RULES AND REGULATIONS
Title 52—PUBLIC UTILITIES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[ 52 PA. CODE CH. 54 ]
[ L-2014-2409385 ]
Disclosure Statement for Residential and Small Business Customers; Notices of Contract Expiration or Changes in Terms for Residential and Small Business Customers
[44 Pa.B. 3522]
[Saturday, June 14, 2014]The Pennsylvania Public Utility Commission (Commission), on April 3, 2014, adopted a final-omitted rulemaking order amending regulations regarding disclosure statements for residential and small business customers, and adding § 54.10 (relating to notice of contract expiration or change in terms for residential and small business customers).
Executive Summary
The Commission adopts this Final-Omitted Rulemaking Order to amend our customer information regulations at 52 Pa. Code § 54.5 and add regulations at 52 Pa. Code § 54.10 providing for a disclosure statement for residential and small business customers and providing for the provision of notices of contract expiration or changes in terms for residential and small business customers. With this Final-Omitted Rulemaking Order, the Commission enhances these rules to guarantee ample customer protections are in place and that customers are provided with the necessary information to make informed decisions when shopping in Pennsylvania's competitive retail electricity market. As such, the Commission is amending its regulations to ensure, among other things, that future EGS disclosure statements include an EGS Contract Summary of key contractual terms and conditions; additional information regarding variable-priced products, including disclosure of the price to be charged for the first billing cycle of generation service, customer access to historical information and a more specific explanation of limits on variability.
Public Meeting held
April 3, 2014Commissioners Present: Robert F. Powelson, Chairperson; John F. Coleman, Jr., Vice Chairperson; James H. Cawley; Pamela A. Witmer; Gladys M. Brown
Rulemaking to Amend the Provisions of 52 Pa. Code, Section 54.5 Regulations Regarding Disclosure Statement for Residential and Small Business Customers and to Add Section 54.10 Regulations Regarding the Provision of Notices of Contract Expiration or Changes in Terms for Residential and Small Business Customers; L-2014-2409385
Final-Omitted Rulemaking Order By the Commission:
The Pennsylvania Public Utility Commission (Commission) adopts this Final-Omitted Rulemaking Order to amend our customer information regulations at 52 Pa. Code § 54.5 and add regulations at 52 Pa. Code § 54.10 providing for a disclosure statement for residential and small business customers and providing for the provision of notices of contract expiration or changes in terms for residential and small business customers. The existing regulations at 52 Pa. Code §§ 54.1—54.9 require that electric generation suppliers (EGSs) enable customers to make informed choices regarding the purchase of electricity offered by providing adequate and accurate customer information in an understandable format, including rules regarding the disclosure of contract terms and conditions. Section 54.5 directs EGSs to provide residential and small business customers with a disclosure statement containing written terms and conditions including, but not limited to: pricing information, length of agreement, cancellation provisions, penalties, and an explanation of any bonuses or incentives. See 52 Pa. Code § 54.5.
With this Final-Omitted Rulemaking Order, the Commission enhances these rules to guarantee ample customer protections are in place and that customers are provided with the necessary information to make informed decisions when shopping in Pennsylvania's competitive retail electricity market. As such, the Commission is amending its regulations to ensure, among other things, that future EGS disclosure statements include an EGS Contract Summary of key contractual terms and conditions; additional information regarding variable-priced products, including disclosure of the price to be charged for the first billing cycle of generation service, customer access to historical information and a more specific explanation of limits on variability.
The Commission has also added a new section to Chapter 54, 52 Pa. Code § 54.10, which provides the notice provisions EGSs must follow before expiration or changing the terms of a residential or small business customer's contract. Specifically, this new section directs EGSs to provide two notices, the first to be issued between 45 and 60 days before the expiration or change in terms of the contract and the second to be issued no less than 30 days before the expiration or change in terms of the contract. These notices will provide customers with information regarding their option to stay with their existing EGS, to purchase generation supply from a different EGS or to return to default service.
For the reasons more fully explained herein, the Commission finds good cause that undergoing the traditional notice and comment procedures for these regulations is impracticable, unnecessary, and contrary to the public interest. See 45 P. S. § 1204(3). In light of the record-breaking recent wave of informal and formal complaints filed with the Commission concerning energy price increases in January 2014, the Commission believes it is essential to the public interest to act promptly and expeditiously to amend its regulations to require EGSs to provide more sufficient disclosures and notices to customers regarding products offered in the retail electric market. Accordingly, for good cause, we issue this Final-Omitted Rulemaking Order to amend our regulations at 52 Pa. Code § 54.5 and add regulations at 52 Pa. Code § 54.10 in order to ensure that residential and small business consumers receive adequate disclosures and notices when shopping for electricity in the Commonwealth.
Background
The Public Utility Code requires EGSs to provide adequate and accurate information to customers. See 66 Pa.C.S. § 2807(d)(2). Specifically, Section 2807(d)(2) requires the Commission to:
[E]stablish regulations to require each electric distribution company, electricity supplier, marketer, aggregator and broker to provide adequate and accurate customer information to enable customers to make informed choices regarding the purchase of all electricity service offered by that provider. Information shall be provided to consumers in an understandable format that enables consumers to compare prices and services on a uniform basis.66 Pa.C.S. § 2807(d)(2).
Pursuant to this statutory directive, the Commission first promulgated regulations in 1998 to enable customers to make informed choices when purchasing electricity generation. See 52 Pa. Code §§ 54.1—54.9 (relating to customer information). The regulations at 52 Pa. Code §§ 54.4—54.6 (relating to the bill format and disclosure statements for residential and small business customers and to requests for information about generation supply) were later amended in 2007, after receiving and incorporating comments from numerous stakeholders.
In 2010, the Commission adopted Interim Guidelines which provided general guidance on the timing and content of advanced notifications that give customers important information about their options prior to the expiration of or a change in terms of their current contract for generation supply. Interim Guidelines Regarding Advance Notification by an Electric Generation Supplier of Impending Changes Affecting Customer Service; Amendment re: Supplier Contract Renewal/Change Notices (Interim Guidelines), Final Order, at Docket Nos. M-2010-2195286 and M-0001437 (entered Sep. 23, 2010).
With this Final-Omitted Rulemaking, the Commission specifically examines and updates 52 Pa. Code § 54.5 regarding disclosure statements for residential and small business customers. This Section requires that EGSs provide disclosure statements to residential and small business customers when those customers request an EGS to initiate service; when an EGS proposes to change the terms of service; or when service commences from a default service provider. See 52 Pa. Code §§ 54.5(b)(1—3). These disclosure statements must include, among other things: the generation charges; conditions of and any applicable limitations on variable prices; explanations of cancellation fees; and information regarding a customer's options upon the expiration of a fixed term agreement. See Annex A, § 54.5.
Additionally, in this Final-Omitted Rulemaking, the Commission seeks to add a new section outlining requirements for EGSs to provide notices to residential and small business customers when a fixed term contract is expiring or when an EGS is proposing to change the terms of a contract. See Annex A, § 54.10.
