The News-Times

In electric market, ‘buyer beware’ not enough?

- 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.
Hearst Connecticu­t Media file photo State Rep. Steve Meskers, D-Greenwich, in September.

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