In electric market, ‘buyer beware’ not enough?
Connecticut Attorney General William Tong is backing legislation that would prevent firms which enroll households for electricity service from renewing those contracts automatically — while putting up major new hurdles for those companies to enroll new customers.
Sponsored by state Rep. Steve Meskers, DGreenwich, the bill was finalized entering April and is now up for consideration by the full state House of Representatives.
The bill would make it more difficult for non
utility electricity companies to sign up customers in several ways, including at renewal time after luring them in with introductory “teaser” rates to get their business.
Customers who do not explicitly consent to a new cycle of service with those firms would be put back onto the standard offer rate of Eversource Energy or United Illuminating. As of February, about four in 10 customers with alternative suppliers paid more than standard offer, according to the Connecticut consumer counsel’s office, with about 24 percent of customers in Eversource Energy’s territories getting service that month from an alternative supplier, and 30 percent in United Illuminating territory.
Consumer Counsel Elin Katz said abuses have been sufficiently rampant that the adage “buyer beware” has not proven effective when it comes to alternative electricity contracts, speaking at a late-February hearing of the Energy
and Technology Committee of the Connecticut General Assembly. Both Tong and Katz have advocated ending third-party service in Connecticut, which has been allowed since 1998 after deregulation of the state’s electricity markets to increase competition.
“Between 2015 and 2018, we have seen residential consumers paying $200 million more overall in this market than they would have ... if they had stayed on the standard offer,” Katz said. “We also know that there is a great and disproportionate impact on our low income consumers.”
‘A pervasive problem’
The Connecticut bill would force companies to record phone calls and face-to-face meetings with customers and maintain those recordings for two years for regulators to use in resolving any disputes. It would mandate a script for representatives of those companies to read that highlight consumer rights, prior to discussing their electricity programs and rates. And it would give the state Public Utilities Regulatory
Authority explicit authority to demand suppliers provide customers restitution in any probes on overcharging, in addition to fines PURA already has the authority to enact.
Speaking at the same hearing as Katz, PURA Commissioner Mike Caron described as “a pervasive problem across many suppliers” the use of deceptive marketing tactics to win or renew customers.
“We’ve ... found that the order in which information is presented to a potential customer and that which is requested from the customer during the marketing call greatly impacts the customer’s understanding of the transaction,” Caron told legislators in February. “Submission of marketing recordings would greatly aid the staff in investigating complaints and reduce the time needed for complaint resolution.”
While companies are accustomed to reciting boilerplate scripts to investors in advance of solicitations or other communications, a representative of the Retail Energy Supply Association pointed out the hurdle it represents in a
marketing context for its member companies. The association has 10 members that sell electric service in Connecticut, including Crius Energy based in Norwalk and Starion Energy of Middlebury.
“The requirement that all of the information be presented before a conversation can begin — and the requirement that that conversation, whether by telephone or face-to-face, must be recorded in full from the very beginning — is simply unworkable,” said Dan Allegretti, an Acton, Mass.-based consultant testifying on behalf of the Retail Energy Supply Association. “Customers have to provide meaningful consent before their conversation can be recorded . ... They can’t do that until you’ve at least begun a conversation — until you gain some basis on which they can decide that it’s in their interest to move ahead and have that conversation continue.”
Direct Energy filed written testimony in advance of the February hearing to note that it and other companies already face a big hurdle marketing in Connecticut, in that homeowners must have their utility account numbers at hand prior to any switch of service. That makes it next to impossible to market services to them in any other setting save the home where they keep their utility bills.
Direct Energy suggested that instead of imposing marketing restrictions, Connecticut levy “draconian penalties” on suppliers that flout the rules, with the company facing a $1.5 million fine itself after a PURA investigation into its own marketing practices.
“The shopping experience must be conducted almost completely in the customer’s home, whether by means of an in-person sales call, an outbound telesales call, (a) direct mail piece leading to an inbound telephone call, or a web-based sale conducted in the customer’s dwelling,” stated Chris Kallaher, a Massachusetts-based government affairs adviser for Direct Energy. “Electric customers thus can’t have the same kind of customer experience they have for essentially everything else they buy.”
State Rep. Steve Meskers, D-Greenwich, in September.