History of the Commission's Review of Its Customer Information Regulations
In September of 2010, the Commission reviewed its customer information regulations and provided Interim Guidelines, as noted previously. In its Interim Guidelines, the Commission provided general guidance on the timing and content of advanced notifications that give customers important information about their options prior to the expiration of or a change in terms of their current contract for generation supply.
Section 54.5(g) of the Commission's regulations currently states that an EGS must send a notice to alert a customer about the pending expiration or a change in terms of a contract for electric generation. This Section reads as follows:
(g) Disclosure statements must include the following customer notification:(1) ''If you have a fixed term agreement with us and it is approaching the expiration date or whenever we propose to change our terms of service in any type of agreement, you will receive written notification from us in each of our last three bills for supply charges or in corresponding separate mailings that precede either the expiration date or the effective date of the proposed changes. We will explain your options to you in these three advance notifications.''52 Pa. Code § 54.5(g)(1).
According to the Interim Guidelines, an ''Initial Notice'' is to be provided to a customer between 52 and 90 days before a contract expires or before a change in contract terms takes effect, and is to include a general description of the proposed changes to the terms of service; the effective date of the change; and the reason for the change(s). Additionally, this Initial Notice is to explain that a customer will receive a second notice with more details, including an explanation of the customer's options. See Interim Guidelines at Appendix A, Section II(a).
A second notice (the ''Options Notice'') is to be provided to the customer at least 45 days prior to the expiration or a change in terms of the contract. The Options Notice is to include the specific changes to the terms of service being proposed; information on new prices; an explanation of the customer's options and how to exercise those options; the date by which the customer must exercise one of the options; the telephone numbers and website addresses for the Commission and the Office of Consumer Advocate (OCA); and the electric distribution company's (EDC's) Price To Compare (PTC). See Interim Guidelines at Appendix A, Section II(b).
During the winter of 2014, numerous retail electric customers with variable-rate contracts experienced sharp price increases resulting from price fluctuations in the wholesale and retail electricity markets. In light of this and after a renewed review of the Interim Guidelines adopted over three years ago, the Commission finds that codifying, strengthening, and augmenting those guidelines as expeditiously as possible is in the public interest. Through this Final-Omitted Rulemaking Order, the Commission seeks to promulgate regulations, as soon as practicable, to require EGSs to provide stronger disclosures that contain more concise, transparent terms and conditions, especially concerning variable-rate products.
Recently, the Commission sought from its Office of Competitive Market Oversight (OCMO), recommendations on how to provide shopping customers with a disclosure statement that contains more concise, transparent terms and conditions, especially concerning variable-rate products, and how to provide greater clarity of customers' rights and responsibilities when shopping for electricity generation supply. In an Order adopted at its February 20, 2014 Public Meeting, the Commission reaffirmed the General Assembly's directive that EGSs provide:
. . . [A]dequate and accurate customer information to enable customers to make informed choices regarding the purchase of all electricity services offered by the provider. Information shall be provided to consumers in an understandable format that enables consumers to compare prices and services on a uniform basis.Review of Rules, Policies and Consumer Education Measures Regarding Variable Rate Retail Electric Products, Docket No. M-2014-2406134, (Order entered Mar. 4, 2014) (Variable Rate Order) at 4-5, citing 66 Pa.C.S. § 2807(d).
In the Variable Rate Order, the Commission expressed particular concern for customers receiving their electric supply service from an EGS under a contract with a monthly adjusted variable rate. As indicated supra, many of these customers experienced sharp increases in their monthly bills during the early months of 2014 due to the demands of the winter heating season and unprecedented price spikes in the wholesale electricity market. While acknowledging that it is important for consumers to carefully review the terms of their contracts, including conditions of variability, the Commission believes that EGSs must take further steps to ensure that customers can easily find and understand information related to price, price variability and history, cancellation fees, renewal notices, and other terms and conditions.
Additionally, in the Variable Rate Order, the Commission outlined measures it had immediately undertaken following the events of early 2014. Specifically, Commission staff initiated the following measures to help ensure that consumers are more informed about variable rate products:
• Posting of a ''consumer alert'' as a slider on the Commission's website at www.puc.pa.gov informing customers that they may see price fluctuations if enrolled in a variable-priced contract and provided a number of steps a customer should take to become more aware of their options;
• Posting of an abridged version of the ''consumer alert'' referenced above on the Commission's www.PaPowerSwitch.com website;
• Reissuing the Commission's January 31, 2014 press release noting information on the Commission's website and PaPowerSwitch.com;
• Development of a separate page on www.PaPowerSwitch.com outlining the difference between fixed and variable-priced contracts;
• Development of a fact sheet regarding fixed versus variable rates; and,
• Addition of a fixed versus variable question-and-answer (''Q&A'') on the Commission's ''Shopping for Electricity'' fact sheet and on www.PaPowerSwitch.com.
In an effort to obtain feedback from stakeholders on the proposed changes to our Disclosure Regulations included in this Final-Omitted Rulemaking Order, the Commission issued a Secretarial Letter on March 19, 2014, alerting affected parties of the intention to promulgate a Final-Omitted Rulemaking that would amend existing Regulations at 52 Pa. Code, Chapter 54, to revise disclosure statement requirements for residential and small business customers. Rulemaking to Amend the Provisions of 52 Pa. Code, Section 54.5 Regulations Regarding Disclosure Statement for Residential and Small Business Customers and to Add Section 54.10 Regulations Regarding the Provision of Notices of Contract Renewal or Changes in Terms, Docket No. L-2014-2409385, (Secretarial Letter served Mar. 19, 2014) (Secretarial Letter). This Secretarial Letter noted that while some amendments would codify, with modifications, existing contract renewal/change in terms notice requirements contained in the Interim Guidelines, other changes raise new issues that had not previously been considered. As a result, the Commission requested comments on its proposed regulations in order to give an opportunity for those entities most affected to provide recommendations prior to the issuance of this Final-Omitted Rulemaking Order.
In response to the March 19, 2014 Secretarial Letter, the Commission received comments related to these and other issues regarding the effect the proposed amendments would have on the Commission's existing regulations and EGS operations. Comments were filed by the following parties: Pennsylvania Representatives Robert W. Godshall and Peter J. Daley (Representatives Godshall and Daley); the Office of Consumer Advocate (OCA), the Office of Small Business Advocate (OSBA), Citizen Power, UGI Energy Services, LLC (UGIES), Washington Gas Energy Services, Inc. (WGES), Constellation NewEnergy, Inc. (CNE) and Constellation Energy Power Choice, Inc. (formerly MXenergy Electric, Inc.) (CEPCI) (collectively, Constellation), IGS Energy (IGS), the Retail Energy Supply Association (RESA), NRG Retail Northeast Companies1 (NRG), Alphabuyer, the National Energy Marketers Association (NEM), and FirstEnergy Solutions Corp. (FES).
