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PA Bulletin, Doc. No. 13-1154




[ 52 PA. CODE CH. 111 ]

[ L-2010-2208332 ]

Marketing and Sales Practices for the Retail Residential Energy Market

[43 Pa.B. 3473]
[Saturday, June 29, 2013]

 The Pennsylvania Public Utility Commission (Commission), on October 24, 2012, adopted a final rulemaking order which sets forth regulations on marketing strategies and sales techniques for electric generation suppliers and natural gas suppliers to ensure fairness and integrity in the competitive market and eliminate confusion on behalf of consumers.

Executive Summary

 The Public Utility Commission's (PUC's) Office of Competitive Market Oversight with industry working groups comprised of gas and electric utilities, suppliers, consumers and other interested parties developed draft interim guidelines on marketing and sales activities for electric generation suppliers (EGSs) and natural gas suppliers (NGSs). The draft guidelines were issued for public comment. After reviewing the comments, the interim guidelines were finalized on November 5, 2010. See Docket No. M-2010-2185981. The interim guidelines cover a wide range of topics and recommended best practices for direct (door-to-door) marketing, telemarketing and sales for the retail residential market. These interim guidelines will provide direction to EGSs and NGSs until final regulations are promulgated.

 On February 14, 2011, the PUC issued a proposed regulation based on the interim guidelines that are applicable to the retail residential energy market. The proposed regulation, which was directed at EGSs and NGSs and their agents who provide sales and marketing support, was drafted to lessen customer confusion about suppliers and the sales process, and to ensure that a customer's account is not transferred to a supplier without his authorization. Specifically, the proposed regulation covered, inter alia, a supplier's liability for its agent; agent qualifications and criminal background investigations; agent training; agent compensation and discipline; and agent identification and misrepresentation. In addition, subjects relating to supplier/agent-customer interactions were addressed: customer authorization to transfer account; customer receipt of disclosure statement and right to rescind contract; consumer protection law; and customer complaints. Door-to-door (direct) marketing and telemarketing, two sales practices fairly new to Pennsylvania's retail energy market, were also addressed.

 On October 22, 2011, the order and proposed regulations were published in the Pennsylvania Bulletin, triggering the start of a 60-day comment period. Twelve parties filed comments in response to the Proposed Rulemaking Order. On January 20, 2012 the Independent Regulatory Review Commission (IRRC) submitted comments. Additionally, the Office of Attorney General (OAG) reviewed the proposed regulations for form and legality pursuant to the Commonwealth Attorneys Act, 71 P. S. §§ 732-101—732-506.

 After careful consideration of the comments filed, the PUC issued a final rulemaking order on October 24, 2012. The Commission voted 5-0 to approve the rulemaking regarding regulations that cover a wide range of topics and recommend best practices for direct (door-to-door) marketing, telemarketing and sales. The regulations will apply to both EGSs and NGSs and to any entity conducting activities on their behalf. As more EGSs and NGSs enter the state's residential retail electric and natural gas supply markets, the Commission expects suppliers to conduct themselves with the regulations in mind so that their sales and marketing activities do not call into question the fairness and integrity of the competitive market.

 Many of the requirements found in the regulation are in the context of door-to-door marketing and are intended to protect public safety. Suppliers are now required to obtain criminal background checks on all of their door-to-door agents. Agents are required to immediately identify themselves to potential customers and to have identification prominently displayed. Additionally, agents are to offer written identification information to the potential customer. Agents are directed to leave immediately upon request of the customer and are to respect an individual's request not to be visited again. The regulation includes the hours that door-to-door sales are permitted; until 7:00 p.m. during the winter months; until 8:00 p.m. during the summer months. The regulation further stipulates that if a local ordinance has stricter timeframes, the local ordinance applies. Suppliers are also obligated to respect all other local ordinances governing door-to-door sales, including registration and licensing requirements where applicable.

 Other requirements in the regulations are intended to ensure that potential customers are receiving the information they need to make informed choices about energy providers. This includes requirements addressing agent training and the written information they provide consumers. Suppliers are required to address the consumer in the same language used by the potential consumer. Still other requirements are intended to prevent confusion and misrepresentation. Agents are forbidden from wearing clothing or making statements that infer a relationship that does not exist with another utility, supplier or government agency. Agents are required to make affirmative statements to consumers making clear who they represent and that they are independent of both the local utility and any other supplier. Suggesting to a consumer that they are ''required'' to choose a supplier is forbidden. Door-to-door sales and telemarketing sales are supposed to be verified by a process that documents the customer's understanding and acceptance of the transaction.

 There is a section of the regulation that specifically addresses telemarketing. This section reminds suppliers of their obligations under both state and federal telemarketing laws, including respecting the ''Do Not Call'' lists. Telemarketing agents must also comply with many of the same rules regarding customer information and misrepresentation as a door-to-door agent must comply with; minus those provisions that concern the physical appearance and physical interaction with the customer. Finally, telemarketing sales transactions need to be verified much the same as door-to-door transactions.

Public Meeting held
October 24, 2012

Commissioners Present: Robert F. Powelson, Chairperson; John F. Coleman, Jr., Vice Chairperson; Wayne E. Gardner; James H. Cawley; Pamela A. Witmer

Marketing and Sales Practices for the Retail Residential Energy Market; Doc. No. L-2010-2208332

Corrected Final Rulemaking Order

By the Commission:

 Before us for consideration is a final rulemaking order on marketing and sales practices for the retail residential energy market. The regulations set forth herein are based on interim guidelines that were developed on the subject by the Pennsylvania Public Utility Commission's Office of Competitive Market Oversight (OCMO) as a result of meetings held with the working groups, CHARGE (Committee Handling Activities for Retail Growth in Electricity) and SEARCH (Stakeholders Exploring Avenues to Remove Competitive Hurdles).1 As was the case with the interim guidelines, the proposed regulations will be applicable to both electric generation suppliers (EGSs) and natural gas suppliers (NGSs). Accordingly, with this order, we issue these final regulations.



 With the expiration of the last of the remaining electric generation rate caps at the end of 2010, greater numbers of EGSs have entered, and will enter, Pennsylvania's retail electric generation supply market. As a result, consumers are being exposed to unfamiliar marketing strategies and sales techniques. One particular sales technique, direct sales or door-to-door sales, has created confusion for some customers, who contacted this Commission with their concerns. To address these concerns, the OCMO and the CHARGE working groups were assigned the task of developing interim guidelines on marketing and sales activities in the retail electric market.

 CHARGE took up the issue of third party marketing and sales support at its January 7, 2010, meeting. CHARGE continued to meet to discuss and review various drafts of the interim guidelines prepared by OCMO staff. The group met on January 22; February 4 and 18; March 4 and 18; April 08 and 29; May 13 and 27; and June 10. During the discussions, CHARGE asked OCMO staff to consider expanding the draft marketing guidelines to include NGS marketers. On April 29, 2010, OCMO circulated the guidelines to SEARCH, seeking feedback from natural gas stakeholders about the feasibility of that suggestion. Joint meetings of CHARGE and SEARCH were held on May 13, 2010, and on June 7, 2010. On June 24, 2010, the group met on the final OCMO staff draft of the proposed interim guidelines.

 On July 16, 2010, the Commission entered a Tentative Order with proposed interim guidelines on marketing and sales practices for EGSs and NGSs. See Interim Guidelines on Marketing and Sales Practices for Electric Generation Suppliers and Natural Gas Suppliers, Docket No. M-2010-2185981, Order entered July 16, 2010 (Interim Guidelines). The Tentative Order set forth 17 proposed interim guidelines and established a 30-day comment period and a subsequent 15-day reply comment period. Fifteen comments and seven reply comments were filed. After considering the comments, the Commission issued its final order on the Interim Guidelines on November 5, 2010.

