CL&P Unaware of Any Law or Rule Prohibiting Automatic Supplier Re-enrollments

June 16, 2011
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Connecticut Light & Power informed the Connecticut DPUC that it is unaware of any rule or law that explicitly states electric suppliers may not automatically re-enroll customers should the customer's underlying customer contract provide for such action.

The DPUC is examining issues regarding an incumbent (original) supplier's re-enrollment of customers who have been switched away from their incumbent supplier, on the basis that the customer did not provide notice of the switch to the incumbent supplier. While a common practice, the DPUC became aware of the issue through its use by ResCom Energy, LLC, as only noted by Matters (6/1).

In what ResCom says is a protection against slamming, ResCom may re-enroll any customer for whom it receives a drop transaction if these customers do not provide notice of contract termination to ResCom. The re-enrollment is "automatic" in that ResCom relies on the customer's original contract and verification for the enrollment, and does not seek a new verification.

Customers agree to this automatic re-enrollment provision as part of ResCom's terms of service, to prevent unauthorized switches.

ResCom noted that it borrowed the policy from a Dominion Retail terms of service dated January 2009.

ResCom does not prevent the drop from occurring (nor could it under the EDI protocols), so the customer is switched to the new supplier for at least one billing period. ResCom then re-enrolls the customer at the next available meter read.

Asked for comment by the DPUC about the process, CL&P said that it is, "unaware of a Department decision, State statute or regulation which explicitly states that automatic invalidation clauses of third party cancellations are impermissible."

CL&P also confirmed for the DPUC that such automatic re-enrollments would have no impact on the utility enrollment process, and that the scheduled drop would occur regardless. In its initial notice soliciting comments, the DPUC appeared to conflate ResCom's re-enrollment with actually invalidating (e.g. stopping) the switch to the new supplier, which as noted above does not occur.

United Illuminating, however, emphasized that it is "not aware that an automatic invalidation policy is permissible under any billing and metering protocol nor any Department decision, state regulation, or state statute." UI conceded that automatic re-enrollments are not specifically addressed in its Supplier Service Agreement and Terms and Conditions.

UI further said that the Electronic Data Interchange protocols, "do not support the 'automatic invalidation policy;'" however, UI was apparently referencing the fact that the incumbent supplier cannot stop a switch to a new supplier from occurring (e.g. unlike under a "contest period" which does not exist in Connecticut).

As indicated by ResCom's actions, automatic re-enrollments are "supported" by the EDI protocols insofar as they can be completed provided that the customer is lost for at least one billing cycle.

Further addressing a potential contest period, UI said that, "[s]uch a policy creates many issues that would require extensive stakeholder discussion before an implementation decision could be made."

"An evaluation of how to implement any such protocol in the Company's systems, the cost for providing such a protocol and a determination of who should pay that cost would be required," UI said.

ResCom argued that the DPUC's Guidelines for Marketing and Sales Practices permit automatic re-enrollments, as the guidelines state that, "[n]othing in these Guidelines precludes month-to-month contracts with termination effected only upon notice by either party."

ResCom's terms of service require notice by the customer for the contract to be terminated, and thus ResCom re-enrolls the customer if the customer is switched away without receipt of such notice.

ResCom said that the customer's original, verified agreement to the contract provides the verification needed to execute any enrollment under Conn. Gen. Stat. Sec. 16-245s, and thus the re-enrollments comply with statute.

Regarding whether automatic re-enrollments should be prohibited, ResCom said that, "there is no valid reason to prohibit such a contractual provision that protects customers from unauthorized switches in service by requiring that they personally notify their existing supplier if they intend to switch to a new supplier."

Automatic re-enrollment "customer protection" clauses were common among New York ESCOs prior to revisions in the Uniform Business Practices which specifically prohibited the practice, and require a new verification for every enrollment (see 9/23/09).

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