Download Peter Saar

THE NEED FOR CONSUMER PROTECTIONS
IN RETAIL ENERGY MARKETING
MARYLAND’S PERSPECTIVE
Peter Saar
Assistant People’s Counsel
Maryland Office of People’s Counsel
6 St. Paul Street, Suite 2102
Baltimore, MD 21202
410-767-8150
www.opc.state.md.us
NASUCA Annual Meeting
November 15, 2011
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Maryland Regulatory Background
• Maryland is a “deregulated” or “restructured” state
• Maryland law: Energy suppliers
• License Requirements
• Consumer Protection rules
• Disputes
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Supplier Licensing
• MD PSC must approve license
• Requirements
• Technical and managerial competence
• Affirmations of Compliance
• FERC and PJM rules
• Federal and state consumer protection laws and regulations
• Disclosure of problems in other states
• Federal and state environmental laws and regulations
• Tax compliance
• Financial history and integrity
• Guarantees, bonds and letters or credit
• Certifications
• MD Assessments and Taxation: Business qualification and standing
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Licensing Procedures
• PSC Staff
• Application – Compliance Review
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Technical and financial competence
Certifications and affirmations
Consumer and environmental complaints – Other states
Review of training and marketing materials (if available)
• Comments to PSC
• OPC Role
• Application - Focus of Review is on Customer Issues
• Disciplinary actions and complaints – Other states
• Internet
• Supplier website
• Marketing and training materials (if available)
• Solicitations without a license
• Comments to PSC
• PSC Approval or Denial
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Consumer Protection
Unfair and Deceptive Acts & Practices (UDAP)
• Unfair and deceptive practices
• “Representations, omissions or practices that are likely to mislead
the consumer”
• Attorney General can enforce State consumer protection laws
• UDAP: Advertising, solicitation and contracting
• Door to Door Solicitation Act
• Telephone Solicitation Act
• Refers consumer complaints to MD PSC in first instance
• MD PSC enforces Public Utility law and regulations (which
incorporate UDAP principles)
• Adequate, accurate customer information – informed choices
• Supplier website: Readily understandable information
• Services, prices and emissions disclosures
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Consumer Protections
Contracts
• General rule: Written contracts are required
• Door to door (anyplace other than supplier’s fixed location)
• Telephone (unless exempt from rule)
• Customer must receive and sign a written contract after call
• Contract is void otherwise
• Typical exemptions
• Pre-existing business relationship
• Customer-initiated call
• Customer has reviewed written materials in advance ( slippery exception)
• Exempt solicitation requirements
• Disclosure of all material terms and condition
• 3rd party verification
• Mail or transmit contract within 3 business days
• Internet
• Printable document with terms and conditions sent to valid email address of customer
• No right of reccission
• Automatic renewal is permitted – 45 Advance notice is required
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Consumer Protection
Contract Disclosures
• Contract: All Material terms and conditions
• Description of services and restrictions
• License number
• Price terms
• Deposits
• Cancellation: Circumstances, notice and fees
• Automatic renewal term
• Billing options
• No Electricity Facts Label
• Price terms
• Fixed and variable prices
• Price: what is included/excluded
• Price Comparison: Supplier price vs. utility SOS price for set periods
• See OPC Price Comparison sheets
• New Law: PSC must have consumer education website – electric supply only
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Consumer Protection
Disclosure Requirements
• Restrictions
• Customer Information
• Mass Customer List: PSC permits release of name, address and
phone number to energy suppliers
• Utility must obtain pre-approval
• Customer deemed to consent
• Notice required
• Customer can “opt-out”
• Account number and energy usage information cannot be
disclosed without express consent
• Bills to require disclosure have been introduced and narrowly
defeated
• Supplier cannot disclose customer billing, payment or credit information
without customer consent
• Exception: Use for billing, bill collection and credit reports
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Regulatory Enforcement
• MD PSC - License Violations
• Show Cause Proceedings
• Suspension or revocation of license
• Prohibition on new customer soliciation or enrollment
• Civil penalty ($10,000 per violation)
• Factors
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Provision of false information