Proposed Rulemaking

 On February 10, 2011, the Commission issued a Proposed Rulemaking Order with proposed regulations on marketing and sales practices for EGSs and NGSs for comment. Rulemaking re: Marketing and Sales practices for the Retail Residential Energy Market, Docket no. L-2010-2208332 (Proposed Rulemaking Order). The proposed regulations were based on the Interim Guidelines. On October 22, 2011, the order and proposed regulations were published in the Pennsylvania Bulletin, triggering the start of a 60-day comment period. Twelve parties filed comments in response to the Proposed Rulemaking Order. Comments were submitted by the Consumer Advisory Council (CAC), Dominion Retail (DES), FirstEnergy Solutions (FES), Interstate Gas Supply (IGS), Met Ed, Penelec, Penn Power and West Penn Power (FirstEnergy), National Energy Marketers Association (NEM), Office of Consumer Advocate and AARP (OCA/AARP), Pennsylvania Coalition Against Domestic Violence (PCADV), Pennsylvania Energy Marketers Coalition (PEMC), Public Utility Law Project (PULP), Retail Energy Supply Association (RESA), and Washington Gas Energy Services (WGES). On January 20, 2012 the Independent Regulatory Review Commission (IRRC) submitted comments. Additionally, the Office of Attorney General (OAG) reviewed the proposed regulations for form and legality pursuant to the Commonwealth Attorneys Act, 71 P. S. §§ 732-101—732-506. The OAG's comments and our responses are discussed below where relevant.

§ 111.1. General.

 PULP focused its comments on the issue of door-to-door sales and opposes this form of marketing. PULP is in favor of a ban because: door-to-door solicitation will lead to a heightened risk of unfair and deceptive trade practices to the most vulnerable members of the community; these types of marketing practices are contrary to the intent of the Choice Acts because the very nature of the door-to-door sales transaction limits consumer choice to a one-sided ''good sales pitch . . . rather than . . . a well informed decision'' and a ban of such marketing activities would not unduly burden competitive energy suppliers because of the myriad means of communication available to suppliers to inform consumers today. PULP suggests there are numerous ways in which a supplier can inform a customer about its product without reliance upon door-to-door sales and marketing activities, such as direct mailings, television, radio, the Commission's website and OCA's Residential Electric/Natural Gas Shopping Guide websites. PULP believes that these are sufficient methods of providing consumers with information about a supplier's price and terms without resorting to door-to-door solicitation.

 The PCADV agrees with PULP in its support of a ban of door-to-door sales and marketing activities. PCADV is concerned with the potential safety hazards of allowing door-to-door solicitors into the homes of victims of domestic violence and the possibility of criminal activity by those posing as door-to-door solicitors. PCADV believes that door-to-door sales ''present a particularly unique and troublesome threat to victims of domestic violence and other victims of similarly insidious crime'' (PCADV, p. 3.) and that ''the only way to truly protect against the unique risks posed to victims of domestic violence and other crimes is to completely prohibit door-to-door sales by electric and gas suppliers.'' (PCADV, p. 4.) PCADV is also concerned because they believe that victims of domestic violence are ''more vulnerable to coercive tactics employed by door-to-door'' salesmen and are also vulnerable because many victims struggle to meet basic expenses and it is ''difficult for a financially-strapped victim to make an informed decision.'' (PCADV, p. 5.) And while PCADV ''recognizes and commends the PUC for including safety provisions'' it believes the proposed provisions are inadequate and that door-to-door activities are ''impossible to effectively monitor.'' (PCADV, p. 6.)

 The CAC agrees with PULP and PCADV about the likeliness of true customer choice during door-to-door sales and marketing activities, particularly when dealing with vulnerable groups such as the elderly, the infirm, or the uneducated. Absent an outright ban, CAC would limit door-to-door solicitations to those consumers who specifically request such solicitations.

 OCA/AARP notes the potential for fraud and customer confusion in door-to-door sales that have been borne out in other states and commends the Commission for its efforts to find a way to allow door-to-door sales while addressing concerns with this sales technique. OCA/AARP suggests language in this section which would require EGSs, NGSs and their agents to comply with all federal, state, and local/municipal laws along with applicable Commission rules, regulations and orders.

 IRRC notes that Pennsylvania's Office of Attorney General administers two statutes that regulate subject matter covered by certain sections of this rulemaking: telemarketing and door-to-door sales. The statutes are the Pennsylvania Telemarketer Registration Act (73 P. S. §§ 2241—2249) and the Pennsylvania Unfair Trade Practices and Consumer Protection Law (73 P. S. §§ 201-1—201-9.2). IRRC asks that the PUC explain how it will administer and enforce this rulemaking when it identifies or becomes aware of activities that violate the rulemaking and the statutes noted above.


 We acknowledge the concerns of the parties that object to the use of door-to-door sales to sell energy supply services. It is out of these concerns that we have proposed these new regulations. However, we first note that IRRC is correct that door-to-door sales are already governed by the Unfair Trade Practices and Consumer Protection Law. The Legislature has placed certain safeguards into law through that legislation. Nonetheless, there are additional protective measures we can impose to govern specifically the door-to-door sale of retail power.

 We share many of the concerns expressed by the parties. We believe that the way to address these concerns, without unduly restricting the ability of suppliers to use their preferred method of marketing, is through the regulations we have proposed, coupled with consumers' ability to rescind their choices within three days. It is our intent to put safeguards in place to protect public safety and the consumers participating in the market. These regulations will serve to protect the integrity of the entire competitive energy market, which will benefit consumers and suppliers alike.

 The Commission has numerous mechanisms by which to monitor the market and enforce these rules. Consumers, likewise, have a variety of channels by which to report concerns or complaints. The Commission maintains a toll-free complaint hotline (800-692-7380) that is staffed by trained professionals who can respond to questions and/or open informal complaints for consumers. These complaints are investigated by Commission staff that look into the matter and are authorized to write binding informal decisions if needed. Informal complaints can also be submitted electronically via the Commission's website ( or in writing via U.S. Mail. Consumers can also file formal complaints in writing by using forms available on the website, and request a hearing before an Administrative Law Judge. Additionally, questions, comments and concerns can be submitted via the Commission's well-publicized electric shopping website ( Consumers contact their local utility with questions or concerns about the competitive market—contacts that are often shared with Commission staff via routine meetings and conference calls with the utilities. Consumers contact other state agencies, such as the Office of Consumer Advocate and the Office of Attorney General, which in turn communicate with Commission staff. Finally, the Commission hears from local government officials and members of the General Assembly about competitive market concerns in their communities. Given all of these channels that are available for consumers to obtain information and report problems, the Commission is confident that sales and marketing activities in the competitive market can be effectively and thoroughly monitored.

 The Commission also has available numerous resources to investigate and enforce any problems that come to its attention via the above-mentioned channels. These resources range from the very informal to formal Commission action that imposes penalties. Informally, Commission staff reviews the informal complaints filed by consumers to identify any customer care or compliance failures. Such failures are brought to the attention of the supplier and corrective action is requested. Commission staff routinely meets with suppliers to discuss their marketing practices and complaints. The Commission, since 2009, has also had an office specifically charged with monitoring the competitive market. OCMO is within the office of the Director of Regulatory Operations, and includes a group of legal, technical and policy staff members from various Commission bureaus to informally address retail market issues. The office is responsible for responding to questions from electric generation suppliers, monitoring issues hindering the development of a competitive retail market and facilitating informal dispute resolution between default service providers and electric generation suppliers. One of OCMO's chief monitoring and oversight venues are monthly conference calls consisting of suppliers, utilities and consumer representatives where any party can raise any market issue for discussion and possible resolution. More information about OCMO and the monthly conference calls are available on the Commission's website.

 If these informal mechanisms are insufficient, more formal avenues are available. The PUC's Bureau of Investigation and Enforcement is the Commission's independent prosecutory arm that can initiate informal or formal investigations as needed and can seek penalties for non-compliance, including the suspension and revocation of supplier licenses. The Commission also has a long-standing Memorandum of Understanding (MOU) with the OAG and under this MOU can refer matters that more appropriately fall under the jurisdiction of the OAG. This could include matters that fall under the Pennsylvania Telemarketer Registration Act and the Pennsylvania Unfair Trade Practices and Consumer Protection Law. A copy of the MOU is attached as Attachment One.

