Illinois Governor Signs Retail Energy Bill Prohibiting Termination Fees

Prohibits Retail Supplier Service To Assistance Program Customers, Except Where Savings Guaranteed

Allows Some Auto-Renewals

Requires Suppliers To Report All Rates To Attorney General

Requires Disclosure Of Price To Compare In Marketing, On Supplier Bills

Includes Higher Supplier Security Requirements

New TPV Requirements

August 27, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Illinois Gov. JB Pritzker has signed retail energy marketing bill SB0651, known as the Home Energy and Affordability Transparency (HEAT) Act

Under the new law, beginning January 1, 2020, an alternative retail electric supplier shall not knowingly submit an enrollment to change a customer's electric supply service if the electric utility's records indicate that the customer received financial assistance in the last 12 months from either the Low Income Home Energy Assistance Program or, at the time of enrollment, is participating in the Percentage of Income Payment Plan, unless: (1) the customer's change in electric supply service is pursuant to a government aggregation program adopted in accordance with Section 1-92 of the Illinois Power Agency Act; or (2) the customer's change in electric supply service is pursuant to a Commission-approved savings guarantee plan as described below

Beginning July 1, 2020, an alternative retail electric supplier may apply to the Illinois Commerce Commission to offer a savings guarantee plan to recipients of the Low Income Home Energy Assistance Program or Percentage of Income Payment Plan funding. At a minimum, the savings guarantee plan shall charge customers for electric supply less than the amount charged by the electric utility for electric supply.

The law requires that all marketing materials, including, but not limited to, electronic marketing materials, in-person solicitations, and telephone solicitations, shall disclose the current utility electric supply price to compare applicable at the time the alternative retail electric supplier is offering or selling the products or services to the customer and shall disclose the date on which the utility electric supply price to compare became effective and the date on which it will expire.

All marketing materials, including, but not limited to, electronic marketing materials, in-person solicitations, and telephone solicitations, shall include the following statement: "(Name of the alternative retail electric supplier) is not the same entity as your electric delivery company. You are not required to enroll with (name of alternative retail electric supplier). Beginning on (effective date), the electric supply price to compare is (price in cents per kilowatt hour). The electric utility electric supply price will expire on (expiration date). The utility electric supply price to compare does not include the purchased electricity adjustment factor that may range between +.5 cents and -.5 cents per kilowatt hour. For more information go to the Illinois Commerce Commission's free website at www.pluginillinois.org.".

The marketing requirements described above do not apply to goodwill or institutional advertising.

The Price to Compare disclosure is only required for residential and small commercial customers

The new law requires that every alternative retail electric supplier or electric utility other than the electric utility in whose service area retail customers are located that issues single bills to the retail customers for the services provided by the alternative retail electric supplier or other electric utility to the customers shall include on the single bills issued to residential customers the current utility electric supply price to compare that would apply to the customer for the billing period if the customer obtained supply from the utility. The current utility electric supply price shall be the sum of the electric supply charge and the transmission services charge and shall disclose that the price does not include the monthly purchased electricity adjustment.

Every electric utility that provides delivery and supply services shall include on each bill issued to residential customers who obtain supply from an alternative retail electric supplier the current utility electric supply price to compare that would apply to the customer for the billing period if the customer obtained supply from the utility. The current utility electric supply price to compare shall be the sum of the electric supply charge and the transmission services charge and shall disclose that the price does not include the monthly purchased electricity adjustment.

Under the law, by May 31, 2020 and every May 31 thereafter, suppliers shall submit to the Commission and the Office of the Attorney General the rates the retail electric supplier charged to residential customers in the prior year, including each distinct rate charged and whether the rate was a fixed or variable rate, the basis for the variable rate, and any fees charged in addition to the supply rate, including monthly fees, flat fees, or other service charges

Suppliers shall make publicly available on their website, without the need for a customer login, rate information for all of its variable, time-of-use, and fixed rate contracts currently available to residential customers, including, but not limited to, fixed monthly charges, early termination fees, and kilowatt-hour charges.

The law allows utilities to discuss retail supplier pricing information with customers as follows.

An electric utility may:

(1) disclose the current utility electric supply price to a retail customer who takes electric power and energy supply service from an alternative retail electric supplier;

(2) disclose the supply price the customer is paying as reflected on the customer's bill, if known;

(3) furnish to a retail customer a list of frequently asked questions to be used by the retail customer in evaluating electric power and energy supply rate offers by alternative retail electric suppliers; this list may include, but is not limited to, the following: (A) length of the contract; (B) the price per kilowatt hour, and whether the contract price is fixed or variable, and if variable, the circumstances under which the rate may change; (C) whether penalties or early termination fees apply if the customer terminates the contract before the expiration of its term; and (D) whether the customer may be subject to any other adjustments, penalties, surcharges, or costs beyond the electric power and energy supply rate;

(4) provide to a retail customer education information published by the Office of Retail Market Development and the Office of the Attorney General regarding the selection and evaluation of electric power and energy supply rate offers by alternative retail electric suppliers; and

The law does not include a previously proposed switch block mechanism

The law adopts new requirements for TPVs.

