STATE OF ILLINOIS

ILLINOIS COMMERCE COMMISSION

Illinois Commerce Commission )

On Its Own Motion )

) Docket No. 15-0512

Amendment of 83 Ill. Adm. Code 412 and )

83 Ill. Adm. Code 453 )

VERIFIED REPLY COMMENTS OF THE

STAFF OF THE ILLINOIS COMMERCE COMMISSION

Matthew L. Harvey Kelly A. Turner Office of General Counsel Illinois Commerce Commission 160 North LaSalle Street Suite C-800 Chicago, Illinois 60601 (312) 793-2877

November 19, 2015

Counsel for the Staff of the Illinois Commerce Commission

Table of Contents

I. Introduction ....................................................................................................................................... 1

II. The Commission Has the Authority to Promulgate Staff’s Proposed Rules ................... 2

III. The Commission Should Adopt Staff’s Proposed Rules .................................................. 4

A. Section 412.10 Definitions ..................................................................................................... 4

B. Section 412.110 Minimum Contract Terms and Condition ......................................... 13

C. Section 412.115 Uniform Disclosure Statement ............................................................ 21

D. Section 412.120 In-Person Solicitation ............................................................................ 30

E. Section 412.130 Telemarketing .......................................................................................... 46

F. Section 412.140 Inbound Enrollment Calls ..................................................................... 50

G. Section 412.150 Direct Mail ................................................................................................. 56

H. Section 412.160 Online Marketing ..................................................................................... 59

I. Section 412.170 Rate Notice to Customers .................................................................... 60

J. Section 412.190 Renewable Energy Product Descriptions ........................................ 74

K. Section 453.20 Criteria by Which to Judge the Validity of an Electronic Signature

80

IV. Conclusion ................................................................................................................................... 84

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STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION

Illinois Commerce Commission ) On Its Own Motion )

) Docket No. 15-0512 Amendment of 83 Ill. Adm. Code 412 and ) 83 Ill. Adm. Code 453 )

VERIFIED REPLY COMMENTS OF THE

STAFF OF THE ILLINOIS COMMERCE COMMISSION

NOW COMES the Staff of the Illinois Commerce Commission (“Staff”), by and through

its undersigned counsel, and for its Verified Reply Comments in the above-captioned

proceeding, states as follows:

I. Introduction

Staff’s Proposed Rule was filed on October 5, 2015. Along with Staff, the following

stakeholders filed Initial Verified Comments on November 5, 2015: the Retail Energy

Supply Association (“RESA”), the Illinois Competitive Energy Association (“ICEA”),

Ameren Illinois Company (“Ameren”), Commonwealth Edison Company (“ComEd”),

Prairie Point Energy, L.L.C. d/b/a Nicor Advanced Energy L.L.C. (“NAE”), the People of

the State of Illinois (“AG”), the Citizens Utility Board (“CUB”) and the Environmental Law

and Policy Center (“ELPC”). Staff’s Verified Reply Comments address the various

stakeholder comments and suggested revisions to Staff’s Proposed Rule. Staff’s

recommendations related to the various proposals are laid out below. Staff maintains the

positions set forth in its Initial Verified Comments, except where explicitly stated otherwise

herein.

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II. The Commission Has the Authority to Promulgate Staff’s Proposed

Rules

As stated in its Initial Verified Comments, the Commission is authorized to adopt

each of the rules Staff requests. (Staff Comments, 3-9.) Arguably, Section 8-501 of the

Public Utilities Act (the “Act”) requires the Commission to prescribe regulations governing

non-utilities to the extent that they provide service “of the character” supplied or furnished

by utilities. (Staff Comments, 4-5; 220 ILCS 5/8-501.)

RESA does not appear to challenge the Commission’s authority to adopt each of

the rules that Staff requests, but appears to imply that Staff is required to demonstrate

that benefits will result from the revisions to the rules in order for the Commission to adopt

them. (RESA Comments, 6.) Staff rejects this claim. First, as Staff explained in its Initial

Comments and elaborates further below, there are a number of benefits – to consumers,

suppliers, and utilities – that will arise from the adoption of the proposed rules.

Additionally, RESA has cited no authority holding that the Staff is required to demonstrate

benefits will result in order for the Commission to approve the proposed rules. Indeed,

as the Illinois Appellate Court for the Fourth District has recently stated, the Commission

was not required to find that “consumers [were] exploited in sufficient numbers before

measures [were] taken to protect them.” Dominion Retail, Inc. v. Illinois Commerce

Comm’n, 2015 IL App (4th) 140173, ¶134.

ICEA argues that the Commission’s authority over a retail electric supplier (“RES”)

is significant but limited. (ICEA Comments, 9.) ICEA argues that the Commission’s

rulemaking authority explicitly does not include RES, but only public utilities. (ICEA

Comments, 12.) ICEA’s argument fails to properly consider that Section 8-501 explicitly

states that the Commission “shall prescribe rules and regulations for the performance of

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any service or the furnishing of any commodity of character furnished or supplied by any

public utility.” 220 ILCS 5/8-501. ICEA argues that this portion of the act requires only

that RES must adhere to “basic technical standards as electric utilities in terms of

supplying electric commodity or performing utility services.” (ICEA Comments, 13.) ICEA

appears to argue that because RESs offer “products” that are not of the character

furnished or supplied by the utility, they do not offer the same “commodity.” This is

illogical. Clearly, by furnishing electric service to utility customers, RESs – retail electric

suppliers - perform a service and furnish a commodity of the same character furnished

and supplied by electric utilities. Staff stands by its argument made in its Initial Verified

Comments that RES service is indisputably a commodity of the character furnished or

supplied by a public utility. (Staff Comments, 5.)

ICEA further argues that “it is beyond the Commission’s authority to expand or

contract the statutes to the extent recommended by Staff’s proposal” to promulgate the

proposed rules. (ICEA Comments, 15-16.) Staff disagrees. Recently, the Illinois

Appellate Court for the Fourth District addressed the issue of whether the Public Utilities

act can be read as a limitation on the Commission’s authority to impose administratively-

created consumer protections. Dominion Retail, 2015 IL App (4th) 140173. In that case,

the Commission’s authority to impose consumer protections as the condition for

establishment of a small volume transportation program in the Ameren gas service

territory. Id. The court rejected arguments that the Commission’s authority is restricted

to only those powers explicitly set forth in Section 19-115 of the Act, which governs

alternative gas suppliers. Id., ¶ 105. The Fourth District’s reasoning also applies here.

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Furthermore, in finding that the consumer protections imposed do not violate the Act, the

court stated:

The suppliers cite no case holding that the Commission must be purely reactive,

and never proactive, in the practices, rules and regulations it requires[.] They cite

no case holding that consumers must be exploited in sufficient numbers before

measures can be taken to protect them. To borrow an analogy from the

Commission’s brief, the Commission should not have to wait until someone is run

over by a train before it declares a railroad crossing to be dangerous.

2015 IL App (4th) 140173, ¶134 (emphasis added). The Dominion Retail court found that

“the Commission could reasonably foresee the potential for unfairness, deception, or

exploitation” and accordingly, it was appropriate to impose the conditions to “try to prevent

the wrong from ever happening.” Id., ¶135 (emphasis added). In light of the ruling in

Dominion Retail, ICEA’s argument that the Commission lacks the authority to promulgate

the proposed rules fails.

III. The Commission Should Adopt Staff’s Proposed Rules

A. Section 412.10 Definitions

“Early termination fee”

Ameren describes a situation in which customers state they were assessed Early

Termination Fees (ETFs) by RESs despite those customers having halted their pending

enrollments within the rescission window. For this reason, AIC asserts that the definition

in the Rule should be altered to reflect that possibility. (Ameren Comments, 1-2.) In

Staff’s opinion this proposed addition is not warranted. The assessment of ETFs before

customers are actually enrolled and actively taking service with RESs appears unlikely.

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In Staff’s view, one purpose of using the separate terms “rescission” and “cancellation” is

to draw a clear distinction between the two acts – one taken before actual service begins

(rescission) and one after (cancellation). There can be no service to “terminate early”

when a customer rescinds the enrollment.

“Fixed rate”

Ameren observes that the proposed rule contains the term “fixed rate” in several

instances, yet does not define what that means. It suggests that it could be defined as,

“any supply product that does not meet the definition of a variable rate,” but it also states

that it would be open to other suggestions for the language to apply to this term. (Ameren

Comments, 2.) The addition of this term to the rule might well be warranted, assuming

that a workable definition can be crafted. However, Ameren’s proposal may well be overly

broad in that it would define anything that is not variable as fixed. Like Ameren, Staff

requests further comments from the parties on this topic.

“Inbound enrollment call”

The AG seeks to add the phrase, “or change provision of their,” to make the

definition consistent with the language found in Section 412.140(c). (AG Comments, 5.)

Staff does not object to this change.

CUB seeks to remove Staff’s proposed language defining transferred calls as

inbound calls; CUB asserts that transferred calls should be treated as telemarketing under

the proposed Rule. (CUB Comments, 3.) While Staff is not opposed to this change, it

observes that including transferred calls in this proposed definition was intended to make

them subject to the changes Staff proposed in Section 412.140, including third party

verification (“TPV”). CUB does not propose any language to ensure that transferred calls

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are in fact treated as telemarketing under Section 412.130. As discussed in more detail

below, Staff would remedy this proposing a new “Transferred Call” definition, while

simultaneously addressing the concerns of the RES community by eliminating the

proposed TPV requirement for inbound enrollment calls.

NAE avers that Staff’s proposed definition is somehow “both too narrow and too

broad,” and directs much of its concern towards the idea that the proposed language

seems to focus on the customer’s intent instead of what actually occurs. NAE’s solution

to this is to rearrange the wording of the definition as follows:

“Inbound Enrollment Call” means a telephone the customer initiates

a call to a RES agent initiated by a consumer that results in an order

to enrollment for power or energy service verified by a recording as

allowed by law for consumer initiated calls. This includes calls where

the consumer customer is transferred to the RES agent.

(NAE Comments, 22-24.) Staff finds merit in NAE’s concern with what customers intend

to do, and does not object the proposed changes to the first sentence. However, Staff

now favors removing transferred calls from the definition of inbound enrollment call.

RESA asserts that the Rule should allow for calls “made to the RES for another

reason” to be transferred to a RES agent under the inbound enrollment definition. (RESA

Comments, 8.) Since Staff now proposes to remove all transferred calls from this

definition and deal with the topic elsewhere in the rule, this should be rejected.

“In-person solicitation”

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ICEA proposes to retain “door-to-door” as its own marketing type, with

modifications to the existing rule to clarify that such solicitations are performed “without

an appointment and in the absence of a pre-existing relationship between the solicitor

and the customer.” (ICEA Comments, 16-17.) ICEA asserts, among other concerns, that

a RES cannot be expected to exert similar controls from door-to-door channels in other

in-person sales situations as varied as a “family dinner-table conversation,” and it

promises to provide language in future comments to address the topic of in-person sales

that do not fit the strict door-to-door definition it proposes to retain and modify. Id. ICEA’s

point appears to be that not all face to face sales interactions require the same protections

as door-to-door sales. However, consumers having experience with door-to-door sales

may be even less on guard when approached in other situations than they would be when

an unknown RES agent knocks on their door. (Staff Comments, 20.) Moreover, any

attempt to describe each different in-person marketing method in the rule, requiring

different regulations tailored for each type, might fail to capture the full spectrum of

possibilities. The simple concept of a standard definition which applies to a sales and

solicitations in which the RES agent is physically present with a customer provides clarity.

Staff remains prepared to consider further comments providing for appropriate and

reasonable regulation of other forms of in-person sales. However, ICEA’s

recommendation should not be adopted.

NAE claims that the proposed Rule’s requirement that all in-person solicitations be

confirmed with a TPV is internally inconsistent because the proposed rule would make

the TPV happen outside the presence of the salesperson. NAE questions how that might

happen when the sale occurs at the RES’s own location. (NAE Comments, 24-25.)

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However, the TPV need not happen immediately on conclusion of the face-to-face

interaction between the customer and sales agent. As long as the customer has a phone

(which seems likely), the TPV can occur away from the agent’s presence. Staff discusses

this in greater detail within Section 412.120 below.

RESA, like ICEA, urges elimination of Staff’s proposed definition pending the

formulation of a definition it considers to be more appropriate. While RESA proposes no

actual language in this round of comments, it suggests the possibility of a “mobile data

application” which may help to address this. Further, RESA urges that, whatever process

is eventually adopted, steps be taken to make it easier for customers to enroll when they

are away from home or their places of business by creating a “virtual wallet” whereby the

customer could use information other than their utility account number to enroll. (RESA

Comments, 8-11.) As explained above, Staff requests further comments and suggested

language on this subject, but dos not at this time change its recommendation.

