the following product information:

• Price

• Contract term

• Early termination fee (if applicable)

• Automatic renewal provision (if applicable)

• Renewable content (if applicable)

• Spoofing protections

Staff also seeks to establish a system that provides the Department with "ready access" to TPV calls

Concerning automatic renewals. Staff proposes that the following product limitations for (fixed-price) contracts that automatically renew (either to fixed- and monthly-price products):

• Renewal prices would not exceed the applicable monthly basic service price (or another specified market price)

• The term of the renewal would be limited to three billing months (or another specified period of time)

Concerning the automatic renewal provisions, "Staff proposes that these proposals be implemented in a voluntary manner, with the expectation that suppliers that do not agree to abide by these limitations would be subject to enhanced reporting requirements."

Concerning a standard contract summary form, Staff offered a proposal generally based on a supplier group proposal (which covers the expected requirements, price, term, termination fee, etc.), except that Staff said that, "Suppliers that offer products for which the price changes monthly must submit the Contract Summary Form for those products to the Department for review," Staff proposed

Staff proposed that suppliers be subject to the following reporting requirements:

(1) Identify the number of residential customers (including low-income customers) that the supplier enrolled during the specified period in the specified distribution company service territory, by marketing channel.

(2) Identify the number of low-income residential customers (i.e., customers that are receiving service under their distribution company's R2 rate) that the supplier enrolled in the specified distribution company service territory, by marketing channel.

(3) Identify marketing channels other than door-to-door and telemarketing through which the supplier enrolled residential customers. For each such channel, provide the same information requested for door-to-door and telemarketing

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