On March 18, 2014, Pennsylvania Senators Robert M. Tomlinson and Lisa M. Boscola (Senators Tomlinson and Boscola) sent to the Commission a letter notifying us that they had received numerous complaints from constituents enrolled in variable-priced contracts. These complaints were specifically in regard to high electric bills caused by retail electric rates spikes over this past winter. Additionally, the letter stated that Senators Tomlinson and Boscola had also received constituent complaints about being unknowingly placed on a variable-priced plan at the end of a fixed-term contract. Senators Tomlinson and Boscola stated that the Commission should immediately begin revising its regulations with regard to variable-priced contracts and the treatment of customers who have an expiring fixed-term contract. The letter stated that customers should be fully informed of the rates they will be paying and that the requirements regarding the timing and type of notifications provided to customers should be strengthened. Lastly, Senators Tomlinson and Boscola encouraged EGSs to provide to customers more information regarding price variability and to provide more timely and complete notices of changes to or expiration of a fixed-term contract.
In addition, two residential customers e-mailed either the Commission's website or www.PaPowerSwitch.com with comments regarding the Commission's proposed regulatory changes to EGS disclosure statements, as well as changes to customer notices regarding ''contract renewals'' and ''changes in terms.''
One customer, Mr. David Tranquillo, was supportive of changes to contract terms and conditions, including rebates and incentives, being explained ''in bold print in a size larger than the rest of the offer.'' Another customer, Mr. Ron Brenize, was supportive of changes that would require suppliers to notify customers of rate increases via mail, e-mail, or on the bill. He added ''this would give the consumer time to review and make changes if they desire.''
Discussion
The Commission has reviewed the comments filed in regard to its proposals and will address those that necessitate more discussion below. As a preliminary matter, we note that any issue or comment that we do not specifically address has been duly considered and will be denied without further discussion. It is well settled that the Commission is not required to consider, expressly or at length, each contention or argument raised by the parties. Consolidated Rail Corp. v. Pa. PUC, 625 A.2d 741 (Pa. Cmwlth. 1993); see also, generally, University of Pennsylvania v. Pa. PUC, 485 A.2d 1217 (Pa. Cmwlth. 1984).
1. Amendment to § 54.5(c) Contracts with variable pricing
Currently, Section 54.5(c) states the following:
(2) The variable pricing statement, if applicable, must include:52 Pa. Code § 54.5(c)(2).
a. Comments
UGIES believes the ''if applicable'' language is ambiguous and can be misinterpreted. One interpretation may be that a statement on the limits of price variability must be included only ''if applicable.'' As such, UGIES states that existing EGS disclosure statements may not contain a statement that there is no limit on price variability and believes that a revision to the language is warranted to clarify the EGSs with variable prices must clearly and conspicuously explain any limits (or lack thereof) on how a price may change. UGIES Comments at 4. Notably, OCA also made a similar suggestion to this regulation. OCA Comments at 6.
b. Resolution
The Commission agrees with UGIES's comments regarding the potential misinterpretation of the current language at § 54.5(c) and has revised the language as follows:
(2) The variable pricing statement[, if applicable,] must include:52 Pa. Code § 54.5(c)(2).
2. Additions to § 54.5(c)(2)(ii) Limits on price variability
As previously discussed, the Commission believes that changes to its regulations regarding the disclosure statements provided to residential and small business customers are required to provide more ample consumer protections and to increase customer awareness and education about the competitive electric marketplace. Specifically, we have concerns that customers are not receiving enough information regarding the rates being charged by EGSs and the circumstances under which those rates may vary. Currently, Section 54.5(c)(2)(ii) only requires that the limits on price variability be disclosed. Because many customers on variable-priced contracts during the events of early 2014 either were not enrolled in contracts that contained any sort of pricing limitations or perhaps were unaware of those limitations, or lack thereof, there was significant confusion and frustration with the shopping experience (as evidenced by the thousands of inquiries and complaints we have received on this subject). Due to such a negative turn of events and in the interest of all residential and small business customers participating in the competitive market now and in the future, we believe that more specific direction should be provided to EGSs regarding the level of detail the Commission expects regarding the variability in retail generation supply pricing. As such, the Commission is amending its regulations regarding the disclosure of limits on price variability. Specifically, the following language has been added to § 54.5(c)(2)(ii), Limits on price variability:
(ii) Limits on price variability:(a) If there is a limit on price variability, such as a specific price cap, a maximum percentage increase in price between billing cycles or minimum/maximum charges per kilowatt-hour for electricity during the term of the contract, the EGS shall clearly explain the applicable limits.(b) If there is no limit on price variability, the EGS shall clearly and conspicuously state that there is no limit on how much the price may change from one billing cycle to the next.52 Pa. Code § 54.5(c)(2)(ii).
a. Comments
NRG agrees with these changes. NRG Comments at 4. WGES agrees with the addition of § 54.5(c)(2)(ii)(b) but believes that § 54.5(c)(2)(ii)(a) is redundant with § 54.5(c)(2)(ii). WGES Comments at 3.
OCA and NEM question the usefulness of providing a statement regarding the lack of limits on price variability. OCA Comments at 5 and NEM Comments at 4, 5. Specifically, in OCA's opinion, having a statement that contemplates no price limit may not confirm with the Commission's current regulations at § 54.5 that specifically reference price limit. OCA Comments at 6. However, OCA recommends that, if this requirement is maintained, the Commission should provide the exact language to be used by EGSs to convey this message. OCA Comments at 5.
b. Resolution
We disagree with OCA and NEM that information regarding the lack of limits on price variability is not helpful to customers. We further disagree with the OCA that allowing a statement or explanation of ''no limit'' is ''taking a step in the wrong direction.'' OCA Comments at 6. Conversely, we see the clear benefit to customers of requiring an EGS to make it explicitly known if it does not have any limitations on the variable prices charged. This Commission strongly believes that disclosure of this information will be invaluable to customers enrolling in variable-priced contracts with an EGS, since customers will be provided clear, plain language descriptions of any floors and/or ceilings on their rates. Through the promulgation of these regulations, it is the Commission's goal to provide as much information as possible in order to ensure that consumers are protected and are able to see the benefits of a competitive electric market, which includes a variety of products and offerings. In making these limits (or lack thereof) known in the disclosure statement provided to residential and small business customers, who in many cases are less sophisticated in their knowledge of energy markets and the fluctuations that may exist in these markets, we are ensuring that customers know whether their generation charges could possibly increase drastically, depending on any number of factors, over the life of a contract. As such, the Commission has amended § 54.5(c)(2)(ii) as outlined above.
