PAULA M. CARMODY PEOPLE’S COUNSEL MARYLAND OFFICE OF PEOPLE’S COUNSEL JANUARY 4, 2014 Retail Energy Suppliers in Maryland: What Consumers Should Know

TOPICS 2 Office of People’s Counsel – Who We Are Maryland – a “restructured state” Pepco Bill Explained Electricity and Gas Suppliers  Licensing  Consumer Protection Rules  Marketing  Contracts  Disclosures  Privacy  Renewable Energy  Regulatory Enforcement  Energy Supply Contracts - What to Watch For

Office of People’s Counsel 3 Independent state agency Represent the interests of residential utility customers  Electricity  Gas  Telephone  Private Water Advocacy  Public Service Commission  Federal agencies (FERC, FCC) and PJM  Consumer Advocates of PJM States, Inc.  State and federal appellate courts  General Assembly  State and local agencies (Advisory Boards, inter-agency work groups)

Maryland: Retail Competition 4 Maryland is a “deregulated” or “restructured” state Gas and electric retail competition  Gas and Electricity (Energy) Supply  Regulated utility remains the “wires” or “pipes” company and provides regulated energy supply to customers  Distribution  Transmission Maryland law: Energy suppliers  License Requirements  Consumer Protection rules  Disputes

Pepco Bill 5 New bill layout soon  Features  Customer Information  Account Number  Address  Bill Issue Date  Additional: Final bill, past due, and reminder notices  Energy Use  New: Bar graph with 24 months of energy usage data Does not distinguish between actual and estimated data on graph  Pepco Contact Information and Messages  Special Billing arrangements  Budget Bill  Deferred Payment Arrangement

Pepco Bill 6  Billing Amount  Summary (page 1) Payments Unpaid Balances New Charges Total – Distribution and Supply Charges

Pepco Bill 7 Billing Amount (cont’d)  Details (page 2) Rate Schedule Meter information: Dates and consumption; next read date Delivery charges (Distribution system) Customer Charge (Fixed monthly amount) Energy Charge (Volumetric charge – based on usage) Taxes (franchise; gross receipts; county energy tax) EUSP charge (fixed) Environmental and EmPower MD surcharges (Volumetric) Supply charges Pepco – Standard Offer Service (SOS) Generation Transmission Retail supplier (Third Party Supplier or “TPS”) – Total includes: Generation (contract price – fixed or variable) Transmission Fixed monthly charges

Supplier Licensing 8 MD PSC must approve license Requirements  Technical and managerial competence  Affirmations of Compliance  FERC and PJM rules  Federal and state consumer protection laws and regulations Disclosure of problems in other states  Federal and state environmental laws and regulations  Tax compliance  Financial history and integrity  Guarantees, bonds and letters or credit  Certifications  MD Assessments and Taxation: Business qualification and standing

Licensing Procedures 9 PSC Staff  Application – Compliance Review  Technical and financial competence  Certifications and affirmations  Consumer and environmental complaints – Other states  Review of training and marketing materials (if available)  Comments to PSC OPC Role  Application - Focus of Review is on Residential Customer Issues  Disciplinary actions and complaints – Other states Internet  Supplier website  Marketing and training materials (if available)  Solicitations without a license  Comments to PSC PSC Approval or Denial  Letter Order  License Number Assigned  Website Information on Licensed Suppliers

Consumer Protection Unfair and Deceptive Practices (UDAP) 10 Unfair and deceptive practices  “Representations, omissions or practices that are likely to mislead the consumer”  State Attorney General can enforce State consumer protection laws  UDAP: Advertising, solicitation and contracting  Door to Door Solicitation Act  Telephone Solicitation Act  Refers consumer complaints to MD PSC in first instance  MD PSC enforces Public Utility law and regulations (which incorporate state consumer protection laws and UDAP principles)  Adequate, accurate customer information – informed choices  Supplier website: Readily understandable information Services, prices and emissions disclosures

Consumer Protections Contracts 11 General rule: Written contracts are required  Door to door (any place other than supplier’s fixed location)  Telephone (unless exempt from rule)  Customer must receive and sign a written contract after call  Contract is void otherwise  Typical exemptions Pre-existing business relationship Customer-initiated call Customer has reviewed written materials in advance ( slippery exception)  Solicitation requirements for exempt transactions Disclosure of all material terms and condition 3 rd party verification or recording Mail or transmit contract within 3 business days  Internet  Printable document with terms and conditions sent to valid address of customer Remember -No right of rescission unless it is a door to door contract Automatic renewal is permitted – 45 Advance notice is required