Switching customers without consent
Service default
Fraudulent or deceptive practices
Failure to maintain financial integrity
Violation of a PSC regulation or order
Non-payment of taxes
Violation of PSC law or consumer protection laws
Conviction for a felony, or crime of fraud, deceit or theft
Suspension or revocation of license in other state
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Problematic Practices
• General – Advertising
• Potential misrepresentation or exaggeration of price
savings
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Percentage savings exaggerated
Deceptive price comparisons
“Teaser” rates (low rates for month or two on variable contract)
“Guarantee” of savings on multi-year contracts (utility SOS price
is not known past one year)
• Use of “gifts” (gift cards; points) can blur price comparison
information
• Targeting: Customers with Limited English Proficiency
and Seniors
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Problematic Practices
• Solicitations
• Door to door
• Marketing agents’ lack of knowledge (paid on commission)
• Deceptive appearance of marketers (logos; clothing)
• Deceptive identification (“I am from the utility”)
• Failure to provide written contract and obtain signature
• Customers do not get required notice of 3-day recission period
• Telephone
• Potential cramming concerns
• Failure to provide written contract and get signature after the call
• 3rd party verification: selective recording
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Problematic Practices
• Contracts
• Contract terms do not match oral representations
• Price terms
• Variable prices
• Insufficient fee disclosures
• Asymmetrical cancellation terms
• Billing
• Consolidated billing
• Handling of disputes over supplier charges (on utility bill)
• Purchase of receivables (POR) – Authorized by MD PSC
• Termination of utility services for non-payment of supplier charges
• Inclusion of non-energy charges in supplier charges
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Maryland Experience
• MD PSC Proceedings
• North American Power
• Viridian
• Licensing
• Pending question – should independent marketing representatives be licensed?
• Advertising and Solicitation
• Price offers and comparisons
• “Guaranteed” savings on long-term contracts (2-5 years) which cannot be
substantiated
• Percentage savings are exaggerated
• Offers lack utility price comparisons
• Brokers
• Advertising and Marketing materials do not clarify the broker role
• Residential brokers have relationship with only one supplier (acting in agent role)
• Account Information
• Submission of personal information (account number) prior to price quote
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Recommendations
Laws, Regulations or Codes of Conduct
• Supplier licenses
• Suppliers (with title), brokers and independent marketing
representatives
• Enforcement
• Dispute process
• Suppliers and brokers
• License or registration for independent marketing representatives
• Consumer Protection
• Marketing and advertising
• Solicitation
• Contracts
• Billing
• Dispute Procedures
• Enforcement
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References
• Maryland Laws
• MD. Public Utilities Article (PUA)
• §7-507 (Electricity Supplier License and Consumer Protection)
• §7-603 (Gas Supplier License and Consumer Protection)
• §7-507 (q) (Concurrent PSC and Attorney General authority)
• Md. Comm. Law Art.
• §13-301 et seq. (UDAP)
• §14-2201 et seq. (Telephone Solicitation Act)
• § 14-2601 et seq. (Door-to-Door Solicitations Act)
• Maryland Regulations (COMAR)
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20.51.02.01 (Electricity supplier license requirements)
20.54.02.01 (Gas supplier license requirements)
20.53.07.01 (Residential electricity customer – consumer protections)
20.59.07.01 (Residential gas customer – consumer protections)
20.53.05.03 (Electric Utility billing – includes purchase of receivables)
20.59.05.01 (Gas Utility billing – includes purchase of receivables)
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References
• Federal Laws
• 15 U.S.C. §§ 11601-1608 (1994) (Telephone Consumer Fraud and
Abuse Prevention Act) (“Do Not Call Registry”)
• Federal Regulations
• 16 CFR Part 310 (Telemarketing Sales Rule)
• FTC Policy Statement on Deception, 103 F.T.C. 110,174 (1984)
• FTC Policy Statement on Unfairness, 104 F.T.C. 949, 1070 (1984)
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Resources
• MD OPC Consumer Information
• Monthly Electricity and Gas Supplier Price Comparisons
• Guide to “Contracting for Electricity and Natural Gas Supply”
Available at www.opc.state.md.us
• FTC
• “Advertising Retail Electricity and Natural Gas”
• “Advertising and Marketing on the Internet” (September 2000)
Available at www.ftc.gov