“Renewable Energy Certificate” or “REC”

The AG proposes this new definition to address its concern that “green power” and

a REC are not equivalent. (AG Initial Verified Comments, Page 5.) Staff’s proposed

definition of “renewable energy resources” includes RECs, and for this reason, Staff

recommends that the Commission reject the AG’s proposed definition of “renewable

energy certificate.”

“Third Party Verification” or “TPV”

NAE contends that the proposed rule’s definitions section should not contain

“directives and requirements,” and that instead those functional aspects should be

“contained in the substantive provisions of the proposed rule.” (NAE Comments, 25.)

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Staff does not concur in this proposal. The rule is more akin to the Commission’s Part

280 rules in that it involves consumers more directly than other Commission rules. As

such, Part 412 should be useful to consumers. In Staff’s experience, consumers and

other parties appreciate definitions which provide some functional directive. (Staff

Comments, 9-10.)

“Time of use rates”

RESA proposes to add a definition (RESA Comments, 11) as follows:

“Time of use” rates mean supply rates that change in a predictable

manner and vary by a combination of hourly, peak or seasonal time

period.

(RESA Appendix A, 3.) Staff sees no reason for this definition. The term “time of use

rates” is not used within Staff’s proposed rule. In addition, it is not clear to Staff that those

rates necessarily change in “a predictable manner.” RESA’s proposed definition should

be rejected.

“Transferred call”

In its initial proposal to require TPVs for inbound calls, Staff sought to protect those

consumers who do not actively call the RESs on their own, by including transferred calls

in the definition for “inbound enrollment call” and then codifying the TPV requirement in

proposed Section 412.140(d). However, based upon various parties’ comments, Staff

believes its initial proposal should be modified. To do so, Staff proposes to remove the

reference to transferred calls from “Inbound enrollment call” and create a new definition

to ensure that transferred calls are treated as telemarketing within the meaning of

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proposed 412.130, while simultaneously removing the TPV requirement from proposed

412.140. Staff’s proposed definition reads as follows:

“Transferred call” shall include any enrollment call in which the

customer did not directly dial a RES agent, including calls which

originate as live or automated calls to the customer who then might

select an option that results in the call being forwarded to a RES

agent. “Transferred call” does not include enrollment calls in which

the customer directly dials a RES call center and selects to be

forwarded to a RES agent from a call center menu or live operator.

Transferred calls shall be treated as Telemarketing within the

meaning of Section 412.130 of this Part for purposes of enrollment

compliance.

CUB argues that calls in which customers are transferred to a RES sales agent

should be treated as telemarketing instead of in-bound enrollment calls as proposed by

Staff. (CUB Comments, 3.) Staff’s proposed definition of transferred calls appears to the

Staff to address CUB’s concern.

The AG argues that the transfer of calls to a RES agent should be prohibited in

instances where a customer initially calls a utility. (AG Comments, 17-18.) However,

issues associated with transferred calls are not limited to consumers who have first

contacted a utility directly, but also include calls made to third-party vendors who offer

customers a “one-stop” service to set up several different utility services. (Staff

Comments, 11.) Staff provides further comments on the AG’s proposal below, but here

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Staff asserts that its proposed definition of “transferred calls” would provide a broader,

yet less restrictive, protection.

ICEA, NAE and RESA offer their views on this issue in their comments regarding

Section 412.140. Staff will address these in detail below, but all three raised serious

concerns with Staff’s proposal to include a TPV requirement for inbound enrollment calls,

and sought its deletion. (ICEA Comments, 30; NAE Comments, 4; RESA Comments,

16.) In Staff’s opinion, customers who affirmatively contact a RES to enroll are likely to

be more informed about the nature of transaction than those who are transferred to a

RES by another party. Staff’s proposal to remove this language from the definition of

inbound call and create a defined “Transferred call” will adequately protect those

consumers while relieving some of the extra burden its initial proposal would have placed

on all inbound enrollment calls.

“Variable rate”

ICEA seeks to modify and expand Staff’s proposed definition so that it includes not

only the basic concept of a “Variable product,” but also two more specific concepts, written

as additional proposed definitions for “Variable index product” and “Variable non-index

product.” ICEA further asserts that the bar for variable products should be lowered to 3

months instead of Staff’s proposed 6 months. (ICEA Initial Verified Comments, 5, 18.)

ICEA’s proposed edits are therefore substantial:

“Variable rate Product” means that the contract between the RES and the

residential customer where the does not specify a charge for power and energy

service that is fixed for at least six three (3) monthly billing periods or longer and

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where the charge for power and energy service does not change more than once

a month.

“Variable Index Product” means a Variable Product for which price is calculable

in whole or in part based on a publicly available index, as modified by a formula

disclosed to the customer.

“Variable Non-Index” product means a Variable Product that is not a Variable

Index Product.

(ICEA Appendix A, 4.) As Staff’s proposed Section 412.170(e) provides an exception to

the rate notification requirements in Section 412.170(a)-(d) for index-based products,

there is no need to create two additional variable rate definitions.

Moreover, as Staff explained it its initial comments, it chose to limit variable rates

to any set rate lasting less than six months for two reasons. First, it is reasonable to

assume that consumers expect rates which are described as “fixed” to remain fixed for

longer periods than three months. Second, the switching process, which can take two

billing periods, does not allow consumers adequate time to assess the value, or lack of

value, of variable rate products, choose another rate or supplier, and avoid the effect of

a variable rate change that they do not find to their liking. (Staff Comments, 13-14.)

NAE believes that the word “contract” is misused in Staff’s proposed definition, and

prefers that rates be described instead as “products.” It also asserts that products might

be offered which would not be captured by the definition, including those that would have

both fixed and variable components. NAE further questions the limit of six months as well

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as Staff’s proposed language qualifying the variable rate as one that “does not change

more than once a month.” It therefore suggests removing Staff’s proposed definition in

favor of two definitions which are similar to those proposed by ICEA. (NAE Comments,

25-26.) Staff sees no need for additional definitions in light of its proposed revisions to

Section 412.170(e). Regarding NAE’s concerns over the “does not change more than

once a month,” Staff notes that Staff’s proposed variable rate definition deliberately

excludes time of use products. As a result, the Commission should reject NAE’s proposal.

RESA states that it should be left to the RESs themselves to determine how

variability occurs, without providing any substantive support for its position. Like ICEA

and NAE, it also would limit the definition of “variable rate” to those products for which the

fixed rate lasts less than three months. (RESA Comments, 11.) This proposal should

also be rejected, for the reasons set forth above.

B. Section 412.110 Minimum Contract Terms and Condition

NAE contests the necessity of increasing required contract font size from 10 point

font to 12 point font size on the basis of not being able to maintain two page lengths and

an assertion that Staff has provided no basis that the change would improve customer’s

awareness. (NAE Comments, 11). Similarly, RESA opposes the increase in font size

asserting that Staff has not provided any explanation as to why it is necessary. (RESA

Comments, 12).

NAE’s concern that it will be unable to maintain a two-page limit as part of the rule

if it is required to use 12-point type lacks merit. The two-page limitation is eliminated in

Staff’s proposed revised rule, and the increased size is required in disclosures mandated

14

by Section 412.110 only. Other contract terms may be printed in type as small as 10-

point.

It is Staff’s opinion that customers would benefit, and be better able to make

informed decisions, if required disclosures are made in a prescribed degree of

prominence. In fact the current rule, Section 412.240 (a) (4) requires a statement to be

provided in at least 12point type. The same degree of prominence should be given to

other key terms which are established in proposed section 412.110.

NAE’s and RESA’s objections to the font size increase should be rejected.

B. Sequence of Disclosures

NAE objects to Staff’s proposed revisions on the basis that the requirement may

increase costs and prevent RESs from developing a contact that can be utilized in multiple

jurisdictions. (NAE Comments, 11). Similarly, RESA asserts that RESs should be able to

put such information in the order it sees fit and that Staff provides no explanation for

sequencing disclosures. (RESA Comments, 12).

Based on Staff’s review of sales contracts and interactions with consumers and

suppliers, Staff is of the opinion that customers would benefit, and be better able to make

informed decisions, if required disclosures are made in a prescribed sequence, and a

prescribed degree of prominence. (Staff Comments, 14). Many of the current Section

412.110 requirements are retained but are reordered in a sequence that in Staff’s opinion

is calculated to aid customers in reaching an informed decision regarding the contract.

With the prescribed sequence and prominence of required disclosures, consumers would

better be able to easily identify key terms within the contact and affirm their understanding

of the terms that were presented at the point of sale with those that they are actually

15

contractually bound to and be afforded an opportunity to have knowledge of their rights

should their understanding not match.

NAE’s and RESA’s objections to the font size increase should therefore be

rejected.

C. Section 412.110 (c)

Staff is not opposed to ICEA’s revisions to Section 412.110 (C) (ICEA Attachment

A, Pg. 5) as follows:

The RES' toll-free telephone number for billing questions, disputes and complaints,

as well as the Commission's toll-free phone number for complaints The charges

for service for the length or term of the contract and, if any charges are variable

during the length or term of the contract, an explanation of how the variable

charges are determined;

(ICEA Attachment A, 5)

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D. Section 412.110 (d)

While Staff appreciates ICEA’s attempt to add clarity to Staff’s proposed revised

rule, its addition of “in addition to a per kilowatt-hour charge” and “[t]he requirements of

this subsection (d) do not apply when the total RES charges are for a fixed dollar amount

per month and do not fluctuate with kilowatt-hours consumed;” (ICEA Attachment A, 5)

are inconsistent with Staff’s proposed revisions. The proposed exclusion of fixed monthly

charges which do not fluctuate based on volume used would not permit a consumer to

make an “apples to apples” comparison with other suppler kilowatt-hour prices and the

customer’s utility kilowatt-hour price, and is contrary to the existing rule, specifically

Section 412.110 (p).

Proposed Sections 412.110 (d) and (e) separate price related disclosures from the

existing Section 412.110 (p). The requirements remain the same, but are codified in two

separate parts for clarity (Staff Comments, 15). ICEA’s proposed revisions improperly

combine two concepts together again in one subsection, and reduce clarity.

NAE’s proposes revisions to Section 412.110 (d) add language intended to clarify

applicability to products that include fixed monthly charges or are comprised entirely of a

fixed monthly charge that does not change with customer’s usage. This appears

unobjectionable. However, inclusion of “all supply” within the definition is ill-taken. Certain

offerings which should be within the scope of the rule may include “all supply” charges.

Customers, accordingly, would not benefit from the potential “apples to apples”

comparisons that the usage intervals would provide.

The Commission should reject NAE’s argument that Section 412.110(d) should be

removed, and should discount assertions that inefficiency will result from alleged

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replication of requirements within the Code Part. Indeed, the disclosure requirement is

intended to restate certain disclosures, and the existing rule and Staff’s proposed

revisions relate to different steps in the sales process. The existing and proposed Section

412.110 establish minimum contract terms and conditions, but is also referred to in other

sections as minimum disclosure requirements at the point of sale. This will ensure that

customers are fully informed and not mislead at the point of sale, and will also enable

customers to make certain the contract is consistent with representations made.

E. Section 412.110 (f)

CUB proposes modifications to Section 412.110 (f) that would require that

customers take affirmative action to renew the contract by the end of the initial contract

term or the customer will return to utility supply (CUB Comments, 5). Staff cannot support

this proposal and is of the opinion that such a requirement by the Commission would be

unlawful, to the extent that it prohibits a contract provision which the General Assembly

has found to be lawful. See 815 ILCS 610/1, et seq. (Automatic Contract Renewal Act

requires certain disclosures in cases where consumer contracts automatically renew).

ICEA’s proposed revisions to Section 412.110 (g) would add, “If the early

termination fee or penalty is not a set amount, the RES shall disclose the amount of such

fee.” (ICEA Attachment A, 6). Staff is unaware of how a RES would disclose the amount

of a fee if it is not a set amount. Staff would be supportive of additional language requiring

the disclosure of set amount of fees and welcomes additional clarification from ICEA.

G. Section 412.110 (h)

ICEA proposes additional clarifying language to Section 412.110 (h) as follows and

Staff has no objections to the additions at this time.

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Any fees assessed by the RES to a customer for switching to the RES If the RES

intends at any point during the length or term of the contract to seek a deposit or

repayment from the customer, the RES shall identify whether Whether and under

what circumstances a deposit or prepayment will be required, along with a

disclosure of the manner in which the deposit or prepayment will be calculated,

and the circumstances in which the deposit or prepayment will be refunded[.]

(ICEA Attachment A, 6)

H. Section 412.110 (i)

ICEA proposes the addition of “signing up for the RES product identified in the

contract…[,]” (ICEA Attachment A, 6) to Staff’s proposed Section 412.110 (i). ICEA

asserts that customers will be interested in their own savings, not those of similarly (or

differently situated peers. (ICEA Comments, 20) It is unclear to Staff how its own

proposed revisions would not be specific to the RES product being sold. Staff requests

additional clarification from ICEA regarding its proposed revisions. The proposed

language might well limit the disclosure to individuals that “sign up”.