Each disclosure made during the third-party verification must be made individually to obtain clear acknowledgment of each disclosure. The alternative retail electric supplier must be in a location where he or she cannot hear the customer while the third-party verification is conducted.

After initiating a TPV, "The alternative retail electric supplier shall not contact the customer after the third-party verification for a period of 24 hours unless the customer initiates the contact."

The law provides that, beginning January 1, 2020, residential and small commercial retail customers shall have a right to terminate their contracts with alternative retail electric suppliers at any time without any termination fees or penalties.

The law allows some auto-renewals with new disclosures, including new disclosures at the time of the initial contract

The law only prohibits auto-renewals from fixed to variable, and does allow other auto-renewals, including renewal onto a higher (non-variable) rate

The law provides that, beginning January 1, 2020, an alternative retail electric supplier shall not sell or offer to sell any products or services to a consumer pursuant to a contract in which the contract automatically renews, unless an alternative retail electric supplier provides to the consumer at the outset of the offer, in addition to other disclosures required by law, a separate written statement titled "Automatic Contract Renewal" that clearly and conspicuously discloses in bold lettering in at least 12-point font the terms and conditions of the automatic contract renewal provision, including: (i) the estimated bill cycle on which the initial contract term expires and a statement that it could be later based on when the utility accepts the initial enrollment; (ii) the estimated bill cycle on which the new contract term begins and a statement that it will immediately follow the last billing cycle of the current term; (iii) the procedure to terminate the contract before the new contract term applies; and (iv) the cancellation procedure.

If the alternative retail electric supplier sells or offers to sell the products or services to a consumer during an in-person solicitation or telemarketing solicitation, the renewal disclosures described above shall also be made to the consumer verbally during the solicitation.

The law then further requires two renewal notices to be sent to customers before renewal, with various disclosures

Notably, the law requires side-by-side rate comparisons as follows:

• for a fixed rate contract, the renewal disclosure must include a side-by-side comparison of the current price and the new price

• for a variable rate contract or time-of-use product in which the first month's renewal price can be determined, a side-by-side comparison of the current price and the price for the first month of the new variable or time-of-use price must be provided

• for a variable or time-of-use contract based on a publicly available index, a side-by-side comparison of the current formula and the new formula must be provided

The law provides that an alternative retail electric supplier shall not automatically renew a consumer's enrollment after the current term of the contract expires when the current term of the contract provides that the consumer will be charged a fixed rate and the renewed contract provides that the consumer will be charged a variable rate. In such case, the customer must expressly consent to the contract renewal in writing or by electronic signature at least 30 days, but no more than 60 days, before the contract expires for such contract to be renewed

Concerning the use of utility logos, the law provides that an alternative retail electric supplier shall not utilize the name of a public utility in any manner that is deceptive or misleading, including, but not limited to, implying or otherwise leading a customer to believe that an alternative retail electric supplier is soliciting on behalf of or is an agent of a utility. An alternative retail electric supplier shall not utilize the name, or any other identifying insignia, graphics, or wording that has been used at any time to represent a public utility company or its services, to identify, label, or define any of its electric power and energy service offers.

An alternative retail electric supplier that is an affiliate of an Illinois public utility and that was doing business in Illinois providing alternative retail electric service on January 1, 2016 may continue to use that public utility's name, logo, identifying insignia, graphics, or wording in its business operations occurring outside the service territory of the public utility with which it is affiliated.

For the provisions described above, the law also includes substantively similar provisions applicable to the retail natural gas market, except with a notable difference regarding the ban on low-income service

For natural gas assistance customers, retail suppliers may only serve such customers under a guaranteed savings plan. There is no provision allowing suppliers to serve assistance program gas customers as part of a municipal aggregation

The law further provides that the language described above concerning the PTC and the fact that the supplier is not the utility shall be made as part of enrollment disclosures.

The law provides that the alternative retail electric supplier agent shall obtain consent to enter multi-unit residential dwellings. Consent obtained to enter a multi-unit dwelling from one prospective customer or occupant of the dwelling shall not constitute consent to market to any other prospective customers in the dwelling without separate consent.

Any telemarketing solicitations that lead to a telephone enrollment must be recorded and retained for a minimum of 2 years. All telemarketing calls that do not lead to a telephone enrollment, but last at least 2 minutes, shall be recorded and retained for a minimum of 6 months.

