Trending Across Retail Choice States

By Natara Feller

Retail energy suppliers in many of the country’s de-regulated markets are preparing for tumultuous times. New York is questioning the value of retail supply and cracking down on “non-compliant” ESCOs while the Massachusetts Attorney General is recommending a full-scale retail ban. Connecticut has already banned variable rate products and New Jersey is tightening its grip on standard pass-through costs for fixed rate customers. Increased use of advancing technology has raised concerns about cybersecurity, setting off proceedings in New York, Maryland, and Pennsylvania, with the potential to limit a supplier’s access to consumer information and utility data systems. The common thread here, and an overarching concern of state regulators, is consumer protection of residential customers. Unfortunately, regulators see partial or full bans on residential retail service as a sweeping response to consumer complaints.

No State is an Island

It is tempting to ignore regulatory trends in other states, but ultimately, proceedings on retail choice in one state have a domino effect on others. New York, for example, led the way in imposing zero-emissions credit payment obligations on suppliers, with Illinois and Connecticut following suit. New York has also sought to impose stringent cybersecurity requirements on suppliers and now proceedings are planned in Maryland and Pennsylvania. Paying attention to how other states treat suppliers (by accessing industry reports, for example) can help you prepare for potentially complicated regulatory requirements down the road, affording you valuable time to adjust your operating procedures, business systems and/or marketing practices.

Regulatory Trend

States

Efforts to Ban Sales to Residential Customers

  • Connecticut
  • Illinois
  • Massachusetts
  • Maryland
  • New York

Regulatory Change Pass-Through Crackdown

  • Connecticut
  • New Jersey

Cybersecurity

  • Maryland
  • New York
  • Pennsylvania

Keep Your Ducks in a Row

Often, suppliers find themselves in hot water not over egregious violations of state regulations, but simple errors compounded over time. The solution is a steady and consistent approach to compliance. Make sure your company information is correct and that your state commission has accurate contact and regulatory information. Have your legal and regulatory counsel review all your marketing materials before you start to use them, whether they are written contracts, mailings, telephonic scripts, or electronic enrollment forms. Never assume that because you have not attracted commission attention, that you are compliant. Rules are constantly changing, and great care must be taken to remain aware of these changes and stay up-to-date.

Remember to keep current and accurate records of enrollment authorizations. In some states, this includes both a signed customer agreement and third-party verification, kept for at least the length of the customer’s service. If the commission comes looking for proof of authorization and you cannot verify that you have enrolled your customers properly, you may be stuck rerating the customer against the utility rate from the start of that customer’s enrollment.

Proactively Supervise Your Marketers & Sales Teams

Your marketers are the face of your business so make sure they represent you well. You are responsible for the actions of your marketers, whether they are in-house or a third-party vendor.  Provide them with proper tools and training by creating and implementing a Quality Assurance Program, ensuring they are aware of how to approach residential and commercial customers. Listen to sales calls and TPVs on a random basis. Do not work with marketers that cut corners and promise unrealistic results!  Do your due diligence by checking public records of consumer complaints with your state commission, or the Better Business Bureau. Have counsel review your service agreements with your marketers so that respective responsibilities and liabilities are crystal clear. Remember, it is you who is on the hook for marketers’ transgressions!

In this regulatory environment, suppliers would be wise to stay ahead and on top of their compliance game.

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Natara Feller is the founding principal of Feller Energy Law.