3. Addition of § 54.5(c)(2)(iii) Regarding the Provision of the First Billing Cycle's Pricing for Variable Rate Contracts
While this Commission recognizes that variable-priced contracts will, in fact, vary, we believe it is essential to provide customers with the rate that will be charged for the first billing cycle upon the EGS's enrollment of that customer. We do not believe it is in the best interests of customers to allow an EGS to enroll a customer without that customer knowing the rate, per kilowatt-hour (kWh), he or she will be charged for the first billing cycle of service. As such, the following language has been added as 52 Pa. Code § 54.5(c)(2)(iii):
(iii) The price to be charged, per kilowatt-hour, for the first billing cycle of generation service.52 Pa. Code § 54.5(c)(2)(iii).
a. Comments
WGES notes that while it, like many other EGSs, does provide customers with the rate for the first billing cycle when it has a customer who initially contracts for service, ''it is not clear that such a requirement is consistent with all variable pricing models.'' WGES Comments at 3. NRG supports this change. Specifically, NRG notes that ''requiring that suppliers to include the first month's price provides customers a starting point to which future comparisons can be made.'' NRG Comments at 4. NRG continues that this regulation, as proposed, provides EGSs with needed flexibility to design variable product offerings to meet their needs and the needs of customers, ''without restricting the types of product offers that EGSs can offer.'' NRG Comments at 4.
OCA notes that while this change ''could have some benefit,'' the OCA is concerned that such a requirement is insufficient where introductory rates are often used. As a result, the OCA suggests that there should be specific language added to the regulation to make clear that a variable product's price will change in the second month and that if the price in the first month is ''introductory,'' there be a clear statement added that the price is an introductory price, the length of the introductory period and the price for the first month after the introductory period ends. OCA Comments at 8.
b. Resolution
As indicated above, and throughout the Order, the goal of this Final-Omitted Rulemaking is to make changes to EGS disclosure practices that are in the public interest. While we note and applaud WGES's explanation that it provides the rate for the first billing month for customers who initially contract with them, the Commission is aware that not all EGSs operating in the Commonwealth operate in the same way. Accordingly, we believe that this change is needed and will be retained in the Final-Omitted Rulemaking.
In doing so, we also take note of OCA's concern that greater explanation is needed when introductory rates are involved. However, rather than include the language suggested by the OCA in this regulation regarding the use of introductory rates, we think this type of information and explanation is better left for inclusion in the EGS Contract Summary that will be explained, infra. As indicated below, the EGS Contract Summary is a more fluid document, and may be refined with stakeholder input through OCMO.
4. Amendment to § 54.5(c)(10) Regarding Explanation of Certain Contract Terms
As previously discussed, this Commission believes it is in the best interest of those customers enrolled in variable-priced contracts to have EGSs provide them with sufficient information regarding variability. Because of the nuances and complexities of the electricity markets and because of the ''legalese'' often included in disclosure statements provided to customers, we believe it important to provide customers pertinent information in plain, easy-to-understand language that stands apart from the rest of the ''fine print'' of disclosure statements. As such, the Commission has made the following amendment to § 54.5(c)(10):
(10) An explanation of limits on price variability, penalties, fees or exceptions, printed in type size larger than the type size appearing in the terms of service.52 Pa. Code § 54.5(c)(10).
5. Addition of § 54.5(c)(14) Regarding Provision of Information for Variable Rate Contracts
a. Addition of § 54.5(c)(14)(i) and (c)(14)(ii) Regarding Provision of Historical Pricing Information
Currently, when an EGS enrolls customers into a variable-priced contract, it must only provide information in the disclosure statement regarding the basis on which that pricing may vary, any applicable limits on pricing variability and an explanation of any applicable sign-up bonuses, add-ons, limited time offers, other sales promotions and exclusions. See 52 Pa. Code §§ 54.5(c)(2) and 54.5(c)(5). However, due to customer confusion surrounding changes in variable-priced products following the events of early 2014, the Commission believes that customers need more information on variable rate contracts upon enrollment.
Specifically, the Commission believes the provision of historical pricing for an EGS's variable rate will be beneficial to customers, despite the fact that historical information is not necessarily an indicator of current or future market conditions. While not necessarily indicative of future performance, this information will allow customers to notice any trends (including the range of prices that have been charged) in variable-priced products. Specifically, we proposed the provision of 12 months of historical retail pricing which would allow customers to understand pricing changes that occur due to seasonal changes and fluctuations due to weather conditions and related temperatures. With this information, a customer may be able to determine appropriate times to reduce his or her electricity consumption or to recognize when it is their interest to shop around for alternative generation supply products.
Furthermore, the Commission believes that the provision of historical pricing is common, and perhaps expected, practice when providing variable rate products in other areas. For example, customers purchasing either individual stocks or mutual funds have access to historical prices, for the sake of determining any potential trends, to determine how prices were affected by certain events (e.g. major weather events; global events; force majeure) or to generally see stock and plan performance over time. Similarly, there is no clear indication or guarantee that past performance can ever be an indicator of current or future pricing.
For these reasons, the Commission proposed the addition of section § 54.5(c)(14). This section stated the following:
(14) For contracts with variable pricing, the EGS shall provide:(i) A telephone number and Internet address at which a customer may obtain the previous 12 months' average monthly billed prices for that customer's rate class and EDC service territory. If an EGS has not been providing generation service in a customer rate class and EDC service territory for 12 months, the EGS shall provide the average monthly billed prices for the months available to date.(ii) In plain language, a statement that historical pricing is not indicative of present or future pricing.52 Pa. Code § 54.5(c)(14).
i. Comments
Multiple parties request that this language be amended and/or clarified. OCA wants to ensure that this information is not misleading and believes a common approach should be utilized. Additionally, OCA believes the highest and lowest price per kWh charged for a rate class and EDC service territory should be provided. Lastly, OCA requests that instead of restricting information to only 12 months, information for between 36 and 60 months be provided, in order to ''properly reflect energy pricing changes over a reasonable period of time.'' OCA Comments at. 9, 10. RESA believes the language should be clarified to make it easier for EGSs to provide information based on meter reads. RESA Comments at 4, 5.
NEM, NRG, IGS and WGES disagree with the provision of historical pricing information as it may be limited in value, confusing, costly, and may be competitively sensitive. NEM Comments at 5; NRG Comments at 5; IGS Comments at 6, 7; and WGES Comments at 4. WGES requests clarification regarding how the average will be calculated. WGES Comments at 4. Constellation requests clarification that EGSs would be providing 12 prices—the average for each month. Constellation Comments at 4.
OCA agrees with the Commission's inclusion of a requirement that EGSs provide a statement to customers that historical pricing is not indicative of future pricing. OCA Comments at 10. Conversely, WGES believes the reasoning behind such a statement is why historical pricing should not be required. WGES Comments at 4.
ii. Resolution
The Commission disagrees with those parties who believe that the provision of historical pricing information is useless to customers. As previously discussed, while we recognize that this information is not indicative of future pricing, we believe customers may use historical pricing information to determine trends related to seasonal changes, global events, etc. Additionally, this information may help a customer determine optimal times to reduce his or her electricity consumption.