 With all of these enforcement resources, the Commission is confident that it can effectively act upon information received through a variety of channels and enforce these regulations. All market participants are put on notice that the Commission will use these resources to aggressively enforce these new regulations in the public interest—to safeguard public safety and ensure fairness for all. We also take this opportunity to remind suppliers of their obligation to respect all federal, state and local laws related to sales and marketing and to note that nothing in these regulations is intended to vacate or supersede any other existing federal, state or local requirement.

§ 111.2. Definitions.

Definition of Agent

 The Commission specifically solicited comments on the definition of ''agent'' in the Proposed Rulemaking Order. PCADV, OCA/AARP, and CAC propose the expansion of the term ''agent.'' PCADV wishes to include all subcontractors, employees, vendors, and representatives not directly contracted by the supplier within the meaning of the term ''agent'' in order to cover those employees who are hired by marketing firms or other vendors on behalf of the supplier but are not working directly for the supplier. PCADV believes that this would ensure compliance with the confidentiality requirements of 52 Pa. Code §§ 54.8, 54.43(d) because it would require compliance of those agent subcontractors who may fall outside of these protections. (PCADV, p. 9.) Moreover, PCADV would include within the definition of ''agent'' a specific confidentiality provision to protect customer information and to require this as a topic for training as well. The PUC should also ''completely restrict the sale of customer information by agents.'' (PCADV, p. 12.) CAC also believes that consumers must first consent before any of their personal information is released and urges the Commission not to eliminate the need for this consent in the name of creating a ''level playing field.'' (CAC, p. 9.)

 OCA/AARP believes that the definition of ''agent'' should be broadened to include those situations where a person may conduct marketing or sales activities on behalf of two or more licensed suppliers and in support of this position cite the Connecticut Department of Public Utility Control's guidelines for Marketing and Sales Practices for Electric Suppliers and Aggregators as an example of a comprehensive definition of the term ''agent'' consistent with their position.2

 Rather than expand the definition of ''agent,'' some parties prefer that the language of the proposed definition be clarified or remain unchanged. RESA suggests that the definition be changed to make clear that the person conducting the marketing/sales for a single supplier is compensated by that supplier and therefore that supplier is responsible for that agent's actions. Moreover, RESA would include language within the definition which excludes employees of independent organizations which facilitate customer access to suppliers.

 NEM opposes the view that compensation should be the determining factor because there are instances when a third party may be compensated but is not engaged in sales or marketing activities (such as providing a price quote to a consumer or the consumer's consultant); instead, language should be added which would define the agency relationship on the basis of the contractual relationship between the supplier and the person marketing on behalf of that supplier. Consistent with this view, NEM believes that language should be added to the definition of ''agent'' which would limit liability to the supplier for whom marketing and sales activities were undertaken because the current proposed language covers agents who provide marketing and/or sales support services to more than one supplier.

 The PEMC, RESA, and NEM agree that affinity groups such as fraternal organizations, churches, rotary clubs, community groups, and/or retail outlets should be excluded from the definition of ''agent'' because these groups ''may choose to recommend or endorse a supplier to its members, employees, or customers and such reference should not result in the group or organization being considered an agent of the supplier under the [Commission's] definition.'' (PEMC, p. 4.)

 RESA would remove the reference to ''marketing service consultant'' and ''nontraditional marketer'' as it relates to gas suppliers. RESA believes that the proposed definition would include some types of entities (such as ''affinity partnerships'' which are included within the definition of nontraditional marketers and ''energy consultants to consumers'' which are included within the definition of marketing service consultant). Moreover, RESA argues that because the Commission has initiated a rulemaking to remove the NGS licensing exemption of marketing services consultants and nontraditional marketers,3 any reference to these regulatory definitions would be outdated. Lastly, inclusion of these references would create the impression of creating different definitions for agents used by electric suppliers and those used by gas suppliers (RESA, p. 4.).

 DES supports the definition of the term ''agent'' in the proposed regulations.

 IRRC is concerned that the preamble to this section notes that agents that provide marketing and/or sales services to more than one supplier would fall under this definition but that the intent of the PUC in the preamble is not reflected in the definition of this term. IRRC believes that clarity could be improved by amending the definition to more accurately reflect the PUC's intent. Additionally, IRRC requests that the PUC review this definition to make sure it covers all persons who could act as agents, such as subcontractors and the potential for an agent to hire employees or delegate activities to employees.


 We agree with OCA/AARP and IRRC that the definition of agent should include those representing more than one supplier and that this is more in keeping with our announced intent in the proposed rulemaking order. We also agree with PCADV, OCA/AARP and IRRC that the definition should be expanded to include all ''subcontractors, employees, vendors, and representatives not directly contracted by the supplier'' who are providing sales and marketing services on behalf of the supplier, as this will provide a more comprehensive description of the individuals covered by the definition and lessen the chance of confusion. We agree with RESA that references to ''marketing service consultant'' and ''nontraditional marketer'' should be removed because, as RESA points out, these types of entities are the subject of another pending rulemaking that may make their inclusion in this rulemaking moot. (Even if this ends up not being the case, we believe the inclusion of these two references is superfluous given our rather comprehensive expansion of this definition discussed above.)

 We agree with RESA, PEMC and NEM that the status of ''affinity groups'' such as community and fraternal organizations, churches, etc., that are not affiliated with a supplier, in the context of this definition needs to be discussed. However, we do not think it is necessary to revise the proposed definition to clarify this; we will simply do so by discussing our intent in this order. If a supplier is using an ''affinity group'' to obtain customers and the individual members of that group are not being reimbursed for the enrollments they obtain, then it is not our intent to treat those individuals as ''agents'' under this definition. Applying these regulations and requirements (background checks, training, uniforms, identification, etc.) upon the members of such organization(s) is impractical and unnecessary. The expectation is that the members of the affinity group are enrolling members of the same group or individuals with which they have a personal relationship.

 However, if the individuals are being compensated for the customers they enroll and if they are approaching individuals outside of a group or personal relationships—including ''multi-level marketing''—then these individuals are more accurately described as an ''agent'' under this definition and these regulations should apply. We acknowledge that there are many different marketing structures currently in operation and unforeseen structures that could appear in the future. There may be scenarios where the applicability of these definitions and regulations may not always be clear. We ask all market participants to use good faith and reason when confronted with such situations, and to seek the guidance of Commission staff if needed.

 While we agree with PCADV and CAC that suppliers and their agents should not sell customer information, we believe that existing regulations at 52 Pa. Code § 54.43(d)4 are sufficient to address this concern and that it does not have to be added to the definition of agent (See 52 Pa. Code § 62.114(3) for the analogous gas industry regulation). We also want to remind everyone of 52 Pa. Code § 54.43(f)5 that codifies the long-standing PUC policy of holding licensed electric suppliers ''responsible for any fraudulent deceptive or other unlawful marketing or billing acts performed by the licensee, its employes [sic], agents or representatives.'' (See 52 Pa. Code § 62.114(4)(e) for the analogous gas industry regulation).

Definition of Disclosure Statement

 IRRC notes that Section 4(b)(7) of the Plain Language Consumer Contract Act (73 P. S. § 2204(b)(7)) provides an exclusion for ''contracts subject to examination or other supervision by the Pennsylvania Public Utility Commission or by the Federal Energy Regulatory Commission'' and asks if contracts between suppliers and a customer are subject to examination or other supervision by the PUC or by FERC. If so, IRRC questions whether the reference to ''consumer contract'' is appropriate. (IRRC p. 2.)


