Hearing Officer Orders Development Of Straw Proposal For Calculation Of Monthly Wholesale Index Cost For Use In Comparison To Retail Supplier Variable Rate Offerings -- EnergyChoiceMatters.com

Hearing Officer Orders Development Of Straw Proposal For Calculation Of Monthly Wholesale Index Cost For Use In Comparison To Retail Supplier Variable Rate Offerings

Directs Regulator's Staff To Develop Straw Proposal On Appropriate Retail Supplier Products For Low-Income Customers

Proposal For Variable Rate Contract Disclosures, Rate Change Notices To Be Developed

March 17, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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A Massachusetts DPU hearing officer issued directives to retail energy suppliers and DPU Staff to develop straw proposals regarding various Tier Two initiatives in the DPU's ongoing retail energy markets investigation (DPU 19-07)

The hearing officer noted that Department staff has recognized that competitive suppliers may consider several factors in determining prices for their monthly-price products.

"One of the primary factors that competitive suppliers take into consideration is the wholesale market costs that they will incur in providing service to their monthly-price customers during a particular month. Developing an index for such costs may allow the Department to better understand the extent to which competitive suppliers’ monthly prices track wholesale market costs," the hearing officer said

"To facilitate discussion among stakeholders on this issue, Department staff requests that the Competitive Supplier Group develop a straw proposal for the method by which a monthly wholesale market cost index may be calculated for the electric and gas markets," the hearing officer directed.

Low-Income Customers

On June 6, 2020, the Department issued D.P.U. 19-07-B, in order to explore the extent of the impact of the competitive supply markets on: (1) the distribution companies’ Arrearage Management Programs’ success rates; (2) low-income customers as a whole; and (3) the general subsidy costs for the low-income assistance programs paid for by all ratepayers.

During a previously reported January 7, 2021 technical session, Department staff summarized the information provided by the electric and gas distribution companies related to the impact of the competitive supply markets on low-income customers (See details here)

In addition, to facilitate discussion during the technical session, staff presented a proposal on best practices that may apply to products offered to low-income customers. Specifically, Staff presented two alternatives: (1) establishing product limitations for low-income customers similar to that proposed by Staff earlier in the proceeding (Staff had earlier proposed that retail suppliers rates to low-income customers not exceed the applicable default service price) or (2) requiring all suppliers to report pricing information on low-income products to assist the Department in identifying suppliers whose 'performance' may warrant further scrutiny, with such suppliers potentially subject to information/notification requirements (e.g., provide low-income customers with information regarding the 'premium' they are paying vis-à-vis basic service)

The hearing officer directed that, "To further facilitate discussion among stakeholders, staff will take the lead in drafting a straw proposal for the products that competitive suppliers may provide to low-income customers."

TPV Process

As previously reported, the DPU has been considering a more "interactive" third party verification (TPV) process under which customers would be required to recite specific material information, and not just answer "yes/no".

The hearing officer noted that, "In light of the important consumer protection function provided by the TPV process, Department staff seeks to explore creating uniformity among competitive suppliers regarding the manner in which they conduct TPV calls, including the scripts used during those calls."

"To facilitate discussion among stakeholders, Department staff requests that the Competitive Supplier Group develop a straw proposal for best practices on the conduct of TPV calls and a uniform script that competitive suppliers would use during TPV calls," the hearing officer directed

Rate Change Notices, Other Variable Rate Issues

Department staff have sought to explore creating uniform rules for competitive suppliers to notify customers any time that a price increases from one month to the next

To facilitate discussion among stakeholders on this issue, the hearing officer said that Department staff will draft a straw proposal for the timing, format, and language of such notifications.

On a similar issue, the hearing officer noted that, currently, competitive suppliers that offer products for which the prices are subject to change monthly are required to inform customers only of the initial month’s price, either through Contract Summary Forms for monthly-price products or through automatic renewal notifications.

Department staff seeks to explore uniformity among competitive suppliers regarding the manner in which subsequent month’s prices are made available to customers

The hearing officer directed that the Competitive Supplier Group draft a straw proposal for best practices regarding: (1) when the next month’s price should be made available to customers (vis-à-vis when the prices take effect), and (2) the vehicle(s) through which this price should be made available.

Additionally, while the DPU has specified the price-related language that competitive suppliers must use on their Contract Summary Forms for fixed-price products, the language for variable rate plans is reviewed for each supplier by the DPU (with no uniform language). Department staff would like to explore uniform price-related language for inclusion in Contract Summary Forms for monthly-price products.

To facilitate discussion among stakeholders on this issue, staff will draft a straw proposal for such language.

Department staff will also draft a straw proposal for the reporting of information related to monthly-price products, similar to the information required to be reported for auto-renewal products (which requires the reporting of the number of customers on auto-renewals and other details)

Auto-Renewal Products

The Competitive Supplier Group was directed to draft a straw proposal for best practices related to the terms and conditions of automatic renewal products, taking into consideration the presentation made by staff during a technical session.

Staff had proposed that auto-renewal products be subject to limitations including the following:

• Terms and conditions of new product must remain unchanged from initial product, except for price and term
• Fixed products can only renew to fixed products
• No early cancellation fee on auto-renewal product

Telemarketing Notices

In D.P.U. 19-07-A at 19-30, the Department established a door-to-door marketing notification requirement for competitive suppliers. "This requirement has provided the Department with useful information regarding door-door marketing activities being conducted in the Commonwealth," the hearing officer said

Department staff seeks to explore a similar notification requirement for telemarketing activities.

To facilitate discussion among stakeholders on this issue, Department staff will draft a straw proposal for the frequency and timing of such notifications, and the information to be provided.

Access To Supplier Marketing Call Recordings

Under prior order, the entire marketing call must be recorded

Department staff seeks to explore a process for proactively requesting recordings from suppliers, rather than in reaction to consumer complaints received by the Department’s Consumer Division. To facilitate discussion among stakeholders, Department staff will draft a straw proposal for such a process.

Enroll By Wallet

To the extent that the Competitive Supplier Group would like to propose an 'Enroll with Your Wallet' approach, the Competitive Supplier Group should draft a straw proposal taking into account the previously reported issue raised by the distribution companies and Department staff during a technical session, the hearing office directed.

The Competitive Supplier Group should also identify differences, if any, in the manner in which the straw proposal should be implemented for the electric and gas competitive markets.

In summation, Department staff will draft straw proposals for (some additional issues listed here which are self explanatory and do not warrant additional narrative):

1. uniform Contract Summary Form language for monthly-price products
2. notification of increase in monthly price
3. customer complaint scorecard
4. reporting requirement for monthly price products
5. best practices for products offered to low-income customers
6. reporting requirement for renewable energy products (including voluntary green plans)
7. telemarketing notifications
8. pro-active access to marketing call recordings

The Competitive Supplier Group shall draft straw proposals for:

1. customer access to future monthly prices
2. wholesale market price index
3. best practices for the terms and conditions of automatic renewal products
4. best practices for the conduct of TPV calls, including a uniform TPV script
5. an 'Enroll with Your Wallet' approach

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