While we disagree with OCA that 36 to 60 months' of historical pricing should be provided by EGSs, as we believe that a 3 to 5 year term is too long and too far removed from current and future conditions to provide any practical value to customers, we agree that it may be beneficial to provide more than 12 months' information. We believe 24 months of historical information would be an appropriate amount as it allows customers to not only view one full year of seasonal changes, but two. In the Commission's opinion, this change meets OCA's desire that enough information is given to ''properly reflect energy pricing changes over a reasonable period of time.'' As evident in the events earlier this year, one year's seasonal changes may be drastically different from the previous year. As such, a comparison between two separate years will aid customers in recognizing how their electric consumption changes over time and how prices are affected by various events. Therefore, we have revised at § 54.5(c)(14) to reflect that 24 months' of historical information shall be provided by the EGSs.
The Commission also recognizes that there are various types of retail electric price offerings throughout the Commonwealth, as well as a variety of offers from each EGS. Due to the variety of price offerings, a one-size-fits-all approach to calculating the average monthly billed price is neither practical nor useful. In addition, as the retail electric market offerings change and evolve, it is impractical to propose a calculation method that is applicable to all current and future rate designs. We agree with the various commenters that further information is needed regarding ways to provide such information in a consumer-friendly and useful format while maintaining competitive sensitivities. However, we do not believe it appropriate to include such details as to the interpretation and application of this requirement in regulations. As such, we will refer this issue to OCMO to review and provide recommendations to the Commission as to the best manner for providing historical pricing information to customers.
b. Notifications Regarding Price Changes
In the March 19, 2014 Secretarial Letter, there were two provisions included in the Annex regarding customer notifications. Specifically, the Commission sought input from stakeholders on the following two provisions in § 54.5(c)(14)(iii) and (iv):
(iii) Information regarding when the customer will be aware of each price change.(iv) Notice to customers of a rate increase of more than 50% over the prior billing cycle as soon as the EGS becomes aware that such an increase will occur. For customers who have elected to receive electronic communications from the EGS, the notice of the rate increase will be transmitted in the manner chosen by the customer. For all other customers, notice will be provided by direct mail.52 Pa. Code § 54.5(c)(14)(iii—iv).
i. Comments
OCA believes that customers on variable-priced contracts should be provided notification of price changes before being charged such prices. OCA submits that this information be provided at least at the beginning of each month. OCA Comments at 10. NRG and WGES believe that such a provision is burdensome. NRG Comments 6, 7; and WGES Comments at 5. UGIES states that this would require EGSs to provide forward price projections. UGIES Comments at 6.
Comments were also provided regarding the percentage of price increases over the previous billing cycle that should warrant notification to customers. Percentages ranging from 30% to 100% price increases were suggested as a trigger for customer notification. Citizen Power Comments at 2 and Constellation Comments at 4, 5.
Other parties believe such a requirement, even at 50%, would be impractical and onerous. WGES Comments at 5 and UGIES Comments pg. 7. WGES specifically states that such a provision, if included in regulations would imply that the Commission sanctions a rate increase of a certain percentage as being ''reasonable.'' WGES Comments at 5.
ii. Resolution
The Commission declines to include requirements in its regulations regarding the provision of notices surrounding variable pricing changes. While we agree with those parties that stated that EGSs should provide some indication of when customers will realize a price change, we disagree with the inclusion of such a requirement in our regulations at this time. Specifically, we believe this information is best included in the EGS Contract Summary provided to customers. EGSs should include, in the EGS Contract Summary, information regarding not only when a customer may realize a price change, but also when they can expect notification of a price change. For example, an EGS could state that a customer's variable rate may change monthly and the customer will receive notification of the price change during a certain time of the month, once the final monthly meter read is performed, or when the price takes effect (i.e. when the customer receives the bill with that price). The inclusion of this information on the EGS Contract Summary allows the Commission flexibility in amending the template to be more or less specific in its direction regarding the inclusion of such information. Additionally, it allows for other stakeholders to bring concerns to the Commission with a potential resolution completed in a timely fashion.
The Commission also declines to include in its regulations a requirement that EGSs notify customers of certain minimum percentage price increases. While we clearly understand customer confusion and potential frustration with increasing prices, as evident during the winter of 2014, we do not believe it appropriate to set a minimum percentage that would represent a ''significant'' increase. As accurately stated by WGES, this Commission should not be perceived as condoning certain levels of rate increases—especially those at 50% over the previous bill as reasonable. Instead, this Commission believes that EGSs should be in contact with its customers regularly regarding rates being charged. It is in an EGS's best interest to contact customers regarding potential rate increases in order to retain that person as a customer. We realize this expectation may not have been met during the events earlier this year; however, as recognized by the majority of parties, those events were unforeseeable. We are confident that all parties involved, including the EGSs, have learned from these events and we expect that they will act in good faith and in the best interest of customers going forward.
6. Amendment to § 54.5(g) Regarding Customer Notices
The Commission has made minor changes to 52 Pa. Code § 54.5(g) to conform with the requirement that EGSs send two notices to customers, an Initial and Options notice, which indicate a contract's impending expiration or change in service terms for a contract. Currently, the section contemplates that three notices would be sent—in each of the last three bills for supply services. While this language has been in regulations, it is unclear whether the intent could even be met, considering EDCs do most of the billing for EGSs and EDCs do not allow EGSs to provide any inserts that accompany bills. To prevent confusion going forward and to provide clear direction to EGSs, the Commission has revised this language to indicate that two notices must be provided to customers when informing them of a contract's expiration or change in terms.
In addition, due to the importance of these notices, we have removed any possibility that these notices can be sent along with a customer's bill by instead requiring two separate written notifications for both the Initial and Options Notice. We believe that providing the notices to customers separately from bills allows these notices to stand out and also come directly from the EGS, thus encouraging and reinforcing an EGS-customer relationship. As such, Section 54.5(g) has been amended as follows:
(g) Disclosure statements must include the following customer notification: ''If you have a fixed term contract approaching the expiration date, or whenever we propose to change the terms of service in any type of contract, you will receive two separate written notifications that precede either the expiration date or the effective date of the proposed changes. These notifications will explain your options going forward.''[(1) ''If you have a fixed term agreement with us and it is approaching the expiration date or whenever we propose to change our terms of service in any type of agreement, you will receive written notification from us in each of our last three bills for supply charges or in corresponding separate mailings that precede either the expiration date or the effective date of the proposed changes. We will explain your options to you in these three advance notifications.'']52 Pa. Code § 54.5(g).
We had provided similar language in the March 19, 2014 Secretarial Letter in order to get stakeholders' feedback. Notably, though, we had included a provision that retained only notification to be done via ''separate mailings'' and other than removing the phrase ''in each of our last three bills,'' did not indicate how many notices must be sent.
a. Comments
In comments, RESA recommends that this section be amended to allow for delivery of these two notifications ''in the form and manner to which the customer agreed in forming the contract.'' RESA Comments at 5. OCA suggests that removing the requirement of three notifications is a mistake and recommended language to retain ''three notifications'' in separate mailings that precede either contract expiration or the effective date of a change in terms. OCA Comments at 12, 13.
b. Resolution
As indicated above, we have attempted, in part, to address RESA's concern that more flexibility be given to EGSs when providing notices to customers to have them ''in a form and manner to which a customer agreed'' when forming the contract. Accordingly, we have removed the requirement that the notices be sent ''in separate mailings.'' Notably, however, and as explained in detail below, while we have amended Section 54.10 to allow for the Initial Notice to be sent via electronic communication to customers that consent to that type of delivery, we are still requiring that the Options Notice be sent by mail, especially in light of the fact that we are retaining the requirement that the envelope containing the Options Notice include messaging to alert customers that ''it contains important information regarding the expiration or changes in terms of the customer's electric supply contract.''