All inbound enrollment calls that lead to an enrollment shall be recorded, and the recordings shall be retained for a minimum of 2 years. An inbound enrollment call that does not lead to an enrollment, but lasts at least 2 minutes, shall be retained for a minimum of 6 months.

The law also includes higher supplier security requirements for suppliers serving residential customers and those using in-person solicitations.

Specifically, for electric suppliers, the amount of the bond required for licensure shall equal $30,000 if the applicant seeks to serve only nonresidential retail customers with maximum electrical demands of one megawatt or more, $150,000 if the applicant seeks to serve only non-residential retail customers with annual electrical consumption greater than 15,000 kWh, or $500,000 if the applicant seeks to serve all eligible customers. Applicants shall be required to submit an additional $500,000 bond if the applicant intends to market to residential customers using in-person solicitations.

For gas suppliers, the amount of a bond required for a supplier shall equal $150,000 if the applicant seeks to serve only nonresidential retail customers or $500,000 if the applicant seeks to serve all eligible customers. Applicants shall be required to submit an additional $500,000 bond if the applicant intends to market to residential customers using in-person solicitations.

The Illinois Competitive Energy Association (ICEA) said in a statement that, "The Illinois Competitive Energy Association (ICEA) applauds Governor Pritzker for signing and Attorney General Raoul for his leadership on SB 651, the Home Energy and Affordability Transparency Act, that will correct marketing abuses in Illinois’ competitive retail energy residential markets."

"This comprehensive consumer protection bill will root out misleading and deceptive energy suppliers, require important consumer disclosures, and ensure integrity in the competitive electric and natural gas residential markets," said Kevin Wright, ICEA’s President and a former Illinois Commerce Commission Chairman.

"ICEA has long advocated for stronger enforcement over competitive supplier marketing practices. ICEA believes this bill will substantially improve the competitive retail energy markets that provide innovative and customized energy products to residential customers as an alternative to utility supply service," said Wright.

In a statement upon passage of the bill in May, Teresa Ringenbach, Sr. Manager of Government & Regulatory Affairs for the Midwest for Direct Energy had said, "We are pleased that the Attorney General’s office and the industry came together on a bill we believe will greatly reduce the number of teaser products in the market through stronger consumer protections. While this is a good start, Illinois consumers are still required to spend up to 47 days more than customers in other states to switch providers and plans. We will continue advocating for progressive reforms to give Illinois consumers greater control over their competitive choices."

Additional reaction to enactment was as follows:

"Passing the HEAT Act was one of my first and top legislative priorities as Attorney General, which is why it was important to me to personally engage with the sponsors, legislators and stakeholders to advance the HEAT Act. My office has resolved investigations against several of these suppliers, and I am committed to using the enforcement tools in the HEAT Act to continue to protect consumers against unscrupulous energy suppliers that use fraud and deception to pad their profits at the expense of hardworking Illinoisans." said Attorney General Kwame Raoul. "I would like to thank Governor Pritzker for signing this important consumer protection legislation, as well as Leaders Lightford and Gordon-Booth for their advocacy in getting this bill across the finish line. I also appreciate the support of consumer protection advocates, which helped us pass this measure by highlighting a problem that impacts ratepayers across the state."  

"The data clearly demonstrates that alternative suppliers focus their signup efforts on low-income neighborhoods, those where English is a secondary language and communities of color," said Sen. Kimberly A. Lightford (D-Maywood). "I am proud to stand with Governor Pritzker and Attorney General Raoul to protect our most vulnerable residents from unknowingly signing contracts that will result in rate hikes they cannot afford."  

"It's been incredibly rewarding to fight alongside AG Raoul to lower utility costs for families and seniors by cracking down on misinformation and misrepresentations provided by alternative retail energy suppliers. Some of the deceptive practices that we uncovered were intentionally targeted at low-income black and brown communities," said Rep. Jehan Gordon-Booth (D-Peoria). "This measure that the Governor is signing requires that consumers receive clear and direct information about the length of utility contracts, notices before renewal, and are not charged termination fees."  

"The HEAT Act is a victory for consumers. For too long, too many consumers have paid too much to alternative electric and gas suppliers," said Abe Scarr, Illinois PIRG Director. "Instead of competing by providing the highest quality energy service, many alternative suppliers have used unfair and deceptive marketing practices, buried important policies in fine print and dangled teaser rates that lead to ballooning bills."  

"The Heat Act will help Illinois consumers avoid bad deals and rip-offs, which, unfortunately, have become commonplace," said Bryan McDaniel with Citizens Utility Board. "Every healthy market has rules, and the Heat Act will go a long way towards improving energy markets for Illinois consumers."

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