In elec­tric mar­ket, ‘buyer be­ware’ not enough?

The News-Times - - BUSINESS - By Alexander Soule

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.”

Hearst Con­necti­cut Me­dia file photo

State Rep. Steve Meskers, D-Green­wich, in Septem­ber.

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