In response to the OCA's comments that the change contained in § 54.5(g) is seen as going backward, for all the reasons articulated above, we disagree. Again, understanding that a majority of EGS bills are provided by EDCs and that EDCs do not allow EGSs any bill inserts, it is more than likely that EGSs have not been able to carry out their commitment to provide ''written notification from us in each of our last three bills for supply changes or in corresponding separate mailings that precede either the expiration date or the effective date of the proposed changes'' for some time. This reality, combined with the fact that the proposed regulations in this Final-Omitted Rulemaking that cover required notices before contract expiration or a change in terms only require two notices, further support the Commission's reasoning for only including two notices in this provision instead of the three as suggested by OCA.
Additionally, to maintain consistency throughout our regulations, we have amended this section to replace the word ''agreement'' with the word ''contract.''
7. Addition of § 54.5(i) Creation of an EGS Contract Summary
With the recent events surrounding the retail electric marketplace, this Commission supports the idea that EGS disclosure statements, as they currently exist, need a clear and concise summary for the benefit of consumers. In order to ensure customers are protected when participating in the competitive retail marketplace, we believe more education is needed regarding the terms of a contract. This idea has been evident in recent actions of the Commission, such as clarifying the presentation of information available on www.PaPowerSwitch.com and updating the definitions of both ''variable'' and ''fixed price'' contracts in the Commission's Final Order regarding Guidelines for Use of Fixed Price Labels for Products with a Pass-Through Clause.2 In furtherance of this goal, the Commission has added a requirement, at 52 Pa. Code § 54.5(i) which states the following:
(i) The EGS shall provide, with the disclosure statement, a separate EGS Contract Summary in a format provided by the Commission.52 Pa. Code § 54.5(i).
We believe the provision of an EGS Contract Summary will provide, in an easy-to-read, one-page document, the most important terms of the disclosure statement. Many customers either do not read the ''fine print'' of their disclosure statements or are confused by the ''legalese'' included therein. The provision of a summary document provides pertinent contract terms in common language, consistent with much of the information provided on the Commission's PaPowerSwitch website, allowing for customers to more easily understand the contract into which they have enrolled. This information is also beneficial if a customer decides to review his or her current EGS terms and compare those terms with other EGS offers.
To aid the EGSs in fulfilling this new requirement, the Commission has created an EGS Contract Summary template separate from the regulations themselves, following this Order as Attachment A. This template is meant to provide pertinent information in a clearly understandable ''Schumer Box'' style3 format for consumers to view, in addition to the disclosure statement they currently receive.4 The Commission's template as proposed for the EGS Contract Summary includes the following headings, with an explanation of the type of information the Commission expects to see in each corresponding box:
• Electric Generation Supplier Information;
• Price Structure—fixed vs. variable; inclusion of an explanation of the limits on variability; information regarding notification of price changes;
• Generation/Supply Price;
• A Statement Regarding Savings—if applicable, a statement that the supply price may not always provide savings to the customer;
• Deposit Requirements;
• Incentives;
• Contract Start Date;
• Contract Term/Length;
• Cancellation/Early Termination Fees;
• Renewal Terms; and,
• EDC Information.
The Commission recognizes that many of the requirements in the EGS Contract Summary Template may not be applicable to certain types of contracts. For example, some EGS contracts guarantee a percentage of savings in relation to the EDC's PTC. However, most contracts do not have such guarantees. As such, an EGS would explicitly state, in plain language, that it does not guarantee that a customer will be saving money every month/billing cycle under this contract.
Because some terms outlined in the EGS Contract Summary template provided herein may not be relevant to all contracts, EGSs are required to include those terms, as listed above, which are applicable to the contract being summarized. If a certain category of information is not applicable, the EGS may remove it from the template for that contract summary.
While we anticipate that the EGS Contract Summary will be incorporated into the EGS application going forward as an addendum to the disclosure statement template and have enumerated this fact in the regulations by stating EGSs ''shall provide, with the disclosure statement, an EGS Contract Summary in a format provided by the Commission,'' we also want to ensure that the EGS Contract Summary is useful and can be made available to consumers as soon as possible going forward. Accordingly, we direct OCMO to provide further direction to currently licensed EGSs serving residential and/or small business customers regarding the submission of EGS Contract Summaries to the Commission.
8. Addition of § 54.10 Notice of Contract Expiration or Change of Terms for Residential and Small Business Customers
The Commission believes that one of the primary ways in which to protect residential and small business consumers when participating in the competitive retail electric market is to ensure that these customers are educated on marketplace operations and on their options when moving around in the market (i.e. choosing different products with the same EGS; switching from one EGS to another; switching from default service to EGS service; or switching from EGS service to default service). As previously discussed, in 2010, after working with numerous stakeholders and reviewing comments, the Commission adopted Interim Guidelines that outlined requirements for the EGS provision of two notices to customers regarding the expiration of or change in terms of an electric supply contract. These notices are intended to provide customers with important information about their options prior to the expiration of or change in terms of their current contracts for generation supply. Because inaction will likely lead to placement on a variable rate, it is essential that customers enrolled in a fixed-rate contract be notified prior to that contract's pending expiration or change in terms.
Prior to the expiration or change in terms of a fixed-rate contract (or any fixed-term contract for that matter), customers need to make a decision whether to remain with their current EGS, choose a new EGS, or return to default service. In order to aid customers in making such a decision, the Interim Guidelines required EGSs to provide an Initial Notice of the contract expiration, or to a change in contract terms, between 52 and 90 days before that contract expires. Additionally, the EGSs are required to provide an Options Notice, which outlines the actions a customer may take, no less than 45 days in advance of the contract expiration or change in terms. To codify these Interim Guidelines and in order to ensure EGS compliance with these requirements, we have added Section 54.10—Notice of Contract Renewal or Change in Terms, to our regulations. Due to the length of this addition, we will not reiterate the language here and, instead, refer readers to Annex A, which outlines all of the regulatory changes, including the addition of 52 Pa. Code § 54.10, resulting from this Order. However, in this section of the order, we would like to highlight certain provisions that differ from the Interim Guidelines.
a. Amendment to the Timing of the Initial and Options Notices
The Commission's Interim Guidelines stated: (a) An Initial Notice shall be provided to each affected customer 52 to 90 days prior to the expiration date of the fixed term5 agreement or the effective date of the proposed change in terms; and (b) The Options Notice shall be provided to each affected customer at least 45 days prior to the expiration date of the fixed term agreement or the effective date of the proposed change in terms.