I. Section 412.110 (k)

Ameren Illinois proposes revisions to retain current Enrollment Rescission window

standards and maintains that it is not capable of manually monitoring carrying Enrollment

Rescission windows and that EDI and billing system automation enhancements would

need to be modified to allow RESs to electronically communicate the length of the

extended Enrollment Rescission window. (Ameren Illinois Comments, 4).

19

Staff agrees that a longer rescission period is really not up to the RES. However,

instead of adopting Ameren’s revisions, Staff proposes to strike the portion that mentions

a longer rescission period. As a result, Staff proposes the following language:

A statement that the customer may rescind the contract and the pending

enrollment, within 10 calendar days after the electric utility processes the

enrollment request, by contacting the RES, unless the contract provides for a

period greater than 10 calendar days, in which case the length of that greater

period shall be disclosed. Residential customers may rescind the contract and the

pending enrollment by contacting the RES or the electric utility. The statement shall

provide both toll-free phone numbers.

J. Section 412.110 (l)

ComEd proposes the following additions to Section 412.110 (l) to clarify that the

RES agent is not endorsed by the utility or activing on behalf of an electric utility program,

A statement that the RES is an independent seller of power and energy service

certified by the Illinois Commerce Commission and that the agent is not employed

by, representing, endorsed by or acting on behalf of the electric utility or electric

utility program, governmental bodies or programs (unless the RES has entered

into a contractual arrangement with the governmental body and has been

authorized by the governmental body to make the statements) or consumer groups

or programs[.]

(ComEd Comments, 2)

Similarly, ICEA proposes revisions to Section 412.110 (l) to clarify that a RES

agent is not representing or acting on behalf of an electric utility program or governmental

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program. ICEA further proposes that a RES be allowed to represent affiliation with a

consumer group if it has entered into a contractual arrangement.

A statement that the RES is an independent seller of power and energy service

certified by the Illinois Commerce Commission and that the agent RES is not

representing or acting on behalf of the electric utility or electric utility program(s),

governmental bodies or governmental program(s) (unless the RES has entered

into a contractual arrangement with the governmental body and has been

authorized by the governmental body to make the statements) or consumer groups

or consumer group program(s) (unless the RES has entered into a contractual

arrangement with a consumer group and has been authorized to make the

statements);

(ICEA Attachment A, 7)

Staff does not object to either ComEd’s or ICEA’s proposed revisions and

proposes the following revision to Section 412.110 (k) incorporating both revisions;

A statement that the RES is an independent seller of power and energy service

certified by the Illinois Commerce Commission and that the agent RES is not

employed by representing, endorsed by or acting on behalf of the electric utility or

electric utility program(s), governmental bodies or governmental program(s)

(unless the RES has entered into a contractual arrangement with the governmental

body and has been authorized by the governmental body to make the statements)

or consumer groups or consumer group program(s) (unless the RES has entered

into a contractual arrangement with a consumer group and has been authorized to

make the statements);

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K. Section 412.110 (m)

ICEA proposes an addition to Section 412.110 (m) that would require RESs to

include a statement that switching to a RES will not impact the customer’s eclectic service

reliability. (ICEA Attachment A, 7)

Staff does not object to the addition of this statement. However, Staff is uncertain

how switching suppliers would negatively impact electric service reliability. While this

might be a valuable statement if a RES seeks to persuade a customer to switch, it is not

an important contract term or disclosure.

L. Section 412.110 (o)

NAE proposes the addition of Section 412.110 (o) which would protect existing

contracts from revisions to Section 412.110 (NAE Initial Comments, Pg. 19). While Staff

does not object to NAE’s proposed Section 412.110 (o), it question the necessity for it.

Staff is unaware of any basis for retroactive application of administrative rules.

J. Section 412.115 Uniform Disclosure Statement

Both ICEA and RESA object to Staff’s proposed Uniform Disclosure Statement

(“UDS”) on the grounds that it is limiting in space and content. (ICEA Comments, 21;

RESA Comments, 13.) ICEA states that “by limiting the contents and space available on

the UDS, RES cannot accurately describe the more advanced product and service

offerings” and thus “the UDS as currently conceived presents a stifling barrier to product

innovation.” (ICEA Comments, 21.) Similarly, RESA states that “as long as the UDS

covers the information required by Section 412.110, the RES should be able to add other

22

pertinent information” and that Staff’s proposed UDS is “another example of inappropriate

micromanagement of a RES’ operations.”1 (RESA Comments, 13.)

Staff fails to see the value in a Uniform Disclosure Statement if each RES gets to

decide how long the Uniform Disclosure Statement is and what it should contain. Yet that

is exactly what ICEA and RESA seem to propose. A Uniform Disclosure Statement should

be a compact summary of the relevant features and disclosures associated with each

RES offer. Staff strongly recommends that the Commission adopt the proposed one-page

limit of the UDS as well as the requirement that the content of the UDS be limited to the

items found in Staff’s proposed Appendix A and described in proposed Section 412.115.

In fact, if the length and content is left to be decided by the RES, there seems to be no

difference between a UDS and the entire contract or even the minimum terms and

conditions described in Section 412.110.

In challenging the proposal for a UDS, ICEA lists product offerings beyond what is

currently most commonly offered to Illinois’ residential customers, including “dynamic or

time-of-use pricing, energy related products or services (including efficiency, demand

response, and distributed generation), renewable energy (beyond fungible RECs), and

offers across other product and service platforms (including rewards points and hardware

such as smart thermostats.” (ICEA Comments, 21.) However, Staff’s proposed UDS

allows for the existence of such offers and features. Suppliers are free to describe each

of these features in the preferred level of detail in either the contract or other

documentation outside of the UDS. Staff agrees with ICEA that “as technological and

1 Staff assumes that “412.110” is a typographical error and should instead refer to “412.115.”

23

regulatory advances allow for product offerings beyond fixed-price commodity, it will take

increasing amounts of text to fully describe all aspects of RES offers.” (Id.) Staff’s

proposed Section 412.110 explicitly allows a RES to add information beyond what Staff

proposes to be the minimum terms and conditions of each offer. Staff fully recognizes

that not every conceivable offer variation can be fully described in a document that is

designed to be short and uniform. However, instead of giving up on the goals of uniformity

and brevity, Staff recommends that the Commission adopt a UDS that briefly discloses

the main features and required disclosures of each RES offer, while still allowing a RES

to supplement the UDS with other, separate documentation.

RESA further states that “the RES’ provision of additional information on a UDS is

commercial free speech and a preemptive prohibition against such speech treads

dangerous ground.” RESA does not cite any legal authority upon which this offhand

comment is based, and furthermore ignores the fact that the General Assembly granted

the Commission the authority to require a UDS pursuant to Section 16-117(h) of the Act.

220 ILCS 5/16-117(h). It is well settled law that statutes are presumed constitutional, and

Illinois courts will construe a statute in a manner that affirms the constitutionality of the

statute, if reasonably possible. People v. Hollins, 2012 IL 112754 ¶13. Furthermore, the

United States Supreme Court has recognized that while commercial speech warrants

protection, albeit to a “different degree” than other speech, Virginia State Board of

Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771 (1976),

disclosure laws imposed upon commercial speech are constitutional. Zauderer v. Office

of Disciplinary Counsel, 471 U.S. 626, 651 (1985). RESA’s concern that the Commission

may tread upon “dangerous ground” in exercising its discretion to require a UDS, as

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authorized by a statute presumed to be constitutional, viewed in light of United States

Supreme Court precedent which allows for such requirements, is unfounded.

NAE states that the “information in proposed Section 412.115 and the Minimum

Contract Terms and Conditions in Section 412.110 are substantially the same, yet Staff’s

proposed revisions require that same information to be provided twice in a direct mail

solicitation – once by requiring the direct mail solicitation to ‘include items (a) and (c)

through (m) of Section 412.110” and a second time by requiring a separate UDS where

the direct mail includes a written Letter of Agency.” (NAE Comments, 7.) NAE argues

that this is “inefficient, costly, and wasteful.” Id.

NAE’s concerns are unfounded. First, the inclusion of the UDS is not required for

all direct mail solicitations. Its inclusion is only required if the solicitation includes a written

Letter of Agency. Second, the UDS is a critical component not only during in-person

solicitations but also for direct mail solicitations where the customer returns a Letter of

Agency and is not required to go through a third-party verification. However, there is a

benefit in dropping subsections (k), (l), and (m) of 412.110 from the list of required

disclosures when a direct mail solicitation includes a written Letter of Agency. As a result,

Staff proposes a revision to Section 412.150(b) in these comments below.

NAE argues that suppliers should “have some flexibility in the exact wording that

is contained in the new UDS” and points to Code Part 280 in which “[d]isconnection

notices substantially in the form of Appendix A shall be required prior to all disconnections

of service.” (NAE Comments, 8.) NAE proposes that Section 412.115(a) be modified as

follows:

25

All RES offers for residential and small commercial customers

require a one-page Uniform Disclosure Statement (“UDS”) that shall

be substantially in using the form appended to this Part as Appendix

A. All text in the UDS shall be printed in a 12-point type or larger. The

UDS may include a logo of the RES but the UDS shall not contain

any items other than the ones found in Appendix A or described in

this section.

Staff considers that revision is reasonable and does not oppose NAE’s proposal.

NAE argues that the rule should include “some language explaining or defining

the phrase ‘custom charge’” and NAE proposes the following language:

If the price is a custom price that will not be known until additional

customer-specific information is obtained, the UDS shall include the

word “custom” and the RES shall replace “custom” with the price

offered to a particular customer once the RES has determined the

custom price for the customer.

This proposed language is a useful addition to Section 412.115 and Staff

recommends that the Commission adopt it.

Similarly, NAE states that “the phrase ‘time of use’ is not defined” and that “it is

possible to have a retail supply product with a daily index rate and it may be confusing to

customers to definitely describe the price for such a product as ‘time of use’ rate in the

UDS.” (NAE Comments, 9.) NAE proposes the following language:

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If the price is a price that varies more than once a month, the UDS

should include the phrase “time of use/daily rate; refer to contract”

There might well be RES offers wherein the rate varies more frequently than once

a month, yet the phrase “time of use” may not be ideal to describe such offers. To that

end, Staff proposed the following modified language:

If the price is a price that varies more than once a month, the UDS

should include the phrase “time of use” or other similarly short

descriptor and refer the reader to the contract;

ICEA recommends deletion of the “burdensome requirements for a sales agent to

date and mark their identification on UDS provided to customers” because ICEA “is

unsure of the consumer benefits while concerned about the additional compliance costs

the requirement will impose on RES.” (ICEA Comments, 20-21.) Staff recommends these

requirements because identifying a particular sales agent is of great value when the sale,

attempted sale, or purported sale was the result of in-person solicitation. When the

Consumer Services Division receives an informal complaint about sales agents

misrepresenting themselves or their offers, it is valuable to both the customer and the

RES in question to easily identify the particular sales agent involved in the allegation. It

allows the RES to determine whether the identified sales agent has had similar allegations

leveled against him or her in the past and to take appropriate action. The identification of

the sales agent is particularly helpful when the solicitation did not lead to an enrollment

request by the RES. While most RESs are able to identify the sales agent if a solicitation

leads to an enrollment request, it is often difficult to determine the sales agent when the

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solicitation does not lead to an enrollment request. However, Staff has no objection to

Section 412.115(b)(15) being modified as follows:

The UDS shall state the date the customer was solicited when the

UDS is used for in-person solicitations.

As with Section 412.110, CUB proposes that the Commission require that a

customer “will be returned to utility supply” unless the customer takes “affirmative action

to renew the contract by the end of the initial contract term.” (CUB Comments.) As

explained above, Staff is of the opinion that such a requirement by the Commission would

be unlawful, to the extent that it prohibits a contract provision which the General Assembly

has found to be lawful. See 815 ILCS 610/1, et seq. (Automatic Contract Renewal Act

requires certain disclosures in cases where consumer contracts automatically renew.)

The AG proposes to add the following subsection:

For a variable rate product, the UDS shall state that the current rate

per kWh price and a one-year price history, or history for the life of

the product, if it has been offered less than one year, is available on

the RES’s website and at a toll-free number. A RES shall not rename

a product in order to avoid disclosure of price history.

(AG Comments, 5.) Staff proposes a similar disclosure requirement regarding a

RES’ historical variable residential rates in Section 412.170(g). However, Staff proposes

that a RES publish its historical variable rates on the Commission’s PlugInIllinois.org

website. Doing so allows a prospective customer to conveniently compare the recent

variable rates of several suppliers. In addition, Staff recommends that the UDS be limited

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to one-page in length and adding the disclosure proposed by the AG will make such a

limit harder to accomplish. The additional benefit of adopting Staff’s proposal to require

a RES to publish the recent variable rates on PlugInIllinois.org is that Staff’s proposed

UDS already contains the following proposed language: “[f]or information about the

electric supply price of your electric utility and offers from other retail electric suppliers,

please visit PlugInIllinois.org.” In sum, Staff is of the opinion that its proposed UDS

combined with the required historical variable rate disclosure pursuant to Section

412.170(g) will be a more effective and efficient means to accomplish the result which the

AG’s proposal seeks.