 Although we are aware that the Plain Language Consumer Contract Act excludes contracts which are subject to our examination, we have encouraged the use of plain language in our own orders as well as in communications between companies we regulate and their customers. We are relying on the language drafted by the Legislature in the Plain Language Consumer Contract Act for the standard by which we will hold EGSs and those acting on their behalf when contracting with consumers. Moreover, we also should note in response to IRRC, that insofar as these regulations address ''retail'' sales of energy, they are beyond the jurisdiction of the FERC and are not subject to its review.

Definition of Door-to-door sales

 PEMC recommends that the definition of ''door-to-door sales'' refers to residence-only locations which would not include commercial components that include both a residence and a commercial establishment.

 IRRC is concerned that the inclusion of the phrase ''without prior specific appointment'' could negate all of the protections afforded customers by this regulation—if an agent has an appointment with a resident, would that agent have to abide by these regulations? IRRC asks the Commission to clarify this definition to ensure that all customers benefit from the safeguards this regulation is intended to provide. (IRRC p. 2.)


 We agree with IRRC and will remove the phrase ''without prior specific appointment.'' The fact that the potential customer scheduled an appointment to meet with an agent should not negate the protections these regulations are intended to provide. We decline to adopt PEMC's suggestion to exempt residences that may have commercial use attached. While we understand this may complicate a supplier's solicitation of some commercial entities, we believe that the need to provide these regulatory protections to all residential consumers is the paramount concern. Regardless, the number of mixed residential/commercial premises is relatively small and should not present too much of a burden on suppliers.

Definition of Sales

 RESA believes that the term ''Sales'' should be changed to ''Sales and Marketing'' because the term ''sales'' involves ''the process of assisting the customer in accepting an offer'' but the term ''marketing'' involves making an actual offer to the customer that the customer can accept. These terms are different yet interconnected and including both definitions would clarify that both activities are covered by the regulations.


 We believe that ''sales'' and ''marketing'' are interconnected enough that two different definitions are not necessary. We will instead change the definition of ''Sales'' to ''Sales and Marketing'' as to make the definition more comprehensive and to clarify that both activities are covered by the regulations.

Other Suggested Definitions

 IRRC notes that there are several terms or phrases used throughout the regulation that are not defined and believes that the clarity of the regulation would be improved if definitions were provided for: marketing, public event, transaction, transaction document, verification, and verification process. RESA and OCA/AARP also request that the Commission should consider additional definitions within § 111.2. (IRRC p. 1.)

''Transaction'' & ''Verification''—RESA believes that the processes of a customer authorizing the transfer of his/her account to the supplier and the validation of a customer's intent to transfer his/her account are two distinct steps that should be defined. Neither of these terms is defined in the regulations. By including a definition for each, RESA believes that the Commission would exclude transactions completed without the involvement of an agent from the definition of the verification process. In doing so, the Commission would eliminate the possibility that a customer service representative would be considered an ''agent'' within the context of the regulations because the CSR is merely assisting the customer rather than marketing a service to the customer.

''Transaction Document''—Because it is a term of art used in Proposed Regulations § 111.5(a)(8) and § 111.7(b)(5), OCA/AARP believes the term ''transaction document'' should be defined. OCA/AARP understands the term to mean ''contract and enrollment forms'' and suggests that a definition be added which defines ''transaction document'' to mean those ''contracts and forms used by an EGS or NGS to enroll a customer for service.''


 We do not think that it is necessary to add a definition of ''marketing'' because we are amending the definition of ''sales'' to include ''marketing'' (see previous discussion of the definition of ''sales''). However, we agree with IRRC's, OCA/AARP's and RESA's suggestions and will add definitions of ''public event,'' ''transaction,'' ''transaction document,'' ''verification'' and ''verification process.'' Additionally, we have added a definition of ''customer'' to avoid possible confusion as to who we are referring to when we use this term. The definition is based, in part, on an existing definition of ''customer'' at 66 Pa.C.S.A. § 1403 and is very broad in that it includes all EDC, NGDC, EGS and NGS customers. This also makes it unnecessary to refer to ''prospective'' or ''potential'' customers; we will simply refer to ''customers.''

§ 111.3. Supplier liability for its agent.

 IGS recommends the addition of a paragraph which would require an agent to be separately licensed for each supplier that it represents and that the specific supplier's licensing number for whom the agent is working is displayed. This would eliminate the potential for an agent who is engaged in marketing/sales activities for one supplier to cause another represented supplier to incur liability for that agent's violations of the regulations. (IGS p. 2.) PEMC strongly supports the concept that suppliers should be held responsible for the actions of its agents over whom the supplier has responsibility but recommends the establishment of a Commission procedure for the investigation of alleged acts and the factual determination of a violation before a supplier is held responsible. RESA seeks to revise the regulations to eliminate references to state and federal laws so that it is understood that only those violations which fall within Commission jurisdiction to adjudicate are addressed. RESA also requests Commission flexibility when formulating remedies for violations to ensure that appropriate sanctions are imposed. (RESA p. 6.).

 IRRC notes that Subsection (a) requires compliance with ''federal, state and municipal laws'' but the regulation does not specify which state laws, federal laws or federal regulations apply. IRRC asks if this rulemaking is consistent with all of these laws, regulations and ordinances and also recommends that the rulemaking include specific references to local ordinances, state laws, federal laws or federal regulations in this subsections and subsections 111.3(a), 111.3(c), 111.9(b) and 111.10(a).

 IRRC also has some concerns with the procedures that would be used to implement this section. IRRC notes that under Subsection (b), suppliers are ''. . . responsible for fraudulent, deceptive or other unlawful marketing or billing acts performed by its agent.'' (Emphasis added.) IRRC questions why this section includes a reference to billing—what kind of billing activities would an agent perform? IRRC also believes that including the procedures or a cross-reference to the procedures used to investigate the alleged misconduct would improve the clarity and assist with the implementation of the regulation. Additionally, IRRC asks if suppliers are the only parties that could be subject to fines, or could agents also be fined? (IRRC p. 3.)

 OCA/AARP and CAC recommend the adoption of § 111.3 without modification.


 Due to the concerns expressed by RESA and IRRC, we will remove general references to ''federal, state and municipal law'' in this section and §§ 111.9 and 111.10. We also believe that it is not practical to list all the relevant laws in every instance; but will identify a specific law when appropriate. This in no way indicates that suppliers do not have to respect other federal, state and municipal laws, and as we have previously discussed, these regulations are not intended to supersede or pre-empt any federal, state or municipal law. Also, while the Commission may not have the direct jurisdiction to enforce federal, state and municipal laws, the Commission does have the means to bring any possible violations that we become aware of to the attention of the appropriate authorities. This includes utilizing the Memorandum of Understanding with the Office of Attorney General that we have previously discussed. Also, in response to the concerns expressed by IRRC, we will remove the reference to ''billing acts'' from paragraph (b) because agents would not be involved with billing customers.

 In response to IRRC's questions as to which parties are subject to fines, we point out that the supplier is the entity that the Commission licenses and, therefore, it is the licensed supplier that would be fined. As previously discussed, long-standing practice and existing regulations make clear that suppliers are responsible ''for any fraudulent deceptive or other unlawful marketing or billing acts performed by the licensee, its employes [sic], agents or representatives.''6

 The Commission has available numerous informal and formal resources to investigate and enforce any problems that come to its attention. If a concern cannot be addressed informally by Commission staff, matters can be escalated to a more formal level. The Commission's independent prosecutory arm, the Bureau of Investigation and Enforcement (I&E), can initiate informal or formal investigations as needed and can seek penalties for non-compliance, including the suspension and revocation of supplier licenses. See 66 Pa.C.S. §§ 331(a) and 506 and 52 Pa. Code § 3.113. The Public Utility Code at 66 Pa.C.S. § 501(a), authorizes and obligates the Commission to execute and enforce the provisions of the Code, and the Commission has delegated its authority to initiate proceedings that are prosecutory in nature to I&E and other bureaus with enforcement responsibilities. Delegation of Prosecutory Authority to Bureaus with Enforcement Responsibilities, Docket No. M-00940593 (Order entered September 2, 1994), as amended by Act 129 of 2008, 66 Pa.C.S. § 308.2(a)(11) as amended by Implementation of Act 129 of 2008 Organization of Bureaus and Offices, Docket No. M-2008-2071852 (Order entered August 11, 2011). 66 Pa.C.S. § 3301, authorizes the Commission to impose civil penalties on any public utility or on any other person or corporation subject to the Commission's authority for violations of the Code or Commission regulations or both. Section 3301 further allows for the imposition of a separate fine for each violation and each day's continuance of such violation(s).

