Transcript 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 2 Maryland Regulatory Background • Maryland is a “deregulated” or “restructured” state • Maryland law: Energy suppliers • License Requirements • Consumer Protection rules • Disputes 3 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 4 Licensing Procedures • PSC Staff • Application – Compliance Review • • • • 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 5 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 6 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 7 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 8 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 9 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 • • • • • • • • • • 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 10 Problematic Practices • General – Advertising • Potential misrepresentation or exaggeration of price savings • • • • 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 11 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 12 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 13 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 14 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 15 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) • • • • • • 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) 16 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) 17 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