Ameren Illinois expresses its concern with Staff’s proposed language for Section

412.115(b)(11) because it “extends the enrollment rescission window past 10 calendar

days and provides for customer enrollment periods to vary individually based on their

individual contract.” (Ameren Comments, 6.) Consistent with Staff’s response to Ameren

Illinois’ concerns regarding the rescission language for Section 412.110, Staff agrees that

the added language is confusing and unnecessary. For this reason, Staff proposes that

proposed Section 412.115(b)(11) be amended to read as follows:

Rescission: The UDS shall include the following: “You have a right

to rescind (stop) your enrollment within 10 calendar days after your

utility has received your order to switch suppliers. You may call us at

[insert toll-free number] or your utility at [insert toll free number] to

accomplish this.” If the contract provides for a period greater than 10

calendar days, the length of that greater period shall be disclosed;

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Regarding Staff’s proposed Section 412.115(b)(4), NAE states that it understands

that “the reference to ‘[i]f the price is a fixed monthly charge that does not change with

the customer’s usage’ is intended to refer to only those products where the price for

supply is a fixed monthly amount and does not include those products where the price

includes but is not limited to a fixed monthly administrative (or similar) charge.” (NAE

Comments, 9.) Staff agrees with NAE’s statement. Only if the price consists solely of a

fixed monthly charge, and no usage-sensitive charge, should the space on the UDS titled

““Price (in cents/kWh) and the number of months this price stays in effect[]” display the

fixed monthly charge in dollar amounts.

Regarding Staff’s proposed Section 412.115(b)(5), NAE states that it “has no

issues with this language, but wants to confirm for the record that this language is not

intended to include fixed bill type products where the price is a fixed monthly charge that

does not change with the customer’s usage.” (NAE Comments, 10.) Staff agrees that if

the price is a fixed monthly charge that does not change with the customer’s usage, such

price is meant to be disclosed in the space on the UDS that is titled “Price (in cents/kWh)

and the number of months this price stays in effect,” as described in Section

412.115(b)(4). Pursuant to Section 412.115(b)(4), the fixed monthly charge shall be

shown in dollar amounts instead. The space on the UDS titled “Other monthly charges,”

described in Section 412.115(b)(5), would be empty if the only fixed monthly charge is

the fixed monthly charge described in Section 412.115(b)(4).

However, the cents per kWh disclosure required by Section 412.115(b)(6) would

still be required for products where the entire price is comprised of a fixed monthly charge

that does not change with the customer’s usage. It is Staff’s opinion that a product that

30

consists solely of a fixed monthly charge, and no per kWh charge, is included in the

universe of products that include a fixed monthly charge. For this reason, Staff’s proposal

is that the space on the UDS titled “Total price with other monthly charges,” described in

Section 412.115(b)(6), contain the price in cents per kWh at the three usage levels for

products where the entire price is comprised of a fixed monthly charge that does not

change with the customer’s usage.

K. Section 412.120 In-Person Solicitation

ICEA, NAE and RESA propose revision to Staff’s proposal to expand the door-to-

door rule to a larger variety of in-persons sales. ICEA contends that other in-person

scenarios are more voluntary in nature than door-to-door and that small commercial

customers do not need the same level of protection as residential customers at their

homes. (ICEA Comments, 23.) ICEA’s assertion that small commercial customers do

not need similar protections should be discounted. There is no basis for differentiating

between small commercial and residential customers for purposes of this Part. The

General Assembly took the view that such customers should be treated identically, and

ICEA articulates no legal basis for departing from this.

Similarly, NAE contends that the expansion of Section 412.120 would include other

in-person sales situations, such as a table set up at a state fair, which do not present the

same concerns as door-to-door solicitations, and is therefore “overbroad in application.”

(NAE Comments, 20.) RESA makes a parallel assertion that Section 412.110 should not

be revised and that the revisions fail to consider the many ways customers and RES may

communicate. (RESA Comments, 13.)

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NAE fails to elaborate why similar concerns with door-to-door sales do not exist

when in fact Staff has referred to scenarios that have caused concern in the Illinois RES

market. (See Staff Comments, 20.) Further, existing rules do not give clear direction as

to what steps must be taken to enroll a customer and verify any authorization for in-person

sales other than door-to-door sales. (Staff Comments, 19.)

Neither NAE, RESA nor ICEA advances any proposal regarding how other in-

person sales should be enrolled and verified. Staff’s proposal is sound and adequately

addresses ambiguities and apparent deficiencies in the existing rule. RESA’s, NAE’s and

ICEA’s proposals in favor of limiting the application of this Section to door-to-door sales

should be rejected accordingly. Staff however, urges RESA, NAE and ICEA to advance

any proposals they might have to govern in-person marketing other than door-to-door.

Section 412.120(a)

Staff recommends adoption of Ameren’s proposed revisions to Section

412.120(a), which provide as follows:

An RES agent shall state that he or she represents an independent

seller of power and energy service certified by the Illinois Commerce

Commission. An RES agent shall not state or otherwise imply that

he or she is employed by, representing, endorsed by or acting on

behalf of the electric utility or electric utility program, a governmental

body or program (unless the RES has entered into a contractual

arrangement with the governmental body and has been authorized

by the governmental body to make the statements), or a consumer

group or program.

32

(Ameren Comments, Appendix A, 11.)

Staff supports ICEA’s proposed revisions to Section 412.120(a) in part, as Staff

acknowledges potential for a RES to enter into a contractual agreement with a

consumer group:

An RES agent shall state that he or she represents an independent

seller of power and energy service certified by the Illinois Commerce

Commission. An RES agent shall not state or otherwise imply that

he or she is employed by, representing, endorsed by or acting on

behalf of the electric utility or electric utility program, a governmental

body or program run by a governmental body (unless the RES has

entered into a contractual arrangement with the governmental body

and has been authorized by the governmental body to make the

statements), or a consumer group or program run by a consumer

group (unless the RES has entered into a contractual arrangement

with the consumer group and has been authorized by the consumer

group to make the statements). Notwithstanding anything else in this

section, a RES may state that it offers power and energy service

within a particular utility’s service territory and may reference that

customers may choose their electricity supplier in the customer’s

utility service territory.

(ICEA Comments, Attachment A, 11.)

33

Staff cannot support the last sentence of ICEA’s proposed subsection revision,

shown above in underline and strikethrough that would permit reference to a particular

utility. While Staff does not suggest that ICEA intends the language to permit

misrepresentation of a relationship between a supplier and a utility, a RES should refrain

from any such reference that might suggest a relationship between the utility and RES.

The proposed addition is inconsistent with the remainder of the subsection.

Misrepresentations and misunderstandings of RES identities is one of the common issues

within complaints filed with submitted to CSD Staff, and Staff opposes inclusion of this

provision.

Section 412.120(c)

Staff supports ICEA’s proposed revisions to proposed Section 412.120(c) as

follows so long as the deletion is relocated to Section 412.120(c)(3):

RES agents who engage in door-to-door in-person solicitations for

the purpose of selling power and energy service offered by the RES

must wear identification visible on an outer garment clearly

disclosing that the sales agent is not affiliated with the utility. RES

agents who engage in door-to-door solicitation for the purpose of

selling power and energy service offered by the RES shall display

identification. This identification shall be visible on an outer garment

at all times and prominently display the following:

(ICEA Comments, Attachment A, 11.)

Section 412.120(c)(3)

34

Staff supports the inclusion of ComEd’s proposed revisions to Section

412.120(c)(3), which clarifies the restrictions on the use of utility name or logo by the RES

agent. Staff also supports ICEA’s revisions to this subsection, which adds language to

require clear disclosure on an outer garment that the RES agent is not a representative

of the utility. Accordingly, Staff proposes that ComEd and ICEA’s revisions to this

subsection be combined as follows:

The trade name and logo of the RES the agent is representing. The

RES agent shall not wear or display any name or logo of the

customer’s utility. In addition, the RES agent’s logotype, badge or

identification shall not stateing or implying that the RES agent is a

representative of the customer’s utility. The RES agent shall wear

identification visible on an outer garment clearly disclosing that the

sales agent is not affiliated with representing the customer’s utility. If

the agent is selling power and energy services from multiple RES to

the customer, the identification shall display the trade name and logo

of the agent, broker or consultant entity as that entity is defined in

Section 16-115C of the Act.

Section 412.120(d)

Staff supports ICEA’s proposed revisions to proposed Section 412.120(d) in part,

to the extent that they clarify the circumstances under which a RES agent shall be

required to leave a customer’s premises. Staff however recommends that the

Commission decline to adopt ICEA’s proposed deletion to this subsection limiting the

35

subsection to solicitations that occur at the premises owned or occupied by the customer.

In Staff’s opinion, no commenter has advanced any compelling argument militating

against expansion of tis section to all in-person sales.

The following includes additions proposed by ICEA to which Staff does not object:

If the solicitation takes place at premises owned or occupied by a

customer, the RES agent shall promptly leave the premises at the

earlier of: (1) the customer's, owner's or occupant's first affirmative

verbal request for the RES agent to leave, or (2) the second

affirmative verbal statement of no interest by the customer, owner,

or occupant.

(ICEA Comments, Attachment A, 12.)

RESA proposes the deletion of Staff’s proposed Section 412.120(d) on the basis

that the subsection is not necessary if the section is limited to door-to-door. (RESA

Comments, Attachment A, 11.) The requirement that a RES agent leave the premises at

the customers, owners, or occupants request is codified in existing Section 412.120(d).

Further, Staff’s proposed revisions would limit this requirement to solicitations that take

place at premises owned or occupied by a customer, and specifically does not apply to

sales that may occur at a RES retail location, kiosk or table at a state fair, or other similar

venue.

Based on its position in its Initial Verified Comments and herewith, Staff opposes

RESA’s proposed deletion of Staff’s proposed Section 412.120(d).

Section 412.120(e)

36

Staff supports Ameren’s proposed revisions to Section 412.120(e) which provide

as follows:

The RES agent shall ensure that, during the sales presentation to

the customer, items (d) through (p) of the uniform disclosure

statement (Section 412.110(d) through (p)) are verbally disclosed

verbally make all disclosures required in subsections (a) and (c)

through (m) of Section 412.110 to the customer. An RES agent may

disclose the items in any order as long as provided that all applicable

items are explained to the customer during the sales presentation.

(Ameren Comments, Appendix A, 12.)

Staff supports ICEA’s proposed revision to Section 412.120(e), which provides

as follows:

The RES agent shall ensure that, during the sales presentation to

the customer, items (d) through (p) of the uniform disclosure

statement (Section 412.110(d) through (p)) are verbally disclosed

verbally disclosed verbally make all disclosures required in

subsections (a) and (c) through (m) of Section 412.110 to the

customer unless the sales presentation is terminated pursuant to

subsection (d) of this Section. An RES agent may disclose the items

in any order as long as provided that that all applicable items are

explained to the customer during the sales presentation.

(ICEA Comments, Attachment A, 12.)

37

While supporting Ameren Illinois’ and ICEA’s proposed revision to Section 41.120

(e), Staff proposes combining both as follows:

The RES agent shall ensure that, during the sales presentation to

the customer, items (d) through (p) of the uniform disclosure

statement (Section 412.110(d) through (p)) are verbally disclosed

verbally disclosed verbally make all disclosures required in

subsections (a) and (c) through (m) of Section 412.110 to the

customer unless the sales presentation is terminated pursuant to

subsection (d) of this Section. An RES agent may disclose the items

in any order as long as provided that that all applicable items are

explained to the customer during the sales presentation.

The AG proposes the additional requirement for a RES agent to offer a business

card or other material that lists the agent’s name, identification number and title, the RES’s

name and contact information, including telephone number (AG Comments, Appendix A,

12.) Staff does not object to the addition; however, proposed Section 412.120(f) would

require RES agents to leave a copy of the UDS with customers. Further, proposed

Section 412.115 would require a RES Agent ID and RES name and contact information

within the UDS, which, in Staff’s opinion would serve substantially the same purpose as

that advanced by the AG.

Staff does not object to ICEA’s revision of Staff proposed Section 412.120 (f) which

provides as follows:

The RES agent shall require the customer to initial the RES agent's

copy of the uniform disclosure statement. A copy of the uniform

38

disclosure statement is to shall be left with the customer at the

conclusion of the visit or a unless a customer’s verbally or by action

refuses to accept a copy of the uniform disclosure statement. Nothing

in this subsection (f) prevents a RES agent from providing the UDS

electronically instead of in paper form to the customer upon request.

The minimum list of items to be included in the uniform disclosure

statement is contained in Section 412.110.

