We have been busy updating our online training to incorporate the new rules related to the use of Portable Electronic Devices for residential door to door sales. Check out the updated training deck over on our training website: http://yourrcs.litmos.com/online-courses/. The course is $50 per registered user and will take approximately 1.5 hours to complete. It includes a quiz and if you successfully complete the quiz, a certificate of completion.
Read the press about NRG’s settlement with PUCT staff related to alleged switch-hold violations. Clearly, the issue surrounds when exactly a switch-hold must be removed. As the settlement states, the rules require the following with respect to removal:
- § 25.480(m) requires that the retail electric provider (REP) request removal of the switch-hold by the transmission and distribution utility (TDU) “after the customer’s obligation to the REP relating to the switch-hold is satisfied.”
- § 25.480(j)(8) provides that a REP “shall submit a request to remove the switch-hold, pursuant to subsection (m) of this section, after the customers payment of the deferred balance owed to the REP.”
- § 25.480(j)(5)(B) requires the REP to inform the customer that “The switch-hold will be removed after your final payment on this past due amount is processed.”
- §25.480(h)(7) requires a REP to inform the customer that a switch-hold “…will be removed after your deferred balance is paid and processed.”
The NRG family of companies clearly had a policy in place whereby a set number of days elapsed on all payments to ensure the payments were not returned as insufficient funds prior to fully considering those payments as “satisfactory” for purposes of switch-hold removal. Staff clearly took issue with the blanket approach of this policy as it would appear to apply to cash payments (where NSF issues would be moot).
It will be interesting to see how the Commissioners deal with this when it comes up for Open Meeting discussion.
I can clearly recall the stakeholder meeting with PUCT staff when the exact language of §25.480(m) was discussed and agree with NRG that it was left vague so as to allow REPs some flexibility in the timelines for processing payments. Unfortunately, none of that conversation was captured in the official rulemaking record.
In the meantime, I would advise all REPs to let this be a lesson to you going forward. If you want to ensure the intent behind rule language, you must make formal comments during the rulemaking process as to what you believe proposed language is intended to do. That would require staff to summarize those comments in the preamble to the adopted rule. That’s what gives clarity to the intent of rule language. Absent that, staff is only guided by the plain reading of the rule.
As many of you are aware, the PUCT Enforcement Section initiated compliance reviews last year of all REPs to assess compliance with several items: switch-hold regulations (particularly related to releasing switch-holds), enrollment websites, and print advertisements. I was advised by PUCT staff that it was their intention to ultimately review all REPs on these issues. Last year, I was aware that at least 20 REPs had been sent RFIs initiating this investigation. To date, I have not heard staff finalize their results with this initial group of REPs. Of course, without some type of public filing, such resolution may be hard to determine.
That being said, I am aware that staff has begun a new round of investigations, sending out the RFI several weeks ago to a new round of REPs. The RFI looks substantively similar to that issued last year.
I should also note that Centerpoint has agreed to pay a fine of $60,000 for violating the rules related to releasing switch-holds. Again, it is good to see the PUCT hold TDUs equally accountable for violations that directly affect retail service.
Read more here: http://www.energychoicematters.com/stories/20160428d.html
Finally, the PUCT seems to be getting serious about enforcing the rules that TDUs are to follow. In this instance Oncor has agreed to pay a $700,000 to settle allegations that it was estimating meter reads beyond the allowed 3 consecutive months. This does not surprise me in the least. Finally, REPs can feel good they aren’t the only entity being held responsible for service issues that affect retail customers.
The story in RetailEnergyX.com can be found here: http://www.retailenergyx.com/sy.cfm/2233/Oncor-To-Pay-700-000-To-Settle-Meter-Reading-Estimation-Issues
At today’s open meeting, Chm. Nelson raised some concerns related to the Power to Choose website and offers.
She has directed staff to:
- Review the offers and determine what could be done to stop the gaming, improve transparency, including whether there should still be a PTC website
- Have staff review the low price offers and see if they are posted correctly
- Have enforcement staff look at the low price offer companies
She also mentioned the possibility of getting focus groups in to look at the website.
The executive director largely voiced your issue of there being private websites that don’t have these issues.
Chm. Nelson directed staff to come back at the second open meeting in March ready to discuss some alternatives.
At it’s open meeting today, the PUCT granted Accent Energy’s request for a good cause exception (docket 44518) to 25.474(f)(2) and (3). The PUCT granted the good cause exception for a period of 12 months. The PUCT also directed staff to open a rulemaking to address these issues for the broader market such that the rules are in place within 12 months.
While not prohibiting other REPs from filing their own good cause exceptions (at least on this issue) clearly they would like REPs to wait and participate in the rulemaking process.
That being said, clearly one path for REPs voicing the need for rulemakings very well could be seeking a good cause exception (and fighting for it) should they believe they have a valid reason.
Thought I’d share this story from the April issue of the Texas Retail Electric Scorecard, given today’s Open Meeting discussion.
I have been following the filings in Docket 44518, the Petition of Accent Energy Texas, LP for a Good Cause Exception to PUC Substantive Rule §25.474(f)(2) and (3).
In their original petition, Accent Energy states they are seeking a good cause exception “to allow cus- tomers the option of choosing a retail electric product via a hand-held electronic device without requiring the customer to participate in a recorded third-party verification voice call.”
The rules for door to door enrollments in Texas require that the authorization disclosures (name of REP, price, term, cancellation fees, etc.) be disclosed either on a written LOA pursuant to §25.474(e) or telephonically pursuant to §25.474(h). Further, the verification elements (applicant and account holder’s names, addresses, language preference, and consent to enrollment) are required to be performed telephonically. Most importantly in these requirements is the prohibition of “a REP or its sales representative from participating in the verification process.”