 Additionally, the Commission also has a long-standing MOU with the OAG and under this MOU can refer matters that more appropriately fall under the jurisdiction of the OAG. This could include matters that fall under the Pennsylvania Telemarketer Registration Act and the Pennsylvania Unfair Trade Practices and Consumer Protection Law.

 As the competitive energy market evolves, additional regulations and enforcement mechanisms may be developed. Given this, and the number and variety of regulations and enforcement avenues already available, as noted above, we decline to reference all of these in the instant regulations. Referencing them also risks communicating the false impression that the Commission is limited to just those regulations and enforcement methods that are referenced.

§ 111.4. Agent qualifications and standards; criminal background investigations.

 Some parties believe that the language of this section needs to be strengthened or clarified. NEM and PCADV argue that the phrase ''probable health and safety of the public'' contained in § 111.4(b) should be modified. NEM believes that the language should comport with federal and state statutory employment guidelines and the screenings should be for convictions that would impact upon and are related to the individual's ability to engage in these types of sales. (NEM p. 5.) PCADV would include additional language which establishes that specific convictions would bar individuals from engaging in these activities. These acts include, but would not be limited to harassment, stalking, terroristic threats, simple assault, aggravated assault, violation of a Protection from Abuse order, and any sexual-related offenses such as indecent exposure, indecent assault, sexual assault, and rape. In addition, PCADV recommends inclusion of inchoate crimes such as solicitation, attempt, and conspiracy to commit any of the aforementioned crimes as those which would prohibit an individual from engaging in door-to-door sales and marketing activities. PCADV would also require anyone who applies for a door-to-door sales position to sign an affirmation regarding the existence of a PFA or similar no-contact order and to affirm that they have no pending criminal charges.

 OCA/AARP suggests that the phrase ''exercise good judgment'' in paragraph (a) is not sufficient and that suppliers should be required to ''exercise good judgment and follow industry standards'' as this provides more direction to suppliers. (OCA/AARP p. 9.) OCA/AARP would also like to return the words ''comprehensive'' and ''possible'' back into the regulations consistent with Interim Guideline B(1).7 OCA/AARP quotes the Commission's interim guideline language in support of this position because ''door-to-door sales [are] a particularly sensitive issue given the obvious privacy and safety issues. Everyone has a right of security and privacy in the sanctity of one's home.'' Interim guidelines at 15. The Interim Guideline word ''possible'' should replace the proposed regulation's use of the word ''probable'' because the word ''possible'' is a different standard than ''probable'' and better reflects the intent of the criminal background check.

 CAC supports criminal background checks of all persons who solicit door-to-door, and recommends that persons convicted of any felony or any offense involving sexual abuse or sexual misconduct be prohibited from conducting door-to-door sales.

 DES believes that because of the critical nature of their jobs, agents should be required to submit to drug testing to ensure that they are unimpaired when dealing with customers in their homes.

 RESA recommends the substitution of the phrase ''ensure that a'' for the word ''conduct'' in § 111.4(a) as it relates to performing criminal background checks so as to eliminate the implication that the background checks were to be done by the supplier only; this change would allow independent vendors to perform background checks and it would mirror the intent of the regulation.

 PEMC believes that suppliers have an important obligation to develop standards and qualifications for individuals hired as its agents and this includes criminal background investigations and checking the ''Megan's Law'' registry. PEMC also believes that these obligations should apply to independent contractors and vendors that perform door-to-door activities.

 IRRC believes that the Subsection (a) requirement that a supplier ''exercise good judgment'' in developing standards and qualifications for individuals it chooses to hire as its agents is vague and does not establish a binding norm and asks that it either be deleted or amended to state what the Commission considers to be ''good judgment.''

 Concerning criminal background investigations, IRRC has four concerns. First, IRRC requests an explanation of why the Commission believes the regulatory standard of ''probable'' compared to ''possible'' is adequate to protect the public health, safety and welfare. Second, will suppliers have to perform a second background investigation on agents that have already been hired and do agents need to report any pending criminal charges or convictions? Third, IRRC notes that a commenter has suggested that the regulation be amended to clarify that other parties can conduct the required background checks on behalf of the supplier. If that is the intent of the Commission, then IRRC recommends that the final-form regulation be amended accordingly. Finally, IRRC notes that a commenter states that a typical background check may not be adequate because it will not provide information such as protection from abuse orders. IRRC asks that the Commission explain how the evaluation of a potential agent's background in the final-form regulation adequately protects the public's health, safety and welfare.

 IRRC notes that under Subsection (c), suppliers must confirm that their independent contractors and vendors have performed criminal background checks on their ''employees and agents.'' IRRC asks why the term ''employees'' was included in this subsection and is it the Commission's intent to require criminal background checks for all of an independent contractor or vendor's employees?


 Throughout the working group process that first developed the Interim Guidelines (Interim Guidelines on Marketing and Sales Practices for Electric Generation Suppliers and Natural Gas Suppliers, M-2010-2185981, November 4, 2010) up to this point of finalizing regulations, agent background checks have been extensively discussed and considered. All the parties appear to recognize the paramount importance such checks have in helping safeguard public health and safety. However, as evidenced by the comments, there is still significant divergence of opinion as to what should constitute a sufficient background check and how they should be used.

 While we appreciate the comments of the parties on these matters and have given them careful consideration, we of course must be primarily guided by the laws that govern the use of background checks for screening potential employees. In their review of these proposed regulations, the OAG communicated a number of concerns to the Commission. OAG questioned the Commission's legal authority to create a presumption that ''a person whose name is listed on the ''Megan's Law'' registry presents a threat to the health and safety of the public'' and questioned whether this presumption was consistent with the necessity to preserve due process rights of prospective employees. While the OAG advised that the regulation could require the supplier to check the ''Megan's Law'' listing, they suggested that the Commission adopt language similar to that used in the PUC motor carrier regulation at 52 Pa. Code § 31.134(c) (relating to criminal history; disqualification) that would bar a supplier from hiring as a door-to-door agent any person convicted of a felony or misdemeanor to the extent the conviction relates adversely to that person's suitability to provide service safely and legally. OAG believes that the suggested revised language would more closely track the Criminal History Record Information Act (CHRIA) and would make the regulation less vulnerable to a court challenge. Finally, OAG suggested that the regulation be revised to make clear that the requirements apply equally to both new and existing employees.

 By memo to the OAG dated July 21, 2011, the Commission's Law Bureau submitted revised proposed language to the OAG and committed to recommending to the Commission the changes OAG insisted upon. As such, we have accepted OAG's suggested changes and have revised this section accordingly. Consistent with OAG's concerns regarding the due process rights of potential and present employees, we are rejecting IRRC's and others' suggestions that we include ''possible'' threats as opposed to ''probable'' threats. Based upon the OAG's advice, we believe the regulation goes as far as it legally is able without creating a potential violation of the due process rights of both existing and prospective employees.

 We will remove the phrase ''exercise good judgment'' in paragraph (a) to address IRRC's concerns that the phrase does not establish a binding norm. Additionally, we have removed proposed language in subsection (b), which will address IRRC's concerns regarding the clarity of the phrase ''to determine if the individual presents a probable threat to the health and safety of the public.'' Also at IRRC's suggestion, we will remove the term ''employees'' from paragraph (c) because ''employees'' is unnecessarily broad when we want this to apply only to ''agents.'' We note that we have expanded the definition of ''agent'' at § 111.2 to include employees, representatives, contractors, subcontractors and vendors, who perform sales and marketing activities, regardless of whether they are directly or indirectly connected to the supplier. However, we decline to adopt the suggestions of DES and PCADV to expand and/or specify precise criminal activities out of concern that such specificity may go against the advice of the OAG and also invites the risk of overlooking activities that are not specifically listed. We also decline to include ''pending charges'' out of concern that this appears to be contrary to the guidance received from OAG, as discussed above.