(ICEA Comments, Attachment A, 12.) Section 412.120(g)

ICEA claims to have difficulty finding authority for restricting incoming enrollment

calls or Letter of Agency to confirm a customer’s intent to switch pursuant to Section 2EE

(a) and (c) of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815

ILCS 505/2EE(a), (c). (ICEA Comments, 24.) To comply with Section 2EE of the

Consumer Fraud Act, a RES must utilize at least one of the methods of verification

enumerated in that Section. However, a RES, by complying with Section 2EE, does

nothing more than avoid committing an unfair or deceptive act or practice, or unfair

method of competition, in trade or commerce which is actionable under the Illinois

Consumer Fraud and Deceptive Business Practices Act. See 815 ILCS 505/2EE. While

Section 2EE of the Consumer Fraud Act establishes three separate methods in which a

RES can choose to confirm a request for change, nothing in either the Consumer Fraud

Act or the Public Utilities Act prohibits or restricts the Commission from requiring more

than one form of authorization.

39

It is settled that administrative agencies are entitled to deference when enacting

regulations, and when interpreting the statutes they enforce. Hartney Fuel Oil Co. v.

Hamer, 2013 IL 115130, ¶59. Likewise, agencies are authorized to regulate and execute

the provisions of the statutes they enforce and to carry out the powers conferred upon

them. Eastman Kodak Co. v. Fair Employment Practices Comm’n, 86 Ill. 2d 60, 70 (1981).

It is further worthy of note that remedial statutes, of which the Consumer Fraud Act is one,

should be broadly construed to effect their remedial purposes, and very specifically to

“introduce regulation conducive to the public good, or cure public evils.” Scott v. Assoc.

for Childbirth at Home, Intl., 88 Ill. 2d 279, 288 (1981). All of this leads inevitably to the

conclusion that Section 2EE should be not be read as a limitation, but rather as

prescribing minimum protections which can be augmented by rule.

Nor should the fact that the Public Utilities Act does not require more than one form

of verification be read as a limitation upon the Commission’s authority to require it, if it

finds that it is necessary. As set forth above, the Illinois Appellate Court for the Fourth

District recently held that the Act’s silence on the Commission’s authority to require a

consumer protection does not limit the Commission’s authority to do so. Ameren, 2015

IL App (4th) 140173.

ICEA’s assertion that Staff’s proposal would require exclusive use of a TPV is

inaccurate. Staff’s proposal would require both a TPV and a LOA to verify in-person sales

and complete an enrollment. Both a TPV and an LOA would satisfy the requirement of

Section 2EE so long as the relevant provisions of each method are followed. Staff

continues to support the inclusion of a two-step verification process for the reasons

presented in Staff’s Initial Comments. The signing and execution of a document signifies

40

a formal, significant transaction which may have binding legal consequences.

Nonetheless, merely obtaining a signature is insufficient to afford the customer an

opportunity to remove him- or herself from the sales process and affirmatively

acknowledge the nature of the transaction outside of the sales agent’s presence. A TPV

outside the presence of the sales agent allows the customer to independently assess the

disclosures, to review the terms, and affirm his or her willingness to switch. (Staff

Comments, 22.)

In its Comments, NAE argues that proposed Section 412.120(g) requiring a RES

agent to be in a location physically separate from the customer while TPV is conducted

is illogical and compliance is impossible to implement in in-person sales transactions,

such as those taking place at kiosks. (NAE Comments, 25.) NAE provides no alternative

language for this proposal. NAE does not make clear why a RES agent should be

physically present with the customer to conduct a TPV. In fact, it is not unusual for a TPV

vendor to place a call to the customer for verification, or for a customer to place a call to

the TPV vendor to verify enrollment, in either case outside the presence of the sales

agent. In Staff’s experience, the presence of the RES agent can lead to undue influence

and coaching by the RES agent to obtain “correct” answers to the third-party verifier’s

questions. Some suppliers have already instituted the practice of requiring the sales

agent to leave while a TPV is conducted. Staff finds this to be a best practice that should

be adopted, and accordingly has presented this as a requirement in its proposed rule.

Based on its position in its Initial Verified Comments and herewith, Staff opposes

ICEA’s objection to requiring both a TPV and LOA for in-person enrolment verification.

However, Staff does not object to the addition of “unless contacted by the customer” to

41

the restriction of approaching the customer within a 24-hour period from when the TPV is

conducted. Further, Staff opposes NAE’s assertions that Staff’s proposed Section

412.120(g) is illogical based on contemporary observations of RES agents not being

present during the TPV.

Section 412.120(h)

ICEA’s revisions to this section that include limiting its application to door-to-door

sales should be rejected for reasons presented by Staff in its Initial Verified Comments

and in the prelude to Staff’s Section 412.120 Reply Comments.

RESA asserts that the prohibition of in-person solicitations in a building with

signage that prohibits solicitation would make no sense in the context of a RES agent

working out of a kiosk in a supermarket which has such signage, but which has an

arrangement for the RES to operate a kiosk there. (RESA, Comments, 13.) RESA

proposes the following revisions:

When it is apparent that a customer's English language skills are

insufficient to allow the customer to understand and respond to the

information conveyed by the agent in English or when the customer

or another person informs the agent of this circumstance, the RES

agent shall find another representative fluent in the customer's

language, use an interpreter, or terminate the in-person contact with

the customer. When the use of an interpreter is necessary, a form

consistent with Section 2N of the Consumer Fraud and Deceptive

Business Practices Act must be completed Unless the RES agent

has received permission from the appropriate party, theThe RES

42

agent shall not conduct in-person sales solicitations at any building

or premises where any sign, notice or declaration of any description

whatever is posted which prohibits sales, marketing or solicitations

on or at such building or premises.

RESA revisions are too broad in Staff’s opinion and it does not specify how consent

would be obtained or recorded. Staff acknowledges the practicality of RESA’s argument

in its initial comments, but doesn’t believe the revisions proposed take into account its

applicability to door-to-door sales. Staff would be willing to consider additional revisions

that would take into account door-to-door sales and require written consent to market

from building management or owner.

Section 412.120(i)

CUB proposes modifications to proposed Section 412.120(i), which would require

a RES agent to obtain written consent from the building owner to enter a multiunit building.

CUB maintains that its proposed additions will better ensure the consent requirement is

met. (CUB Comments, 7.) While CUB’s proposal is not without certain advantages, it

may prevent solicitation of lessee customers who may not be averse to solicitation.

Further, it seems conceivable that one RES might pay a landlord or building manager to

solicit tenants on an exclusive basis; this, while arguably abusive, would not violate CUB’s

proposed rule. Staff requests additional comments from CUB and other parties on these

CUB proposed revisions.

ICEA proposes revisions to Staff’s proposed 412.120 (i) that would allow RES

agents be to set up static displays in multi-unit buildings (with landlord or building

management consent) without consent of all residents. Staff does not object to such an

43

amendment, provided that approval from the landlord or building management be

obtained in writing, and that the rule be limited to static displays, and not constitute a

basis for active solicitation in the building. Further, setting up such a static display clearly

requires some coordination between a RES and building management, suggesting that

obtaining written consent will not be difficult or requiring it burdensome. Staff rec

Upon a customer's request, the RES shall refrain from any further

marketing to that customer The RES agent shall obtain consent to

enter multi-unit buildings. Consent obtained to enter a multi-unit

building from one prospective customer or occupant within the

building shall not constitute consent to engage in door-to-door

marketing to of any other prospective customers within a multi-unit

building without separate consent. Nothing in this subsection

prevents building management from authorizing a RES agent to

engage in door-to-door solicitations or to set up a booth or other

static display in a common area of a multi-unit building, however such

permission alone does not authorize the same RES agent to engage

in door-to-door solicitation in violation of this subsection.

Staff opposes ICEA’s revisions to Section 412.120(i) that would limit the section to

door-to-door sales and supports the allowance of building management consent with

written authorization. The following provides Staff supported revisions:

Upon a customer's request, the RES shall refrain from any further

marketing to that customer The RES agent shall obtain consent to

enter multi-unit buildings. Consent obtained to enter a multi-unit

44

building from one prospective customer or occupant within the

building shall not constitute consent to market any other prospective

customers within a multi-unit building without separate consent.

Nothing in this subsection prevents building management from

authorizing a RES agent to engage in in-person solicitations or to set

up a booth or other static display in a common area of a multi-unit

building with written consent from building management, however

such permission alone does not authorize the same RES agent to

engage in door-to-door solicitation in violation of this subsection.

Section 412.120(k)

Staff opposes ICEA’s revisions to this section that include reversion to door-to-

door sales for reasons presented by Staff in its Initial Verified Comments and herewith.

CUB Proposed Section 412.120(l)

CUB proposes adding subsection 412.120(l) ,which in summary requires a RES to

make video and audio recordings of all in-person solicitations. CUB’s proposed

amendment would require that each RES maintain such recordings for a minimum of two

years. CUB argues that existing laws and regulations governing misleading marketing are

not effective at eliminating misleading practices at customers’ premises and the only way

to truly accomplish this it to require recording of all in-person sales. (CUB Comments, 6.)

Staff agrees with CUB that existing laws and regulations are ineffective at

elimination of misleading practices. Staff further agrees with CUB that the most effective

way to evaluate compliance regarding a particular sale is to evaluate exactly the manner

in which the product was described to the customer. In telemarketing, this is best

45

accomplished through recording of conversations, and the retention and review of those

sales calls. Staff is aware that some RESs require recording of sales presentations at

the point of sale for quality and compliance purposes, through the use of mobile

technology. RESA stated in its Comments that some RESs are considering

implementation of mobile data applications capable of recording face-to-face contacts,

including door-to-door sales, which would make it possible to verify what representations

a door-to-door RES agent makes to a customer. (RESA Comments, 10.) Staff seeks

additional comments from other parties regrading CUB’s proposal. Staff will reserve its

opinion for a subsequent round of comments.

ICEA Proposed Sections 412.120 (l) and (m)

ICEA proposes the additions of Sections 412.120 (l) and (m), which would impose

additional requirements exclusively upon door-to-door sales. Staff acknowledges the

merits of ICEA’s proposed subsections, but notes that the subsections as proposed would

require a definition of door–to-door sales, or language excluding in-person sales other

than door-to-door sales in some manner. Staff maintains that Section 412.120 should

apply to all in-person sales.

Staff would be supportive of ICEA’s proposed sections 412.120 (l) and (m) if it had

consideration for other in-person sales through the remainder of 412.120 and possibly

412.10 (Definitions). Staff welcomes additional explanation from ICEA of proposed

412.120(l)(1) and how it would function in light of Staff’s proposed 412.120(i). Staff

welcomes ICEA’s attempt to further refine its proposed Section 412.120 (l) (2) in the next

round. Staff would also be supportive of proposed section 412.120(m), but questions what

the threshold would be from prohibiting an individual from marketing for a RES based on

46

the results of a background check. ICEA did not suggest or define the type of background

check that would be required, and should explain further in future comments. Staff also

seeks additional comments from parties, particularly the Attorney General’s Office, on this

proposal.

L. Section 412.130 Telemarketing

RESA refers to the Commission’s Order in Docket 14-0701 “concerning access to

customer data for non-billing purposes.” It proposes that the Rule should “allow for

flexibility regarding the presentation to telephonic customers of the authorization

language” for this topic. (RESA Comments, 15.) However, RESA does not offer any

language to amend the proposed rule. While it may be possible to use shorter verbal

disclosures, this should be proposed by RESA or others interested in a shortened version.

In the absence of concrete language, Staff cannot endorse RESA’s proposal.

Ameren proposes altering the occurrences of “an RES” to read “a RES” in Section

412.130(a). (AIC Initial Comments, 9-10.) Staff supports these changes, and

recommends that it be made wherever necessary throughout the rule.

ICEA proposes revisions to Section 412.130(a) to ensure that a RES which has

been authorized to solicit on behalf of a consumer program may claim to do so.

Staff does not object to ICEA’s clarifying language regarding entities operating

programs, and providing that a RES may refer to such programs if it has been authorized

by the entity operating it to do so. However, Staff has concerns with the language

provided in the last sentence of ICEA’s proposed revisions to Section 412.130(a) that

would permit reference to a particular utility. The proposed addition might well have the

47

effect of negating or diluting the remainder of the subsection and its requirements.

Misrepresentations and misunderstandings regarding the identity of RESs, the identities

of RES agents, the relationship between RESs and utilities, are among the common

complaints regarding RESs filed with CSD. Accordingly, and Staff opposes this inclusion.

The AG seeks to add a requirement to Subsection (c) that would compel a

telemarketing agent to disclose any topic included in the RES’s UDS which is not a

specific item in the proposed Section 412.110(a) and 412.110(c)-(m) disclosures. (AG

Comments, 7.) Staff concurs with the AG’s assertion that if a RES believes a matter is

important enough to include it in its written UDS, then that matter should also be disclosed

in forms of marketing that involve verbal descriptions instead of printed ones.

ICEA suggests that Section 412.130(c) be modified so that a RES agent is not

required to continue with the disclosures if the customer terminates the conversation.

(ICEA Appendix A, 16.) Staff agrees this change is logical and supports its adoption.