Accent’s Proposed Enrollment Process
An Accent agent will conduct an electronic enrollment with the customer via an internet protocol on the mobile hand-held electronic device. Specifically, with an Accent electronic enrollment:
1) The customer selects a product and enrolls with Accent Energy through the handheld device;
2) When a customer chooses to enroll in this manner, the electronic hand-held device utilized with the enrollment verifies the customer’s consent to the terms and conditions via an electronic signature of the customer that is captured as a digital image.
3) The customer inputs their personal information, including e-mail address, directly into the hand-held electronic device which acts as a portal into the Accent Energy Customer Information System without separate disclosure of sensitive information to the Accent employee.
4) The hand-held electronic device also verifies via an electronic signature that the customer consents and acknowledges the specific statements set forth in the requirements of P.U.C. Susbst. R. 25.474;
5) After verifying the customer’s consent and desire to choose the selected product, the terms of service, EFL, and Your Rights as a Customer document are e-mailed to the customer; and
6) As stated in the information sent to the customer in compliance with the Commission rules, the customer has the right of rescission to withdraw their enrollment for a period of 3 federal business days.
The enrollment process also gives the customer the option to receive a physical copy of the terms and conditions and applicable acknowledgement form. If the customer requests traditional hard- copy documentation, those documents are provided to the customer at the time of enrollment and a third-party verification call is conducted in order to complete the enrollment.
While technology can improve the quality and consistency of the sales presentation, it cannot overcome the ability of disreputable agents to engage in fraudulent enrollments.
To the extent the above-identified rule provisions would require a customer to participate in a recorded third-party verification call after the customer has chosen to participate in an electronic enrollment via the electronic hand-held device through the detailed process described above, Accent Energy requests that the Commission find good cause to waive that third-party verification requirement. Good cause exists for this waiver because the technology in question did not exist at the time the rules were adopted. Further, the technology which Accent Energy seeks to utilize affords additional consumer protections that are not available with the door-to-door options that were available at the time the current rules were written. Indeed, Accent has structured the customer protections around this program in a manner that exceed the general door-to-door protections. Allowing customers to utilize the technology developed by Accent without a separate recorded third-party verification call will effectuate choice, will enhance the customer experience, and will benefit customers.
The rule in §25.474(e)(5) states that the LOA (Letter of Authorization) shall disclose the following information (and then the specific authorization disclosures are delineated). Therefore, the rule appears to require the presentation of the authorization disclosures to the customer in writing as 25.474(e) further defines an LOA as “written”. I should further note that the term “in writing” is already defined in the customer protections rules ~ §25.471(d)(8) as “written words memorialized on paper or sent electronically.” As such, you could have an electronic LOA that presents the authorization disclosures outlined in §25.474(e)(5).
Clearly the PUCT’s rules already understand that there are 3 mechanisms by which an applicant can provide their consent and authorization to enroll: via the internet, with a signature on a document, or telephonically. Separately, there are only 2 general locations where sales can occur: either in the applicant’s home (or place business) or elsewhere. The rule at issue here is that which specifically deals with sales that occur at a residential applicant’s home, i.e. §25.474(f). It is clear that REPs could use electronic devices to process an enrollment in other sales venues. Also it is clear that internet enrollments are meant to initiated and completed by applicants and that such interaction could occur at any location where the internet is available. Telephone enrollments can also be initiated or completed on any telephone to which the applicant may have access. Likewise, written enrollments could be obtained anywhere (a mall, store, or public event).
Clearly, by specifying additional requirements for door-to-door sales, the PUCT believes this particular sales venue warrants additional protections. Why is that? It is the only sales venue that could potentially not have any other means of confirming the specifics of what the sales agent told the applicant at the point of sale. Telephone calls can be recorded. Internet websites and emails can be archived. However, there is no way to prove what an agent did (or did not) tell an applicant while at the applicant’s home. Additionally, in all other sales venues, the applicant can leave the sales transaction at any time. Applicants can hang up the phone, walk away from a vendor sales booth, or close their browser window. However, applicants cannot leave their home to flee an aggressive sales agent, nor can they easily force an aggressive agent to leave their property.
It is also important to acknowledge that sales agent fraud does exist. Agents have been known to forge applicant signatures and pass themselves off as applicants on phone calls. There is simply no way to elim- inate agent fraud completely. The best that can be done is to minimize its likelihood by implementing steps where such fraud is most likely to occur, such as an applicant’s premise. The reason that door-to- door regulations exist is to both provide the applicant with some protection from overly aggressive sales agents who are simply not willing to take no for an answer and to deter agent fraud.
While I think electronic devices like IPads have their place in the sales transaction, they too suffer from the all to easy ability of an agent to fraudulently enter enrollment information on behalf of the applicant. At the end of the day, the IPad is simply an electronic LOA. There’s no way of proving the applicant com- pleted the LOA versus the agent even if an electronic signature is obtained. A required telephone call to the applicant is simply another protection element that is useful in both deterring and identifying fraudu- lent agents, as well as protecting applicants from aggressive sales agents. That’s why it is, and should continue to be required for door-to-door sales.
We’ll see where the Commission comes out on Accent’s petition.
Kudos to AEP Energy for filing suit against a vendor for alleged do-not-call violations. As I have said before, regulators hold the certificated entity responsible for compliance with laws. If the certificated entity outsources a function to the vendor, it is still ultimately the certificated company, and not the vendor, that is on the hook for complying with regulations. The recourse for the certificated entity — make your vendor financially liable for any enforcement penalties caused by their actions.