 In response to IRRC's request that we clarify the ability of other parties to conduct the required background checks, we believe it is not necessary to address this point in the regulation, but will instead clarify it here in this order. There are companies that provide background security check services, and it is indeed possible that a supplier may want to utilize the services of a professional firm that specializes in background checks. We do not object to the use of these services. The important thing is not who performs the check—but that a check is done correctly and in accordance with these regulations. We also note that the supplier is ultimately the party we will hold responsible for the security background check, regardless of the entity that actually performed the check.

§ 111.5. Agent training.

 PCADV would add specific customer information confidentiality provisions within the definition of ''agent'' and include confidentiality as a specific topic of agent training. NEM suggests that inserting ''supplier-approved'' before ''training'' in Section 111.5(d) to clarify that the supplier's obligation is to ensure that the vendor or contractor utilizes the supplier's training program.

 IRRC notes that while paragraph (a)(1) requires training in state and federal laws, it questions whether this provision should also reference Pennsylvania's Telemarketer Registration Act since it directly relates to agents and to Section 111.10. IRRC also notes that paragraph (a)(2) requires training in ''responsible and ethical sales practices'' but is concerned that this phrase could be interpreted in different ways. IRRC believes that the Commission should either include in the regulation the specific training required relating to responsible and ethical sales practices or add a citation to the practices the training must include.

 IRRC is also concerned that the regulation is not clear regarding the bounds of actions an agent may take when doing door-to-door sales. For example, is it appropriate for the agent to ask to enter the dwelling, or should the agent only enter the dwelling upon the invitation of the customer? Additionally, IRRC thinks that paragraph (a)(10) is broad and suggests adding a cross-reference to the minimum terms and definitions the training must include. A time-frame associated with the record-keeping requirement should also be included in the final-form regulation.

 IRRC also has two concerns with agent monitoring. First, IRRC thinks that the term ''representative sample'' is vague and that a more precise standard should be included in the final regulation. Second, IRRC questions how monitoring of door-to-door sales calls can be accomplished in a manner that ensures the agent is meeting the requirements of this regulation. In the preamble to the final-form regulation, IRRC asks that the PUC explain how a supplier is expected to monitor door-to-door sales and how that monitoring will adequately protect the public health, safety and welfare.


 We agree with PCADV that customer confidentiality should be a training topic requirement specified in the regulation and we agree with IRRC that Pennsylvania's Telemarketer Registration Act should be a training requirement for agents engaged in telemarketing. In response to the request that we specify the requirements as to what constitutes ''responsible and ethical sales practices'' and ''bounds of action,''—we believe that complying with the proposed regulations in effect will constitute responsible and ethical sales practices and actions. We will add language to subsection (a)(2) specifying this. To address IRRC's request for clarification as to the terms and definitions in subsection (a)(10), we will add a reference to the glossary of electric and gas terms on the Commission's website. We also agree with IRRC in that we should be more specific on the record-keeping requirement in paragraph (b) and will adopt the record-keeping timeframe of three years that is found in the existing regulations at 52 Pa. Code § 57.179 (Record maintenance). In addition, we agree with IRRC that the phrase ''representative sample'' in paragraph (e) is too vague and we will remove it, along with the word ''employees'' in (d) because it is superfluous given our expanded definition of agent. We also agree with NEM and will insert ''supplier-approved'' before ''training'' to make clear the supplier's obligation to review and approve the training a vendor provides to its employees.

 Regarding the concerns expressed by IRRC as to how the Commission will monitor and enforce these regulations, please see our discussion relating to Sections 111.1 and 111.3.

§ 111.6. Agent compensation; discipline.

 Some of the parties that submitted comments on behalf of the utilities and suppliers are in general agreement with the intent of the proposed regulation but have concerns. PEMC believes ''that if the Commission seeks to enforce the provision strictly, Commission staff will be faced with a significant burden to evaluate every supplier compensation program for its employees, agents, and contractors. We are concerned that assessment of supplier compensation practices may be an overreach into the legitimate and proprietary business practices of suppliers.'' (PEMC page 6); (See also NEM p. 6, ''The matter of appropriate and optimal agent compensation structures should be a matter within the purview of the supplier.'')

 WGES proposes that the language of the subsection should be limited to prohibiting the supplier from compensating those agents who engage in practices which run counter to those contained in the regulations because ''such inappropriate practices should be eliminated through agent selection and training and supplier contacts with agents that bar payment for slamming or defrauding customers.'' (WGES p. 2.) RESA opposes the language because ''any time any agent violates the regulations, a supplier's compensation arrangement with the agent could be viewed as violating this section because the agent is compensated by the supplier.''

 RESA also disagrees with the implication that agents who are salaried employees are less likely to violate the regulations than those agents who are paid under a commission compensation scheme. To RESA, the regulations would require a supplier to determine in advance whether a particular compensation arrangement was problematic. RESA would modify the language of § 111.6(a) to hold suppliers liable who ''deliberately'' design agent compensation program structure[s] which promote, encourage, or reward behavior which runs counter to those practices established by the regulations. (RESA p. 9.) In addition, RESA believes that the language of § 111.6(b) should be clarified to ensure that a supplier educates agents on the Commission's long standing policy toward slamming and other violations of consumer protections. PEMC believes that Subsection (b) should include a procedure for those instances when an honest mistake is made concerning the transfer of a customer's account and punish only those who engage in slamming. (PEMC p. 6.)

 FES submits that the Commission should allow supplier's to exercise discretion in setting agent compensation in a way that suits its business model. FES believes that the consequences to suppliers of their agents' noncompliance are sufficient deterrence against supplier's promoting illegal behavior.

 OCA/AARP strongly supports the proposed language and urges the Commission to implement it without modification. CAC believes that agents engaged in door-to-door activities, regardless of whether they are employees or contracted vendors, should not work on a commission basis but instead should be salaried.

 IRRC asks that, given concerns of some parties that contend that compensation structures should be left to their discretion, the Commission should explain the need for this subsection. Also, relating to subsection (b), IRRC has three concerns. First, IRRC asks if this provision would apply to independent contractors and vendors of suppliers, or would those entities have to develop their own internal discipline practices and procedures? Second, IRRC recommends that this subsection include a cross-reference to the PUC's policies regarding unauthorized transfers. Third, IRRC believes that the phrase ''long-standing zero tolerance'' and the last sentence of the subsection are both non-regulatory in nature and should be deleted. (IRRC p. 5-6.)


 Regarding the proposed paragraph (a) and supplier employee compensation, we agree with those parties that suggest that this proposal is unnecessary, over-reaching and too vague and we will remove it. Regarding paragraph (b), we agree with IRRC and will remove the last sentence and the reference to ''zero-tolerance'' and will instead reference the supplier switching regulations for electric and gas. Concerning IRRC's question as to the applicability of this section, we note the long-standing practice of holding the licensed supplier responsible ''for any fraudulent deceptive or other unlawful marketing or billing acts performed by the licensee, its employes [sic], agents or representatives.''8 We believe this is sufficient notice to all suppliers that they will be held responsible for the actions of any contractors and vendors they utilize.

§ 111.7. Customer authorization to transfer account; transaction; verification; documentation.

 DES supports the language of the regulation as proposed but would urge the Commission to be flexible given the changing technological environment. For example, one technological change to be considered would be to determine whether allowing electronic signatures for enrollment would be permissible under the regulations. RESA would revise § 111.7(b) to allow an on-site agent to correct any problems with enrollment with the customer's consent. This would avoid the time lag associated with strict adherence to the regulation which would require only contact by phone, letter, or email should a problem arise with verification.