We believe that customers need to be notified prior to the expiration of their existing contract or prior to a change in the terms and conditions of that contract in a fashion that gives them both the information and time to act. Having an EGS provide an Initial Notice 90 days before the contract expires loses the implied urgency. Similarly, customers who receive their Options Notice 45 days before expiration may act immediately and incur an early cancellation fee because they left their existing EGS too soon. By requiring the EGSs to send the Initial and Options Notices closer to the expiration or change in terms of a contract, it will make customers more cognizant of the upcoming change and will likely force customers to not delay in making an affirmative choice to either remain with their existing EGS, switch to alternative EGS or return to default service. As such, we have amended the language from the Interim Guidelines to direct that the Initial Notice be provided to the customer 45 to 60 days prior to the expiration of the contract and that the Options Notice be provided to the customer no less than 30 days prior to the expiration or change in terms of the contract.
b. Amendment to the Provision of the Initial and Options Notices
Currently, Section § 54.5(g) states: ''If you have a fixed term agreement with us and it is approaching the expiration date or whenever we propose to change our terms of service in any type of agreement, you will receive written notification from us in each of our last three bills for supply charges or in corresponding separate mailings that precede either the expiration date or the effective date of the proposed changes. We will explain your options to you in these three advance notification.'' See 52 Pa. Code § 54.5(g). In the 2010 Interim Guidelines, the Commission required the provision of an Initial Notice to customers between 52 and 90 days prior to the expiration or change in terms of a contract and the provision of an Options Notice to customers at least 45 prior to the expiration or change in terms of a contract. Due to the importance of the notices, the Interim Guidelines stated that the notices will be mailed to customers, separately from those customers' electric bills.
i. Comments
Multiple parties believe that the EGSs should be allowed to use electronic means to transmit these notices, should a customer request such methodology. RESA Comments at 7; Constellation Comments at 5.
ii. Resolution
The Commission agrees that many customers may request notifications via email, text messaging or other electronic means. As such, we will allow EGSs to provide the Initial Notices to customer via electronic communication, using the format chosen by the customer. We would like to make it clear that this Commission does not believe that simply posting messaging on a website, such as the EGS's homepage, would constitute notification. We expect the EGS to actively reach out to the customer via the electronic means (e.g., e-mail or text message) requested by that customer.
While the Commission will allow the Initial Notice to be communicated electronically, we still believe standard U.S. mail is an effective means of communicating important information to customers, especially in light of the fact that we are retaining the requirement that the envelope containing the Options Notice include messaging to alert a customer that it contains important information regarding that customer's contract. Additionally, the potential utilization of electronic means for delivering the Initial Notice and requiring the Options Notice to be delivered via first class mail provides for multiple avenues through which to reach a customer. As such, we will require EGSs to provide the Options Notice via first class mail. We have amended the language in § 54.10(1).
c. Amendment to Cancellation Fee Information in the Initial Notice
The Commission proposed the addition of § 54.10(1)(vi) which stated:
(vi) A statement indicating whether the existing fixed term contract has a cancellation fee, and an explanation of the fee amount and how to avoid the fee, if possible.52 Pa. Code § 54.10(1)(vi).
i. Comments
RESA requests that the language be amended to include the option for customers to select a different product from their existing EGS. RESA Comments at 7.
ii. Resolution
The Commission maintains its position that customers nearing the end of a fixed-term agreement need to be made aware that their existing contract has a cancellation fee. We agree with RESA that customers should be notified that they can choose a different product that is being offered by their existing EGS, as well as having the ability of choosing to purchase supply from an alternative EGS or return to default service. Therefore, we have amended the language at § 54.10(1)(vi) to state the following:
(vi) A statement indicating whether the existing fixed term contract has a cancellation fee, and an explanation of the fee amount and how to avoid the fee, if possible, including notice of the date when the customer can choose a different product from the customer's existing EGS, can choose an alternative EGS or can return to default service.52 Pa. Code § 54.5(1)(vi).
d. Amendment to Information in Options Notice re: Customer's Options
Currently, the Commission's Interim Guidelines provide for: A statement advising the consumer of the specific changes being proposed by the EGS and informing the customer of its options, including the customer's ability to select another EGS within a certain time period, accept the proposed changes, or return to default service. The Commission proposed the inclusion of this language in its regulations.
i. Comments
Constellation notes that customers should be encouraged to explore all of their options, including options for service from their existing EGS. Constellation Comments at 5, 6.
ii. Resolution
We agree with Constellation that the option for a customer to accept a new product from his or her existing EGS should be included and have revised the language to state the following:
(i) A statement advising the customer of the specific changes being proposed by the EGS and informing the customer of how to exercise the customer's options, including the customer's ability to accept the proposed changes, to choose another product offering from the customer's existing EGS, to select another EGS, or to return to default service.52 Pa. Code § 54.10(2)(i)
e. Amendment to Provide Customers with First Billing Cycle's Rate
As noted previously, this Commission recognizes that variable-priced contracts will, in fact, vary, but we believe it is essential to provide customers with the rate that will be charged for the first billing cycle of service. In the instances where a customer is enrolled in a fixed-term contract that is nearing expiration or a change in terms, we believe that customer must know the first billing cycle's per kWh rate. Specifically, when EGSs provide the Options Notice at least 30 days in advance of the expiration or change in terms of the contract, that EGS should provide the new rate the customer will be charged the first billing cycle following the expiration or change in terms. As such, we proposed that customers who have not responded to the notices provided by EGSs and will be converted to a month-to-month or to another fixed-term contract be provided the first billing cycle's per kWh rate.
The Commission also proposed for those customers enrolled in fixed-term contracts who do not respond to the Initial or Options Notices and will be enrolled in a month-to-month variable-priced contract, that EGSs provide to customers 30 days' notice in advance of any subsequent price change.
i. Comments
Constellation requests that the first billing cycle's price be provided closer to when that rate will be charged. Specifically, Constellation proposes that EGSs provide the first billing cycle's rate to customers seven to 14 days in advance, instead of 30 days in advance via the Options Notice. Constellation states that the monthly rate for the upcoming month is typically established a few weeks in advance of the month. Constellation Comments at 6.
Multiple parties provided comments regarding the proposed notification of rate changes for those customers who are entered into a month-to-month contract upon expiration of their fixed-term contract. RESA, NEM and UGIES state that the providing notifications of rate changes as suggested 30 days in advance of the rate change would be costly, burdensome and may confuse customers, which could have a negative impact on both variable price products and retail choice. RESA Comments at 8; NEM Comments at 8, 9; UGIES Comments at. 11, 12.