ICEA proposes edits to Section 412.130(d) to change the retention requirement

for records beyond the two-year threshold so that it applies only to those customers who

remain subject to the contract for which they were originally enrolled. ICEA further seeks

to eliminate the requirement that recordings of failed enrollments be retained, asserting

that such calls far outnumber the successful ones and would therefore prove

burdensome. Lastly, ICEA urges deletion of provisions requiring a RES to review any of

the recordings, and of any provision which would allow Staff to obtain the recordings and

any review materials prepared by the RES. (ICEA Comments, 30-31.)

48

Retaining records for the life of the customer/RES relationship is important

because of disputes that arise over renewal terms, particularly where a customer

becomes subject to variable-rate service after expiration of an initial fixed-rate term.

Where consumers complains that they were not provided an adequate description of this

contract condition by telemarketing agents, retention of recordings will materially aid

resolution of that dispute. With regard to ICEA’s assertion that retaining failed calls will

be overly burdensome, Staff’s proposal limits the retention of those calls to only six

months. Moreover, consumer complaints alleging fraud and misrepresentation by

telemarketers are not made exclusively by those consumers who enroll. This retention

requirement affords RESs and the Commission a useful resource to resolve disputes and

enables RESs to more effectively monitor sales procedures, as does the requirement that

RESs conduct periodic reviews of sample recordings. Further, there is no colorable

reason to deny Staff access to such recordings, and to records of such reviews. ICEA’s

proposals should be rejected.

NAE offers criticisms similar to those of ICEA regarding the retention requirements,

including retention beyond the initial contract and the expense associated with keeping

recordings of failed enrollments. While NAE accepts Staff’s proposal that RESs provide

recordings to Staff upon request, NAE opposes provisions which authorize Staff to

request written confirmation that compliance reviews have occurred. NAE’s proposal

should be rejected. (NAE Comments, 27.) It is not enough to simply require the reviews.

A means to check compliance must also be in place.

RESA, like ICEA and NAE, objects to Staff’s proposed record retention

requirements in Section 412.130(d) beyond two years. Unlike ICEA and NAE, however,

49

RESA would prefer a specific set number of years and nothing more, citing difficulties in

programming supplier systems to accommodate retention for the life of the customer/RES

relationship. Instead it proposes a simple one year retention requirement, saying that a

full year is ample time for a customer to complain about a problem at the point of sale. It

also rejects Staff’s proposal to save failed enrollment calls for the same reasons cited by

ICEA and NAE. Lastly, RESA disagrees with Staff’s proposal that a RES review a

“statistically significant” number of its call recordings, and prefers a “reasonable” amount

determined by the RES itself. (RESA Comments, 14.)

A one-year retention is not consistent with the two-year limitation for filing

complaints under Section 9-252 of the Act. 220 ILCS 5/9-252. Staff’s proposal mirrors

the record retention requirements already in the current rule for proof of authorizations,

as codified in Section 412.180. RESA’s concerns about designing an effective system to

accomplish the requirement that recordings be saved for the longer of two years or the

length of the customer/RES relationship are not persuasive, without further detail

regarding the purported difficulties. It appears that programming to accommodate Staff’s

proposal would entail two simple conditions for the system to review: first, whether the

recording is over two years old, and second, whether the customer is an active RES

customer. All other conditions under Staff’s proposal require continuing retention of the

recordings for successful enrollments. Staff references its responses above to ICEA and

NAE regarding RESA’s similar concerns over the retention of failed enrollment calls.

Lastly, RESA’s concern that it might be required to retain statisticians to determine

statistical significance seems overblown. (RESA Comments, 15.) RESA members, as

commercially sophisticated entities which engage in arcane purchasing and hedging

50

activities, seem likely to already employ persons with knowledge of basic statistics. If

RESA is of the opinion that review of, for example, a certain percentage of recordings is

sufficient, Staff recommends that it advance such a proposal,

CUB seeks to increase the retention period under Section 412.130(g) to ten years.

(CUB Comments, 8.) As this seems a very substantial change, Staff requests further

comment regarding CUB’s justification for this, as well as comment from the suppliers as

to the cost and feasibility of this requirement.

The AG recommends, and CUB supports, placing a “common-sense limit” on the

time of day during which RESs may engage in telesales and proposes to entirely prohibit

it from 9PM to 9AM daily. (AG Comments, 7; CUB Comments, 8.) Staff notes that Section

15 of the Illinois Telephone Solicitations Act, 815 ILCS 413/15, restricts telemarketing for

goods or services in Illinois to the hours between 8AM and 9PM. It appears, therefore,

that Illinois statute affords a prohibition substantially consistent with that requested by

CUB and the AG. Moreover, as violation of the Telephone Solicitations Act also

constitutes violation the Consumer Fraud Act, and as the AG enforces the Telephone

Solicitations Act, 815 ILCS 413/25(e), incorporating this protection into the rule may not

be entirely warranted.

M. Section 412.140 Inbound Enrollment Calls

As with Section 412.130, RESA seeks to have the topic of access to customer data

for non-billing purposes addressed within the proposed Rule. Specifically, with regard to

the Commission’s Order in Docket No. 14-0701, RESA asserts that Part 412 should “allow

for flexibility regarding presentation to telephonic customers of the authorization

language.” (RESA Comments, 15.) However, RESA does not offer any alternative

51

language for its proposed addition to the rule. While there may well be that a shortened

version could be used for verbal disclosures, such a shortened version should be

proposed by RESA or others who advance the argument that one is necessary or

appropriate.

The AG seeks to add to subsection (c) a requirement that calls be recorded and

records be retained for six months. This is similar to Staff’s proposal for failed

telemarketing calls in Section 412.130(d). (AG Comments, 7; Appendix A, 16.) This

would require RESs to save a copy of every inbound call potentially leading to enrollment.

Staff requests that the parties comment on what costs this might entail, and benefits which

might be realized, from this proposal. Staff notes that the AG could not have anticipated

Staff’s proposal – advanced for the first time in in these Reply Comments - to include all

transferred calls under the rubric of telemarketing. Since Staff’s proposed Section

412.130 includes the recording of calls not resulting in enrollment, recordings of any

transferred calls not leading to enrollment would need to be retained for six months. In

Staff’s opinion, there is a substantial and obvious difference between a consumer actively

calling a RES on his or her own for the purpose of enrolling, and a consumer being

transferred to a RES agent in the course of either an inbound telemarketing call, or a call

initiated for another purpose. Staff is therefore somewhat inclined to view the

requirements governing inbound enrollment calls as appropriately less comprehensive

than outbound telemarking, provided that transferred calls are deemed to telemarketing

for regulatory purposes, as CUB proposes.

ICEA challenges the Commission’s authority to modify any of the CFA’s

requirements for inbound enrollment calls. (ICEA Comments, 30.) Such authority,

52

however, exists. In a recent Appellate Court decision, the court determined that, to the

extent that the Commission was fully authorized to impose administratively-created

consumer protection requirements. Dominion Retail, Inc. v. Illinois Commerce Comm’n,

2015 IL App (4th) 140173, ¶¶105-119. The Dominion Retail court ruled that courts

properly make two inquiries when determining whether an administrative action is proper:

first, whether it is authorized by statute, and second, whether it conflicts with other

statutes. Dominion Retail, ¶¶96, 98, 104. The Commission clearly has authority to

promulgate the rule (see Staff Comments, 3-9), and the proposed rule does not conflict

with Section 2EE of the Consumer Fraud Act, or with any other statute identified.

Accordingly, the Commission is authorized to promulgate the rule in question.

In its redline Attachment A, ICEA appears to accept Staff’s proposal to record and

retain for two years the entire content of any inbound calls that lead to enrollment. ICEA,

however, opposes Staff’s proposal authorizing Staff to request the recordings and

requiring RES reviews of those recordings. (ICEA Attachment A, 18.) Staff notes that

the authority to seek proof that compliance reviews took place is important to ensure that

RESs perform those reviews. It is not enough to simply require the reviews. A means to

ensure compliance must also exist.

NAE raises its concern that Staff’s proposal in subsection (c) would require RESs

to record calls that consumers themselves might not want to have recorded. NAE then

asserts that by forcing the call to be recorded every time, the proposed Rule would not

allow a customer who wanted to use a written LOA or TPV as their verification to do so.

(NAE Initial Verified Comments, 5.) This argument, however, fails to recognize the fact,

known to anyone who has ever called a customer service number, that most, if not all,

53

entities doing business using a toll-free number for incoming calls from customers

announce immediately that the call may be recorded for quality control purposes. In

Staff’s experience, customers are very familiar with this reality, and indeed, when a Staff

member made a test call to NAE’s own hotline for sales calls from prospective residential

customers, 877-292-9363, there was an immediate disclosure that the call might be

recorded. With regard to customers who may, for some reason not apparent to Staff, call

a RES directly to enroll but then decide that they want a written LOA sent to them or they

demand to be sent to a third-party verifier, such customers would still be free to verify the

enrollment by those other methods instead of through the simple act of completing the

inbound phone call they themselves initiated. The LOA would be sent using the RES’s

direct mail enrollment process, or in the case of a TPV, the RES could transfer the

customer to its verifier just as it would with telemarketing. As noted, it appears that NAE’s

existing procedures apparently involves recording all incoming calls.

NAE also claims that record retention requirements should not extend beyond the

longer of two years or the expiration of the original term under which the customer

enrolled. (NAE Comments, 8.) This argument should be rejected. Retaining records for

the life of the customer/RES relationship is important because of the many disputes that

arise over renewal terms, particularly where a customer is subject to variable rates after

the term of a fixed rate product expires. If a consumer complains that he or she was not

provided an adequate description of terms effective upon expiration or termination by the

RES agent who handled the initial enrollment, the retention of the recording of that

inbound enrollment call will be needed to resolving that dispute.

54

NAE’s final concern with regard to proposed subsection (c) is that the RES should

not have to prepare written reports on its reviews of inbound enrollment calls because,

“there is no need or basis for the Commission to insert itself into the details of how all

RES operate.” (NAE Comments, 5-6) NAE’s arguments incorrectly suggest monitoring

of RES policies for regulatory compliance is equivalent to the “insertion” of the regulatory

body into all operations of the RES. It is not simply enough to require that sales

recordings be made. In order to be effective as a tool for compliance and quality control,

at least some sample of those recordings must be reviewed, and likely all recordings

associated with complaints ought to be reviewed. (Staff Comments, 27.) Moreover, the

Commission, through its Staff, needs to be able to verify compliance with its Rule.

RESA argues that the retention period for recordings under proposed subsection

(c) should be one year, and expresses concern over any requirement that RESs review

a “statistically significant” percentage of such recordings. (RESA Comments, 15-16;

RESA Appendix A, 16) A one-year requirement, however, is inconsistent with the two-

year period for filing complaints under Section 9-252 of the Act, 220 ILCS 5/9-252, and is

further inconsistent with the record retention requirements already in the current Rule for

proof of authorizations. 83 Ill. Adm. Code 412.180.

Further, RESA’s argument that the Commission has no authority to expand

protections embodied in Section 2EE of the Consumer Fraud Act is infirm. As noted

above, the Commission’s authority to promulgate administratively-created consumer

protection requirements was upheld by the Appellate Court. Dominion Retail, ¶¶96, 98,

104-119.

55

The AG proposes to add a requirement to subsection (d) that would require a RES

agent answering an inbound enrollment call to disclose anything included in the RES’s

UDS whether or not specifically included in other disclosure requirements. (AG

Comments, 7-8; Appendix A, 16.) The AG correctly argues that if a RES considers a

matter important enough to include it in its written UDS, then it should be required to

disclose it elsewhere, However, Staff now proposes to differentiate between purely

inbound calls, as opposed to calls in which a customer is transferred to a RES agent. As

such, the AG’s proposed language should be moved, to proposed subsection (c) instead

of subsection (d).

With regard to proposed subsection (d), Staff now proposes to eliminate the

requirement that a RES obtain a TPV for purely inbound enrollment calls. ICEA, NAE

and RESA all view Staff’s previous proposed inclusion of a TPV requirement for in-bound

enrollment calls to be unacceptable, and seek its deletion. (ICEA Comments, 30; NAE

Comments, 4; RESA Comments, 16.) As previously noted, customers who affirmatively

contact a RES to enroll are, likely to be more informed about, or at the very least cognizant

of, the nature, terms and conditions of the transaction than those who are transferred to

a RES by another party. Since transferred calls will now be treated as telemarketing

under Staff’s modified proposal, Staff sees no need to require third-party verification of

enrollments obtained through purely inbound calls.

ICEA, in its Appendix A, proposes language in subsection (e) which would state

that the UDS and contract can be sent to the customer “in writing in a manner authorized

by the customer.” (ICEA Appendix A, 18.) Staff was unable to locate ICEA’s discussion

of this proposed additional language in its Comments, and is not certain why and if the

56

change is warranted. The original language of the current Rule, which simply uses the

word “send” to describe the provision of the UDS to the customer, should allow for any

method of delivery that the two parties agree to use. Staff notes also that ICEA did not

make a parallel edit to the proposed Section 412.130(f) governing the sending of the UDS

after enrollment. If ICEA has a specific concern that it believes this addition would

address, Staff urges ICEA to comment further.