 PEMC offers three modifications to § 117(b)(2)(ii). The first would permit an agent to remain in the customer's presence or home to be used as a resource during the verification process; this is done to ensure an informed decision. In order to avoid the perception of undue influence or coaching by the marketer, PEMC suggests that a specific question or set of questions be posed to the customer by the verification agent to show no coaching or influence was present.9 If the customer answers any of the questions ''no,'' then this would result in the automatic termination of the verification process. In addition to this modification, PEMC would establish a ''safe harbor'' provision in the regulation that would permit marketers to adopt an internal policy providing for customers to have the clear option to separate themselves from the agent's vicinity during the verification process. If the customer requests the marketer to leave the customer's home, or the customer chooses to leave the public location following the sale, the agent would be required to comply with the customer's wishes immediately. Lastly, PEMC would include a requirement that the sales agents would not be permitted to have any interaction with the verification agent once the verification process had begun because ''once the verification starts, it is the customer who controls the conversation, including whether or not the customer would like to be separated from the sales agent during the verification.'' (PEMC p. 8.)

 PEMC requests the addition of a new provision, § 111.7(5)(vii), which would deal with those suppliers who utilize automated sales verification systems. The companies who utilize these types of verification systems do not have a name or number attached to the record even though the verification is recorded and archived. The recordings would be maintained for six billing cycles and the maintenance of this information would provide reviewers with a record of the verification process. In addition, PEMC requests that the Commission permit the required pieces of information referenced in § 111.7 to be maintained in different databases due to the expense of keeping them in one location. PEMC argues that such a change would be permissible so long as the information would be readily available for Commission review.

 FES requests that the Commission reconsider its position with respect to the three- day right of rescission contained in § 111.7(b) and remove the requirement that the customer be provided with a three-day right of rescission during telemarketing calls. Specifically, FES believes that because the customer is provided with the right of rescission on two different occasions, the third notification at the end of the verification process might be counterproductive during telemarketing sales as it might be construed as urging the customer to rescind his or her authorization.

 OCA/AARP strongly support the proposed section which they believe draws a clear line between the sales agent's personal contact in the home of the consumer and the need for the agent to physically depart before the verification process commences. As such, OCA/AARP urges the Commission to adopt § 111.7(b)(2) without modification. However, OCA/AARP is concerned with the Commission's proposal to not require the verification process when the enrollment is done without the interaction with an agent. OCA/AARP suggest that ''there is a need to review the documents and forms used for such enrollments to ensure that the documents are clear, contain all necessary information to ensure that it is only the customer of record making the request, provide all necessary information about the supplier and the process and provide all necessary instructions. This rulemaking process does not provide the forum to review and address any necessary requirements.'' As such, the OCA/AARP submit that this exception to the verification process should be removed. (OCA/AARP, p. 13.)

 CAC also recommends that the verification of sales be required without the agent being present because such verification ''is most likely to be independent and free from influence if the sales agent is not present.'' (CAC, p. 7.)

 IRRC has three concerns with subsection (a)(1). First, this subsection states that the process ''may'' include three specific actions. The use of the word ''may'' implies that a supplier has the option to use one of the three actions to authorize the transfer. If it is the PUC's intent to require suppliers to use one of the three actions in Paragraphs (i), (ii) and (iii) of Subsection (a)(1), then IRRC suggests ''may include'' should be replaced with ''shall include one of.'' However, if the Commission intends to allow suppliers to use other processes, the regulation should be amended to clarify this intent. Second, IRRC notes that (a)(l)(ii) and (iii) include a reference to a ''program'' and asks what this term means. Third, (a)(2) requires the document used to complete the transaction to identify the agent who completed the transaction. However, the documents referenced in Subsection (a)(2)(iii) and (iv) could be completed without the assistance of an agent. IRRC believes that it is unclear how the requirements of these provisions will be implemented and recommends that these provisions be clarified in the final-form regulation. Concerning Subsection (b), IRRC believes that the regulated community would benefit if a specific reference to 73 P. S. § 201-7, Pennsylvania's Unfair Trade Practices and Consumer Protection Law was included in the final regulation. (IRRC p. 6-7.)


 The transaction verification process required by subsection (b) has been extensively discussed and debated; first in the working group process that developed the Interim Guidelines, and now in the proposed rulemaking. One of the central issues is the role and presence of the sales agent during the verification process. Many parties, including OCA/AARP and CAC believe potential customers should be free of the presence of the sales agent so that the verification is completed privately, thus minimizing the chance of intimidation. However, many suppliers point to practical problems that this requirement could create and how it allegedly hinders their communication with the potential customer.

 We believe there is a way to structure this process so that customers will still be protected, even if agents are allowed to be in their presence during the verification. First, we will include new language stating that the agent is permitted to remain in the vicinity of the customer during the verification process only if the customer agrees. Further, we believe that by concluding the verification process with a reminder to the potential customer of the three-day right of rescission, as proposed in subsection (b)(3), we will provide sufficient safeguards in case the customer feels intimidated or unsure. If a potential customer was feeling too intimidated to ask the agent to leave, or if for any reason is not satisfied with what he or she just agreed to, a customer merely has to exercise his or her three-day right of rescission. This will negate what the customer just agreed to without penalty. Therefore, we decline to accept the suggestion of FES to remove the reminder of the three-day right of rescission from the verification because we believe this requirement is key to protecting the consumer in instances where the agent is present. We will enforce this requirement by using the complaints that customers file with us and will be asking complainants about the presence of the agent during verification. Additionally, we will strengthen this provision by agreeing with IRRC and include a reference in the regulation to the Unfair Trade Practices and Consumer Protection Law.

 Concerning IRRC's questions about subsection (a), we agree that this section is unclear and unnecessarily complex. As such, we will shorten and clarify it by simply requiring a supplier to establish either a verbal, written or electronic transaction process for a customer to authorize the transfer of his or her account to the supplier. We also agree with IRRC's concerns with subsection (a)(1) and will add language clarifying that the agent only has to be identified on the document if an agent was involved in the process.

 Concerning PEMC's questions about the archiving of records under subsection (4), we respond by noting that we require that the records be maintained in a system that is capable of retrieving them. We will not dictate what kind of system or how many different systems may be involved; these are matters we leave to the discretion of the supplier.

 OCA/AARP asks us to include under the verification requirements those transactions that do not include the interaction with an agent. We decline to do this because the main reason for the verification process is to protect against consumers being pressured, possibly intimidated, by the presence of an agent, either in person or on the phone. When a customer is enrolling through a process that does not involve an agent (i.e. direct mail, internet,, etc.), these kind of pressures simply do not exist. Without an agent present, the customer is free to take all the time they want to review an offer, compare offers, read all materials and disclosures, and reject or accept the offer without any outside influence or pressure. Accordingly, we think requiring a verification process to confirm such transactions would be superfluous. However, OCA/AARP is correct in pointing out that all the documents involved in direct mail and internet solicitations must contain all of the information necessary for the potential customer to arrive at an informed decision and must comply with all relevant rules governing such transactions.

§ 111.8. Agent identification; misrepresentation.

 Subsection 111.8(a) would require supplier-issued identification badges for all door-to-door sales agents or for those who appear at public events to be visible at all times. NEM wants to have the words ''public event'' defined in the regulations to include those events which may facilitate sales and marketing activities or may result in a customer enrollment. In doing so, this definition would exclude activities such as sporting events that are sponsored by the supplier or agent rallying events hosted by the supplier. OCA/AARP wishes to have this provision amended to require agents to ''prominently or conspicuously'' display identification badges and ''to be on the outer clothing being worn at the time.''