While first suggesting that this requirement should not be maintained, RESA notes that, if the Commission would decide to make such a requirement, those notifications should be transmitted electronically if agreed upon by the customer. RESA Comments at 8. NRG also states that the requirement should not be imposed if the rate change benefits the customers or if an EGS already has limitations on the variability of its rate(s). NRG Comments at 8.
ii. Resolution
The Commission disagrees with Constellation that the provision of the first billing cycle's rate should be provided seven to 14 days in advance instead of 30 days in advance via the Options Notice. The purpose of the Options Notice is to provide a customer with information regarding their options in advance of the expiration of his or her fixed-term contract. The intent is to encourage a customer to take action, whether it be enrolling in a new product with his or her existing EGS, enrolling with an alternative EGS or returning to default service. As is the case when a customer initially shops, we believe the customer should be presented with, at a minimum, the first billing cycle's rate he or she will be charged. This information is most appropriate in the Options notice.
Upon review of stakeholders' comments, consumer complaints and feedback provided by a variety of parties, the Commission maintains its position that 30 days' notice of any pricing changes should be provided to those customers whose fixed-term contract has expired or has had a change in terms and are now enrolled in a variable-priced month to month contract. Because many of the customers enrolled in fixed-term contracts have affirmatively chosen a fixed rate, these customers may need more information regarding the potential variability in rates they may experience upon contract expiration or when the terms of the contract are changed. Therefore, the following language has been included at § 54.10(2)(ii)(A)(I):
(I) Notice of a subsequent change in pricing shall be provided to the customer at least 30 days prior to the new price being charged.52 Pa. Code § 54.10(2)(ii)(A)(I).
However, we recognize the comments provided by the EGSs who indicated that providing notice only via first class mail to all such customers may be costly and burdensome. As such, customers who did not respond to either the Initial or Options Notices, whose fixed-term contract has been converted to a month to month contract and who have elected to receive electronic communications from the EGS will be able to receive price change notifications transmitted in the manner chosen by the customer. For all other applicable customers, the price change notices will be provided by first class mail. We would like to make it clear that the Commission does not believe that simply posting messaging on a website, such as the EGS's own website, would constitute compliance with this requirement. We expect EGSs to actively reach out to these customers and provide notice of price changes via the means requested by that customer. Accordingly, the following language has been included at § 54.10(2)(ii)(A)(II):
(II) For customers who have elected to receive electronic communications from the EGS, notice of the change in pricing shall be transmitted in the manner chosen by the customer. For all other customers, notice shall be provided by first class mail.52 Pa. Code § 54.10(2)(ii)(A)(II):
f. Inclusion of Information on Options Notice Envelope
We recognize the fact that due to the cost, popularity and effectiveness of mail advertising for EGS products, customers tend to receive significant amounts of mail at any point in time and may disregard general notifications provided by any number of entities, including their EGS. As such, this Commission believes it is in the best interest of those customers on fixed-term contracts nearing expiration or a pending change in terms to be made clearly aware of this upcoming change. To do this, the Options Notice provided by EGSs to customers must be distinguishable from the other mailings a customer may receive. As such, we proposed that the front of the envelope used in the distribution of the Options Notice should include, language that the mailing contains important information regarding the expiration or changes in terms of a customer's electric supply contract.
i. Comments
Constellation encourages the Commission to review the New York Public Service Commission's proceeding related to similar issues and recommends that the Commission adopt the same universal statement as utilized in New York. Additionally, Constellation requests that EGSs be allowed the flexibility to provide the messaging through the clear window portion of a window envelope, if practical. Constellation Comments at 7, 8.
Citizen Power requests that the language indicate that the expiration or changes in terms of the contract may modify the rates paid by the customer. Citizen Power Comments at 2.
ii. Resolution
We maintain our position that language regarding the expiration or change in terms of a customer's fixed-term contracts should be clearly visible on the envelope distributing the Options Notice in order to make the notice more distinguishable from other items of mail. However, we do not intend a requirement that will be overly burdensome to EGSs to effectuate if they have similar processes that can achieve the same effect—such as providing messaging visible in the transparent window portion of the envelope, as Constellation suggests. To achieve this effect, we are requiring information that alerts the customer as to the importance and purpose of the mailing to be ''clearly visible'' on the front of envelope. This change will accommodate either messaging on the envelope as originally proposed or messaging in the transparent window as long as it is clearly visible on the front of the envelope.
Regarding the exact wording of the messaging that needs to be visible on the envelope, we decline to make any specific recommendations in this proceeding. Accordingly, EGSs are free to use language from other jurisdictions, as long as it fulfills the intent of the regulation—which is to make known that the Options Notice contains important information regarding the expiration or change in terms of a customer's electric supply contract. Accordingly, the Commission has included the following language in order to attain this objective:
(vi) language clearly visible on the front of the envelope used to provide the Options Notice stating that it contains important information regarding the expiration or changes in terms of the customer's electric supply contract.52 Pa. Code § 54.10(2)(vi).
g. Inclusion of Information Regarding Actions to be Taken Should a Customer not Respond to EGS Notices
Lastly, as outlined in the Interim Guidelines, we believe direction is needed regarding actions to be taken when customers fail to respond to either of the two required EGS notices. Because the intent of the competitive market is to encourage customers to shop for their retail electricity supply, we do not believe it is appropriate for a customer to be reverted to default service should that customer fail to respond to either of the two EGS-provided notices. Instead, and as indicated in the Interim Guidelines, we believe that customers with a fixed-term contract who fail to respond to the EGS notices should be enrolled in one of two types of contracts. The first would be to convert that customer to a month-to-month contract with no cancellation fee. This month-to-month contract will remain in place until the customer affirmatively enters into a new contract with the existing EGS, a new EGS, or returns to the default service provider. The second option would be for the customer to be enrolled in a new fixed-term contract that includes a customer-initiated cancellation provision and does not include cancellation fees.
However, in allowing that EGS to retain these customers, the Commission believes certain customer protections should be in place, which is why cancellation fees may not be imposed on these customers, should they choose to switch suppliers or return to default service while enrolled in one of these two contracts. To memorialize this language from the Interim Guidelines and in order to ensure EGS compliance with these requirements, we have added Section 54.10(3) to our regulations. Due to the length of this addition, we will not reiterate the language here and, instead, will refer readers to Annex A, which outlines all of the regulatory changes, including the addition of 52 Pa. Code § 54.10(3), resulting from this Order.
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1 The NRG Retail Northeast Companies include NRG Residential Solutions, Green Mountain Energy Company and Energy Plus Holdings Company.
2 See Guidelines for Use of Fixed Price Labels for Products with a Pass-Through Clause Final Order, at Docket No. M-2013-2362961, entered November 14, 2013.
3 A Schumer Box is template used by the credit card industry to present certain terms and conditions. This template is named after Senator Charles Schumer (NY) who was responsible for the legislation associated with the requirements for outlining credit card terms.
4 Attachment A is an attachment to this Final-Omitted Rulemaking Order and is not an attachment to Annex A. As such, the EGS Contract Summary template provided herein is not included in the revised regulations.
5 Fixed-term agreements are agreements that may offer a fixed-price or a variable-price over a specific period of time, such as 12 months, but is not intended to apply to a rolling month-to-month contract that has no set term length or expiration date.
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