N. Section 412.150 Direct Mail

ICEA proposes revisions to Section 412.150(a) to clarify that a RES which has been

authorized to work on behalf of a consumer program may claim to do so, if it has in fact

been authorized to do so. (ICEA Comments, 31-33) Staff does not object to clarifying

the language and proposes the following:

RES agents contacting customers for enrollment for power and energy service by

direct mail shall include items (a) and (c) through (m) of Section 412.110 for the

service being solicited in the solicitation. Direct mail material shall not make any

statements of representation of, endorsement by or acting on behalf of the electric

utility or an electric utility program, a governmental body or program run by a

governmental body (unless the RES has entered into a contractual agreement with

the governmental body and has been authorized by the governmental body to

make the statements), or a consumer group or program run by a consumer group

(unless the RES has entered into a contractual agreement with the consumer

group and has been authorized by the consumer group to make the statements).

Direct mail shall not utilize the name or logo of the customer’s utility in any manner.

57

However, Staff urges the Commission to be cautious regarding language proposed

by ICEA which would permit a RES to state or represent that it offers power and energy

service within a particular utility’s service territory and state or represent that the customer

may choose their electricity supplier in the customer’s utility service territory. (ICEA

Comments, 32.) The proposed addition might well have the effect of negating or diluting

the remainder of the subsection and its requirements. Misrepresentations and

misunderstandings regarding the identity of RESs, the identities of RES agents, and the

relationship between RESs and utilities are among the common complaints regarding

RESs filed with CSD. Accordingly, Staff opposes inclusion of the language proposed by

ICEA permitting a RES to state or represent that it offers service within a particular utility’s

service territory.

Staff’s proposed rule adds Section 412.150(c), which provides that “[i]f the direct

mail solicitation allows the customer to enroll via telephone or online, Section 412.140 or

Section 412.160 shall apply, in addition to this Section 412.150.” RESA suggests that

Section 412.150(c) be revised to recognize a distinction between direct mail which seeks

to induce the customer to enroll using an attached or enclosed LOA, and direct mail that

seeks to induce a customer to enroll by telephone or the internet. (RESA Comments,

15.)

There is arguably a principled distinction between these two cases, although

perhaps not the one that RESA suggests. Section 412.140 applies where a potential

customer calls to enroll, and Section 412.160 applies where a potential customer enrolls

online. However, Staff does not recommend adoption of RESA’s proposed amendment,

since replacing “allows” with “requires” does not acknowledge that the marketing material

58

may contemplate use by the customer of any of several options, and not specifically

require the use of any one of them. In an attempt to promote clarity, Staff suggests the

following language:

If the direct mail solicitation allows a customer to enroll by telephone, and the

customer elects to do so, Section 412.140 shall apply. If the direct mail solicitation

allows a customer to enroll online, and the customer elects to do so, Section

412.160 shall apply.

NAE states that the “information in proposed Section 412.115 and the Minimum

Contract Terms and Conditions in Section 412.110 are substantially the same, yet Staff’s

proposed revisions require that same information to be provided twice in a direct mail

solicitation – once by requiring the direct mail solicitation to ‘include items (a) and (c)

through (m) of Section 412.110” and a second time by requiring a separate UDS where

the direct mail includes a written Letter of Agency.” (NAE Comments, 7).NAE argues that

this is “inefficient, costly, and wasteful.” (Id.)

NAE’s concerns are unfounded. First, the inclusion of the UDS is not required for

all direct mail solicitations. Its inclusion is only required if the solicitation includes a written

Letter of Agency. Second, the UDS is a critical component not only during in-person

solicitations but also for direct mail solicitations where the customer returns a Letter of

Agency and is not required to go through a third-party verification. However, there is a

benefit in dropping subsections (k), (l), and (m) of 412.110 from the list of required

disclosures when a direct mail solicitation includes a written Letter of Agency. As a result,

Staff proposes a revision to Section 412.150(b) as follows:

59

If the direct mail solicitation includes a written Letter of Agency, the direct mail

solicitation shall include items (a) and (c) through (j) of Section 412.110 in the

solicitation and the UDS according to Section 412.115 of this Part. If a written

Letter of Agency is being used to authorize a customer's enrollment, it shall comply

with Section 2EE of the Consumer Fraud and Deceptive Business Practices Act

and shall contain a statement that the customer has read and understood the items

each of the disclosures required by subsections (a), (c) and (e) through (m) of

contained in the uniform disclosure statement in Section 412.110.

O. Section 412.160 Online Marketing

ICEA suggests changes to clarify that a RES which has been authorized to work

on behalf of a consumer may claim to do so, if it has been authorized to do so. (ICEA

Comments, 31-33.) Staff does not object to clarifying the language as follows:

Each RES offering power and energy service to customers online shall clearly and

conspicuously make all disclosures required by subsections (a) and (c) through

(m) of Section 412.110 for any services offered through online enrollment before

requiring the customer to enter any personal information other than zip code,

electric utility service territory, and/or type of service sought. The RES internet and

electronic material shall not make any statements to the effect that it is a

representative of, is endorsed by or is acting on behalf of the electric utility, or an

electric utility program, a governmental body or program run by a governmental

body (unless the RES has entered into a contractual agreement with the

governmental body and has been authorized by the governmental body to make

the statements), or a consumer group or program run by a consumer group (unless

60

the RES has entered into a contractual agreement with the consumer group and

has been authorized by the consumer group to make the statements).

However, Staff urges the Commission to be cautious regarding language proposed

by ICEA which would permit a RES to state or represent that it offers power and energy

service within a particular utility’s service territory and state or represent that the customer

may choose their electricity supplier in the customer’s utility service territory. (ICEA

Comments, 32.) The proposed addition might well have the effect of negating or diluting

the remainder of the subsection and its requirements. Misrepresentations and

misunderstandings regarding the identity of RESs, the identities of RES agents, and the

relationship between RESs and utilities are among the common complaints regarding

RESs filed with CSD. Accordingly, Staff opposes inclusion of the language proposed by

ICEA permitting RES to state or represent that it offers service within a particular utility’s

service territory.

P. Section 412.170 Rate Notice to Customers

RESA states that Staff’s proposed Section 412.170 “would require phone calls to

customers advising them of matters already covered by the contracts the customers

signed.” (RESA Comments, 17.) However, Staff’s proposal requires no such thing.

RESA also states that Staff’s proposed Section 412.170 exposes “RESs that wish to

make variable offers to extreme increases in the cost of doing business” and that Staff’s

“proposed rule changes threaten to regulate variable offers out of the marketplace.” (Id.)

RESA does not provide any additional support for its claims. There is no reason to believe

that messages on the utility’s bills and written notices (which can be sent electronically)

61

will “regulate variable offers out of the marketplace.” RESA’s arguments should be

discounted.

Section 412.170(a)

ICEA proposes to delete the requirement that a RES must provide variable rate

information to a requesting customer by telephone. (ICEA Comments, 34, Attachment

A.) ICEA argues that the rules should “allow more diverse methods of communication

with customer consent.” Id. Staff’s proposed rule, however, does not preclude and

indeed permits “more diverse methods of communication.” However, the requirement for

a RES provide requesting customers with variable rate information by telephone should

be adopted. In other words, a RES is free to utilize additional methods of communicating

with its customers, but such additional methods should not come at the expense of the

customers contacting it by telephone. Section 16-123 of the Act provides that “[a]ll …

alternative retail electric suppliers shall be required to maintain a customer call center

where customers can reach a representative and receive current information.” 220 ILCS

5/16-123. The notion that “current information” does not include information regarding

rates cannot be seriously advanced.

ICEA states that there is a “disconnect between calendar months and billing

cycles” because “ComEd and Ameren do not bill on a calendar month basis.” (ICEA

Comments, 34.) Staff is aware that the utilities do not bill by calendar month, and Staff

previously sought further informal comment on its proposal, which was not forthcoming.

Staff was therefore gratified to learn that ICEA “is … developing a solution to this issue,

and will propose specific edits in upcoming rounds of comments.” (Id.) However, Staff’s

proposed language does not prevent a RES from publishing the rates that are in effect

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during the relevant calendar months for a particular customer. As a result, a customer

with a billing cycle that overlaps two different calendar months would be able to calculate

his or her rate if the RES provides the relevant information on its website.

Section 412.170(b)

CUB proposes that, rather than requiring RES to include a bill message that

contains the toll-free phone number and/or website address where the variable rate

information can be obtained if the electric utility’s implementation of Section 16-118(d)

prevents a RES from including account-specific rate information, “the RES should be

required to provide a separate written notice of the rate for that month.” (CUB Comments.)

While Staff favors a generic bill message for those situations, Staff does not oppose

CUB’s alternative proposal if the Commission believes that a bill message with the phone

number and/or website address is not sufficient information for the customer, provided

that “written” is defined as Staff proposes.

The AG argues that Staff’s Summary of Proposed Changes that accompanied

Staff’s proposed rule changes filed on October 9 is inconsistent with the proposed rule

because the Staff Summary stated an intention to require the RES “to provide the

upcoming variable rate information on the customer’s monthly bill” while the proposed

rule requires suppliers to provide rate information regarding the “rate that is in effect at

the time the bill is received by the customer.” (AG Comments, 8.) The AG further argues

that “Staff’s draft subsection (b) does not require RES’s [sic] provide ‘upcoming variable

rate information.’” (Id.) As a result, the AG recommends that “the first sentence of

subsection (b) should be modified such that it is consistent with Staff’s stated intent.” (Id.)

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While Staff regrets any misunderstanding which might have been occasioned,

proposed Section 412.170(b) reads as Staff intended. The language in proposed Section

412.170(b) is different from an earlier version that Staff shared informally with interested

parties before the October 9, 2015 filing of Staff’s proposed rule changes. The sentence

from the Staff Summary is an inadvertent holdover from an earlier version. Thus, Staff

recommends that the Commission adopt its proposed language for Section 412.170(b).

Ameren explains in detail that it offers two billing options for suppliers who want to

use the utility’s single bill service pursuant to Section 16-118(d). (Ameren Comments, 11-

13.) Ameren states that under the Bill Ready option, RESs can include bill messages at

the account level and “under Rate Ready billing, a RES cannot tailor messaging on an

account-by-account basis.” Id. at 12. Ameren quotes Staff’s proposed Sections

412.170(b) and (c). However, Ameren Illinois omits from its discussion the provision that

is most relevant to its discussion. Specifically, Staff included a provision in both proposed

412.170(b) and 412.170(c) that “acknowledges that one of Ameren[‘s] … billing options

pursuant to [Section] 16-118(d) does not allow for individual messages at the account”

and provides that in such cases “the RES is required to include a bill message with the

website address and/or telephone number where this information may be obtained by the

customer.” (Staff Comments, 37-38.) Staff is not certain why Ameren did not refer to this

provision. Nonetheless, Staff is of the option that its proposed Sections 412.170(b) and

(c) address the situation where a RES decides to both (a) charge its residential variable

rate customers a large number of different rates that are more granular than the rate code

level and (b) chooses Ameren Illinois’ Rate Ready option to bill its customers.

Section 412.170(b)-(d) and (g)

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ICEA states that it “cannot identify what in Section 16-115 through 16-115B (or

elsewhere in the Public Utilities Act) gives the Commission the specific authority to require

disclosure of historic prices or to compare current prices to past prices.” (ICEA

Comments, 35.) As noted elsewhere, this view of Commission authority is unduly narrow.

In a recent Appellate Court decision, the court determined that, to the extent that the

Commission was fully authorized to impose administratively-created consumer protection

requirements. Dominion Retail, Inc. v. Illinois Commerce Comm’n, 2015 IL App (4th)

140173, ¶¶105-119. The Dominion Retail court ruled that courts properly make two

inquiries when determining whether an administrative action is proper: first, whether it is

authorized by statute, and second, whether it conflicts with other statutes. Dominion

Retail, ¶¶96, 98, 104. The Commission clearly has authority to promulgate the rule (see

Staff Comments, 3-9), and the proposed rule does not conflict with any statute ICEA has

identified. Further, insofar as the Commission is authorized to require use of a Uniform

Disclosure Statement, as it unquestionably is, it stands to reason that the Commission is,

a fortiori, authorized to require such disclosures as it deems necessary to protect the

public interest, including price comparisons.

Section 412.170(c)

While ICEA refers to Sections 412.170(b)-(d) in its Initial Comments (ICEA

Comments, 38), the statements that follow appear to be directed at Section 412.170(c)

and (d) specifically. ICEA argues that “a customer can make a decision based on the

absolute value of the price change relative to what is otherwise available from the same

RES or on the market” and that “that calculus is not impacted by much the price went up

or down since the last price adjustment.” (Id.) ICEA further states that “mandating a

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description of the percentage increase (or decrease) does not provide the customer

actionable information about whether the overall product is competitive or not.” (Id.)

