Revised N.Y. UBPs Require New Consent for Renewals with Material Changes, Excludes Price

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December 20, 2010

ESCOs will have to receive a new customer consent to renew residential customers onto contracts with material changes, but the definition of material changes excludes changes only in price, or renewals onto a monthly variable rate, under revisions to the New York Uniform Business Practices issued Friday (98-M-1343).  

The modified UBPs implement the ESCO Consumer Bill of Rights and related provisions (12/17).

The revised UBPs specifically provide, for residential customers and for customers solicited via "door-to-door sales":

"Regarding contract renewals, with the exception of a rate change, or an initial sales agreement that specifies that the agreement renews on a monthly basis with a variable rate methodology which was specified in the initial sales agreement, all other changes will be considered material and will require that the ESCO obtain the customer's express consent for renewal."

The term door-to-door sales as used here excludes sales to non-residential customers made by appointment, or in-person commercial sales at trade shows, expos, etc.

The PSC said that it remains, "concerned that a contract that renews as a fixed rate contract with a new rate could bind a customer to a contract with a significant change in rates through inaction."

Accordingly, the Commission invited parties to provide comments within 30 days on the treatment of a fixed rate contract that renews as a fixed rate contract with a new rate.

Renewal notices must be sent not less than thirty days nor more than sixty days prior to the renewal date.  Renewal notices are not required for variable rate contracts which renew on a monthly basis.  For any agreement whose initial term was longer than a month, regardless of whether the rate is fixed or variable, a renewal notice must be sent.  For contracts rolling onto a monthly variable rate, only a notice of the initial rollover is required, and subsequent notices are not required for each monthly renewal.

Consent is not required for renewals with no material changes.  However, a customer shall not be charged a termination fee if the customer objects to renewal within three business days of receipt of the first billing statement under the agreement as renewed.

Regarding the ESCO Consumer Bill of Rights, which must be provided to each prospective customer, the Commission said that a prospective customer is one that an ESCO contacts either by phone, in-person, or in writing, to sell a product.

Specifically, 1) for telephonic sales to residential customers the marketer must inform the customer where, on the ESCO's website, the Bill of Rights is located and it must be provided with the first correspondence an ESCO sends the customer to be reviewed by the customer prior to the 3-day rescission period; 2) for door-to-door sales or other in-person sales presentations, the Bill of Rights should be provided before a marketer makes its sales presentation; and 3) for internet sales, the Bill of Rights should be provided as a non-avoidable screen which a residential customer must affirmatively click to verify they have seen the document, prior to effecting an enrollment.

The Commission clarified that the Bill of Rights need only be provided to residential customers and customers subject to door-to-door solicitations (using the same definition above).

The revised UBPs also codify the limit on termination fees for residential customers or customers solicited door-to-door as: a) $100 for any contract with a remaining term of less than 12 months; or b) $200 for any contract with a remaining term of more than 12 months or; c) twice the estimated bill for energy services for an average month, provided that an estimate of an average monthly bill was provided to the customer when the offer was made by the ESCO along with the amount of any early termination fee.

To calculate such average monthly bill, the ESCO may use an average of the customer's actual usage for the previous twelve months, or if such data is unavailable at the time the offer is made, the ESCO may apply the usage for a typical customer in that service classification as reported by the distribution utility or the Commission, and multiply it by the ESCO's estimate of the average annual rate that will be charged under the agreement.  The PSC said that Staff will post, within 30 days, the annual average customer usage, by service class for each utility, with such information updated annually by January 15.

Regarding the definition of a residential customer, the PSC said that, "where the utility classifies a multi-metered account as commercial but the account contains a limited number of residential meters or service points, the customer should be considered a commercial customer."

"However, if a non-residential customer has multiple accounts, and the utility classifies one or more accounts as residential, the accounts classified by the utility as residential must be treated as residential for purposes of implementing [the Consumer Bill of Rights and related provisions discussed above]."

The PSC denied recommendations from the utilities to enumerate specific prohibitions against ESCO agents wearing apparel or displaying badges or other items that contain any branding elements that are similar to that of the distribution utility (including logo), and prohibitions against an agent's possession of any item containing the distribution utility's logo including, but not limited to, clip boards, utility bills and/or statements.  The PSC found such activity already falls under prohibitions against deceptive marketing and misrepresentation of the utility, and also found the recommendations to beyond the scope of the proceeding which was limited to revising the UBPs in conformance with the ESCO Consumer Bill of Rights Law.

The effective date of the revised UBPs is January 11, 2011.  Contracts entered prior to that date, even for service beyond the effective date, need not conform to the revised UBPs.  However, after the effective date, the renewal process and renewed contracts themselves must comply with the revised UBPs, regardless of the date of the initial agreement.

 

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