Consumer Protection Contract Disclosures 12  Contract: All Material terms and conditions  Description of services and restrictions  License number  Price terms  Deposits  Cancellation: Circumstances, notice and fees  Automatic renewal term  Billing options – Most suppliers use utility billing  No Electricity Facts Label  Price terms  Fixed and variable prices  Price: what is included/excluded  Price Comparison: Supplier price vs. utility SOS price for set periods See OPC Price Comparison sheets

Consumer Protection Information Disclosure and Privacy Requirements 13 Mass Customer List: PSC permits release of name, address and phone number to energy suppliers Utility must obtain pre-approval Customer deemed to consent Notice required Customer can “opt-out” Account number and energy usage information cannot be disclosed without express consent Bills to require disclosure have been introduced and narrowly defeated Customer billing, payment or credit information cannot be disclosed without express consent Exception: Use for billing, bill collection and credit reports

Renewable Energy Supply 14 Renewable Portfolio Standard (RPS)  All supply sold in MD must meet RPS - 20% by 2020  2014 – 10.3% Tier One, including at least 0.35% from solar; 2.5% from Tier Two  Source must be located in PJM region or in control area adjacent to PJM, if delivered here Renewable Supply Offers – Retail Suppliers  Terms Used – Green, Clean, Renewable, Wind  Percentage of Supply – 100%, 50%, 5%  Source of supply  Not limited to MD or PJM (wholesale market area)  You do not actually receive your supply directly from renewable sources  Your supply purchase has the effect of putting renewable generation into the national or regional supply mix  Renewable Energy Certificates (RECs)  A REC puts a $ value on the environmental benefits of 1000 kwh of renewable supply  OPC Price Comparison Chart – Website  Renewable supply offers are identified

Regulatory Enforcement 15 MD PSC - License Violations  Show Cause Proceedings  Suspension or revocation of license  Prohibition on new customer solicitation or enrollment  Civil penalty ($10,000 per violation)  Refunds or credits  Factors  False information given to PSC  Switching customers without consent  Service default  Fraudulent or deceptive practices  Failure to maintain financial integrity  Violation of a PSC regulation or order  Non-payment of taxes  Violation of PSC law or consumer protection laws  Conviction for a felony, or crime of fraud, deceit or theft  Suspension or revocation of license in other state

What to Watch For 16 General – Advertising  Potential misrepresentation or exaggeration of price savings  Percentage savings exaggerated  Deceptive price comparisons  “Teaser” rates (low rates for month or two on variable contract)  “Guarantee” of savings on multi-year contracts (utility SOS price is not known past one year)  Use of “gifts” (gift cards; points) can blur price comparison information  Targeting: Customers with Limited English Proficiency and Seniors

What to Watch For 17 Solicitations  General: Slamming  Account number  Door to door  Marketing agents’ lack of knowledge (paid on commission)  Deceptive appearance of marketers (logos; clothing)  Deceptive identification (“I am from the utility”)  Deceptive statements about prices and services  Failure to provide written contract and obtain signature Customers do not get required notice of 3-day rescission period  Telephone  Deceptive identification  Deceptive description of prices and services  Failure to provide written contract and get signature after the call  3 rd party verification: selective recording

What to Watch For 18 Contracts  Contract terms do not match oral representations  Price terms  Variable prices Formula or Factors - Transparency  Insufficient fee disclosures  Asymmetrical cancellation terms Billing  Consolidated billing  Handling of disputes over supplier charges (on utility bill)  Purchase of receivables (POR) – Authorized by MD PSC  Termination of utility services for non-payment of supplier charges  Inclusion of non-energy charges in supplier charges

References 19 Maryland Laws  MD. Public Utilities Article (PUA)  §7-507 (Electricity Supplier License and Consumer Protection)  §7-603 (Gas Supplier License and Consumer Protection)  §7-507 (q) (Concurrent PSC and Attorney General authority)  Md. Comm. Law Art.  § et seq. (UDAP)  § et seq. (Telephone Solicitation Act)  § et seq. (Door-to-Door Solicitations Act) Maryland Regulations (COMAR)  (Electricity supplier license requirements)  (Gas supplier license requirements)  (Residential electricity customer – consumer protections)  (Residential gas customer – consumer protections)  (Electric Utility billing – includes purchase of receivables)  (Gas Utility billing – includes purchase of receivables)

Resources 20 MD OPC Consumer Information  Monthly Electricity and Gas Supplier Price Comparisons  Guide to “Contracting for Electricity and Natural Gas Supply”  Available at MD PSC  Availability of Suppliers in Area  License Information  Price Offer Information  Available at FTC  “Advertising Retail Electricity and Natural Gas”  “Advertising and Marketing on the Internet” (September 2000) Available at

For More Information 21 Office of People’s Counsel 6 St. Paul Street, Suite 2102 Baltimore, Maryland or