 OCA/AARP and DES request changes to § 111.8(b) with respect to how an agent identifies the supplier to the potential customer. DES would require the agent to identify the supplier both orally and in writing as opposed to the proposed regulation's requirement that the agent perform the supplier identification either orally or in writing. OCA/AARP would require that the agent's initial identification upon first contact be orally and then a written notification may be provided to the customer to confirm the oral representation made to the customer. In addition to this change, OCA/AARP would broaden § 111.8(c) to avoid any confusion about branding. OCA/AARP would add additional language to eliminate any potential confusion as to who an agent represents by prohibiting any branding elements which might be construed by a customer as working for or approved by a government agency or another supplier. OCA/AARP would remove the ''deceptively similar'' language in the regulation as being too vague and substitute it with more specific language to capture the intent of the regulation. OCA/AARP would also include a new subsection (f) to require an agent to specifically advise a customer that their failure to choose a supplier will not affect their ability to receive natural gas or electric service.

 CAC believes that agent identification cards should include a phone number the potential customer can call to verify that the person soliciting at their door is a legitimate agent. CAC also suggests that agents be required to direct potential customers to PUC and OCA information resources. (CAC, p. 7.)

 IGS and RESA would add a new subsection § 111.8(f) in order to avoid confusing customers with the identity of the supplier for whom an agent represents. The new subsection (f) would require those suppliers who have similar names as the distribution company provide disclosures to the customer that explain that the non-affiliated company is not the utility and is not affiliated with the company and disclose the full legal name of the entity providing services that may appear to be similar to the utility. (IGS, p. 2-3.)

 IRRC has three concerns with the subsection (a)(3) requirement that the agent's identification number be displayed on the identification badge in a ''reasonably sized font.'' First, IRRC asks if a supplier must assign an identification number to each of its agents and if so, where can that requirement be found? The same concerns apply to business cards in subsection 111.9(d)(2). Second, IRRC asks what is considered a ''reasonably sized font'' and how will suppliers and agents know if they are meeting this standard? IRRC recommends that a more precise standard be included in the final-form regulation. Finally, IRRC asks how an agent can satisfy the requirement that the identification badge ''be visible at all times'' and would requiring the identification badge to be ''prominently displayed'' be an acceptable standard that could be met by the agent while still protecting the public health, safety and welfare?

 Concerning the subsection (c) prohibition on an agent from wearing apparel or accessories and carrying equipment that contains branding elements ''deceptively similar to that of the local Pennsylvania distribution company'' IRRC has two concerns. First, IRRC thinks that the word ''deceptively'' is unclear and should be deleted from the final-form regulation. Second, the Commission should consider replacing the phrase ''Pennsylvania distribution company'' with the phrase ''any EDC or NGDC'' as this would provide greater clarity and would be more consistent with other statutes and regulations. (IRRC, p. 7.)


 The intent of Section 111.8 is to minimize to the extent possible, the chances of misrepresentation—such as a potential customer being confused as to who they are dealing with because of inadvertent or deliberate actions of a sales agent. Given the relatively new concept of competitive energy shopping and the inexperience of many potential energy customers, confusion is all too possible. In such an environment, it is very easy for a potential consumer to confuse any energy provider with their incumbent energy utility—a confusion that can be contributed to by either inadvertent or deliberate acts of the supplier agent.

 Concerning subsection (a), we have already previously discussed and agreed to add a definition of ''public event'' to Section 111.2 as suggested by NEM (see our discussion relating to Section 111.2 for more information on this change). We agree with CAC that the agent identification card should include the supplier's phone number so that the potential customer can call the supplier if desired. In response to IRRC's concerns, we will remove the reference to ''identification number'' since this requirement is not specified anywhere, and we will remove the phrase ''reasonably sized font'' as too vague and subjective. In response to IRRC, we also will replace the requirement that the badge be ''visible at all times'' with the more practical ''prominently displayed.''

 Concerning subsection (b), we agree with DES and OCA/AARP that agents should be identifying themselves and their company both orally and in writing. However, we decline IGS's suggestion that suppliers affiliated with distribution utilities should provide additional disclosures to the potential customer as over-scripting. While we understand IGS's concern, this is more a matter of protecting suppliers rather than consumers. As such, we believe our original proposal including references to the existing codes of conduct at § 54.122 and § 62.142 is the appropriate way to address these concerns. We also decline CAC's suggestion that agents be required to refer consumers to PUC and OCA information resources as we wish to avoid over-scripting the agents; and inappropriately so in this case, because we would, in effect, be requiring an agent to provide information on the products and prices of competitors. In no other business that we are aware of does government force a business to provide consumers with information on their competitors.

 Concerning subsection (c), we agree with OCA/AARP and IRRC, and will remove the word ''deceptively'' before ''similar to that of the local Pennsylvania distribution company.'' We will replace this with language prohibiting actions that suggest a relationship that does not exist. Per the request of IRRC, we will also replace the phrase ''Pennsylvania distribution company'' with the phrase ''any EDC, NGDC . . .'' Also, at the request of OCA/AARP, we will strengthen this sentence by adding ''government agency or another supplier'' in addition to ''any EDC or NGDC.'' In response to OCA/AARP's request that we add a subsection (f) requiring agents to specifically advise customers that their failure to choose a supplier will not affect their ability to receive energy service, we will add a subsection (f) that prohibits agents from suggesting to potential customers that they ''have to choose'' a supplier since this is a point of confusion we hear about from consumers. We think this prohibition is more appropriate than adding yet more scripting.

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1  CHARGE and SEARCH members included electric distribution companies, natural gas distribution companies, EGSs, NGSs, industry trade organizations, consumers, the Office of Consumer Advocate, and the Office of Small Business Advocate.

2  DPUC Review of the Current Status of the Competitive Supplier and Aggregator Market in Connecticut and Marketing Practices and Conduct of Participants in that Market, Docket No. 10-06-24, Decision (Mar. 16, 2011) (DPUC Guidelines). In the DPUC Guidelines, the term ''agent'' is defined as follows: ''Agent'' means any person, whether an employee, representative, independent contractor, broker, marketer, vendor, sales conduit through multi-level marketing, or member of any organization, who (A) has contracted with, or has been directly authorized by, a Supplier or Aggregator to conduct marketing or sales activities or to enroll customers on behalf of the Supplier or Aggregator; or (B) has received compensation, in any form, from a Supplier or Aggregator for any activities relating to the sales or marketing of the Supplier or Aggregator's electric generation services or the referral, enrollment or servicing of customers on behalf of the Supplier or Aggregator[.]

3  See Licensing Requirements for Natural Gas Suppliers, Docket No. L-2011-2266832, Motion of Commissioner Pamela A. Witmer adopted October 14, 2011.

4  (d) A licensee shall maintain the confidentiality of a consumer's personal information including the name, address and telephone number, and historic payment information, and provide the right of access by the consumer to his own load and billing information.

5  (f) A licensee is responsible for any fraudulent deceptive or other unlawful marketing or billing acts performed by the licensee, its employes, agents or representatives. Licensee shall inform consumers of state consumer protection laws that govern the cancellation or rescission of electric generation supply contracts. See section 7 of the Unfair Trade Practices and Consumer Protection Law (73 P. S. § 201-7).

6  See 52 Pa. Code § 54.43(f) for electric; 52 Pa. Code § 62.114(4)(e) for gas.

7  See Proposed Interim Guidelines For Marketing And Sales Practices For Electric Generation And Natural Gas Suppliers, B(1.) (''The suppliers performing door-to-door marketing shall conduct, on all potential door-to-door marketing agents or sales agents, comprehensive criminal background checks and screenings necessary to determine if an individual presents a possible threat to the health and safety of the public.'')

8  See 52 Pa. Code § 54.43(f) for electric; 52 Pa. Code § 62.114(4)(e) for gas.

9  Examples of questions would include: ''Is the sales agent in your immediate vicinity? Are you aware of your right to not have the sales agent present during this verification process, unless you wish for the agent to be present? Can you verify that you are entering into this sales agreement voluntarily without any undue influence or pressure by the sales agent?'' See PEMC p. 7.

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