Staff notes that the advance disclosures of price changes, which ICEA supports,

(Id.) also do not provide the customer actionable information about whether the overall

product is competitive or not. Like Staff’s proposed percentage change disclosures in

proposed Section 412.170(c) and (d), advance notice of rate changes are likely to alert

some variable rate customers to the fact that it might be advisable to carefully monitor

price changes in the market generally. In other words, proposed Section 412.170(c) and

(d) are just another method by which variable rate customers can be reminded or induced

to pay attention to changes in variable rates. ICEA’s argument that a “rate increase may

be significant” and yet not necessarily “make the rate out of line with the market” equally

applies to ICEA’s example where a customer “sees a high June-July price.” A “high” price

may be in line with the offers available at that particular point in time. Just like a “high”

price could lead a customer to believe it is worth “to switch to a different product with a

lower current rate,” a significant percentage increase in the customer’s variable rate could

lead a customer to do the same. As a result, Staff proposes Section 412.170(c) and (d)

not because every significant percentage increase in the customer’s variable rate from

one month to the next should prompt the customer to switch rate plans or suppliers, but

rather because a disclosure about a significant percentage increase could lead some

customers to review their options.

Section 412.170(d)

Although CUB and the AG support Staff’s proposed Section 412.170(d), each

urges the Commission to require a separate notice to customers once a variable rate

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increases by more than 20% from one monthly billing period to the next, instead of Staff’s

proposed 30% trigger point. (AG Comments at 9; CUB Comments.) While Staff

acknowledges that it is difficult to balance the benefits of additional customer notifications

and the increased costs on RESs as a result of frequent notifications, it seems likely that

requiring customer notifications for increases of less than 30% might result in such notices

being so frequent as to be disregarded. CUB’s and the AG’s proposals are well-

intentioned. However, Staff is of the opinion its proposed 30% threshold best balances

consumer interests with cost.

While NAE argues that Section 412.170(d) should be eliminated, NAE offers two

modifications in the alternative. (NEA Comments, 18.) First, NAE states that that “RES

should be allowed to use any form of communication authorized by the customer (e.g.,

email or text messages), which may be less costly.” Id. However, Staff’s proposed

definition of the terms “written” and “writing” allows for electronic written communication

as long as the RES and customer agree to communicate by electronic means. As a result,

there is no need for NAE’s proposed language.

Second, NAE is concerned that Staff’s proposed language “does not make clear

that it does not apply to increases associated with a new or renewed contract.” (Id.) Staff

did not intend to create exemptions for increases as a result of a new or renewed contract.

Staff’s proposal is that as long as the customer is a customer of the same RES, an

increase of more than 30% from one monthly billing period to the next should trigger a

separate written notice, regardless of the reason for the increase. Thus, Staff

recommends that the Commission reject NAE’s “clarifying” language on this subject.

Section 412.170(e)

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CUB argues that Staff’s proposed Section 412.170(e) “creates a giant loophole”

because it “could incent a RES to make a small component of each rate determined on

a publicly available index, and thereby avoid the vital notification provisions outlined in

this rule.” (CUB Comments.) Perhaps the language could be improved upon. To make it

clearer that the exemption to the notification requirements in Section 412.170(a)-(d) is

limited to situations where the customer is able to determine the variable rate by

obtaining publicly available information, Staff proposes the following modification:

Subsections (a) through (d) shall not apply to contracts which

disclose the formula that will allow a customer to determine the

variable rate, based or a component of the variable rate, on a publicly

available index or benchmark.

This modified language attempts to address situations where the RES is unable to

calculate the upcoming variable rate until a publicly available index or benchmark is

available. At the same time, the modified language attempts to address the concern that

a customer is unable to determine his or her variable even if the index or benchmark is

publicly available.

NAE supports Section 412.170(e) but “wants to be clear that an index or

benchmark is ‘publicly available’ whether or not such index is available from the publisher

of the index with or without a subscription fee.” (NAE Comments, 18.) Staff agrees.

However, Staff proposes that, unless the RES provides the index or benchmark

information to the customer without charge, the RES should be required to disclose the

charge of obtaining the index or benchmark on the UDS and in the contract if the RES

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relies on Section 412.170(e) for exemption from Sections 412.170(a)-(d). If this were not

the case, a customer whose variable rate is based on an index or benchmark that is not

available free of charge, will be at a disadvantage compared to other variable rate

customers if the customer has to choose between not learning of the applicable variable

rate until much later or paying to receive the information other variable rate customers

receive free of charge. As a result, Staff proposes the following addition to Section

412.170(e), part of which is similar to language proposed by ICEA:

Subsections (a) through (d) shall not apply to contracts which

disclose the formula that will allow a customer to determine the

variable rate, based or a component of the variable rate, on a publicly

available index or benchmark. Each RES shall publish on its website

sufficient information to identify the inputs to the formula used to

calculate the variable rate, including the timing and location of the

index prices and any information necessary to calculate the rate.

Unless the RES provides the index or benchmark information to the

customer free of charge, the RES shall be required to disclose the

charge of obtaining the index or benchmark on the UDS and in the

contract.

(ICEA Comments, Attachment A.)

ICEA first states that it supports Staff’s proposed Section 412.170(e) and then

describes the adverse consequences likely to result if Section 412.170(e) were not

included in the rule. ICEA states it “supports the substance of new proposed Section

412.170(e)” and “strongly recommends keeping proposed new Section 412.170(e) […] in

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the event that the Commission does not incorporate the concepts of Index Variable and

Non-Index Variable in the definitions sections.” (ICEA Comments, 34.) However, ICEA

then states that “without a recognition that these types of products will not have a known

price 30 days prior to the month it would force a supplier to not be able to use current

index pricing.”

In fact, Staff’s proposed Section 412.170(e) does recognize this and, as mentioned

above, ICEA acknowledges that it does. It is not clear to Staff what exactly ICEA intends

to convey. Regardless, Staff’s proposed Section 412.170(e) takes into account products

based on an index or benchmark.

Section 412.170 (f)

Similar to its proposed changes to Section 412.170(a), ICEA proposes to allow

“any means of communication authorized by the customer.” (ICEA Comments, 34.)

However, Staff’s proposed definition already allows electronic records “so long as both

RES and customer have agreed to electronic communication.” For this reason, Staff

recommends that the Commission reject ICEA’s proposed language.

NAE and RESA oppose Staff’s inclusion of the following provision in Section

412.170(f)(3): “unless the customer takes a certain action, including the information as to

how to take the certain action.” While RESA does not address this in its Initial Comments,

RESA’s Appendix A contains a comment in the margins that states: “It is not clear what

action the RES is supposed to advise the customer to take to avoid a change to a variable

rate to which the customer has agreed.” (RESA Comments, Appendix.) Similarly, NAE

states that Staff’s proposed language “incorrectly assumes that the switch to a variable

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rate is optional or conditional by requiring the notice to advise the customer of the action

to be taken to avoid a rate change.” (NAE Comments, 19.)

Staff proposes this amendment to apply to a situation common to many RES offers

available to residential customers in Illinois. The initial term of the contract contains a

fixed rate for a certain period. Thereafter, the customer will be automatically placed on a

variable rate that will be determined by the RES on a month-to-month basis. However, in

most cases no early termination fee applies if a customer leaves the RES after the fixed

rate period has ended. In addition, many suppliers will offer their customers a new fixed

rate before the customer is placed on a variable rate. Staff proposes that the written

notification pursuant to Section 412.170(f) include a note that the customer is eligible for

a new fixed rate offer (if applicable) and that there is no fee for switching suppliers after

the switch to a variable rate. Staff proposes the following modification to Section

412.170(f)(3), in the hope that it will at least partially resolve NAE’s and RESA’s concerns:

A statement in bold lettering, in at least 12 point type, that the rate will change to

a variable rate unless the customer takes a certain action, including the information

as to how to take the certain action. If the customer is eligible for one or more fixed

rate offers from the RES, the RES shall include information about such offer(s),

including the information as to how to enroll in such offer(s). If the customer is not

subject to an early termination fee after the switch to a variable rate, the notice

shall advise the customer of such.

CUB proposes that “it should be made clear here that Subsections (a) through

(d) are also in effect with regard to notice of the variable rates for the rate charged after

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the initial term.” (CUB Comments.) Staff agrees. For this reason, Staff proposes the

following for Section 412.170(f)(4):

4) Items (a) through (d) of this section also apply to contracts that

include a provision that results in a residential customer’s rate plan

changing from a fixed rate to a variable rate after the initial term.

Section 412.170(g)

Both ICEA and RESA argue that the Commission should not adopt Staff’s

proposed Section 412.170(g) because a disclosure of variable rates from the recent

past are not helpful to customers. While RESA merely states that posting the historical

rate data “provides no value to customers as to future rates,” (RESA Comments, 17)

ICEA advances this argument at some length. (ICEA Comments, 35-38.)

ICEA argues that providing historical variable rates “would not be helpful to

residential customers” because “no serious participant in any market would contend that

the best way to attempt to predict what the market will do in the future is to look at the

past.” (ICEA Comments, 36.) ICEA further asserts that a historic rate “does not tell the

story of whether a current or future RES price is a good deal today or tomorrow” and that

“no amount of historical RES data could have anticipated the 2014 Polar Vortex during

the summer of 2013 or PJM’s decision to alter its own market rules in response.” (Id., 37.)

However, Staff is not suggesting that past rates predict future rates or that customers

should use posted historical rates to predict future rates. In fact, Staff recommends that

a disclosure stating that historical pricing is not indicative of present or future pricing be

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included on PlugInIllinois.org, which is the place where these historical rates by suppliers

would be posted under Staff’s proposal. (Staff Comments, 42.)

Instead, Staff is proposing Section 412.170(g) because it provides, in Staff’s

opinion, at least two benefits. First, it gives prospective customers the ability to become

aware of seasonal as well as weather-related fluctuations in the variable rates charged

by the various suppliers. Second, it provides prospective customers a basis upon which

to compare recent variable rates by different suppliers. Currently, a prospective variable

rate customer sees only the introductory rates offered by the suppliers. These introductory

rates are sometimes only applicable for the first month of service and generally for less

than six months. Requiring suppliers to publish recent variable rates will give customers

a high level comparison of actual variable rates charged by the various suppliers before

enrolling with one of them. This is information that customers currently do not have, and

Staff recommends that the Commission require this information to be provided. (Staff

Comments, 41-42.)

For example, a customer might consider four different variable rate offers from four

different suppliers, imaginatively designated A, B, C, and D. Their offers are as follows:

Supplier A: 9 cents/kWh for the first month, market rates thereafter

Supplier B: 7.9 cents/kWh for the first two months, market rates thereafter

Supplier C: 10 cents/kWh for the first month, market rates thereafter

Supplier D: 8.7 cents/kWh for the first three months, market rates thereafter

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Assuming further that the historical rate information required by Section 412.170(c)

is as follows, with month 1 the most recent month and month 12 the oldest rate

information:

Month Supplier A Supplier B Supplier C Supplier D

1 8.6 10.5 8.9 10.1 2 8.1 10.4 8.8 8.6 3 7.4 9.9 8.8 7.8 4 7.7 9.8 8.7 9.3 5 7.4 9.9 8.7 6.9 6 8.2 9.9 8.8 9.8 7 8.3 10.2 8.7 7.2 8 7.9 9.8 8.8 8.4 9 7.6 9.8 8.8 7.5 10 7.2 9.7 8.6 8.6 11 6.9 9.8 8.6 6.4 12 6.8 9.8 8.6 6.7

If nothing else, a customer would be able to make a high-level comparison of the

monthly average variable rate fluctuations among those four suppliers offering variable

rates. If the Commission is of the opinion this additional information is not helpful for the

customer, it should decline to adopt proposed Section 412.170(g). If, however, the

Commission, like Staff, finds that this disclosure provides benefit to customers shopping

for residential supply offers, the Commission should adopt Staff’s proposal.

ICEA also states that “lumping products together is not necessarily an apples-to-

apples comparison, especially when value added services like efficiency, demand

response, or distributed generation are added to the mix.” (ICEA Comments, 36-37.)

ICEA further states that offers “may also have different terms and conditions, including

minimum lengths/early termination fees.” Id. at 37.

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Staff agrees that any average residential variable rate comparison among

suppliers will not be perfect. However, even if the comparison is not perfect, average rate

information enables customers to make a useful high-level comparison of variable rate

offers. Second, Staff’s proposed Section 412.170(g) excludes “green” offers when

calculating a RES’ average residential variable rate. Doing so ensures that at least one

source of potential distortion is eliminated from the average rate calculation. Third, several

of the value-added services referred to by ICEA are usually bundled with time-of-use

offers. For this reason, time-of-use offers are explicitly excluded from Staff’s proposed

definition of variable rates. Fourth, the majority of residential variable rate offers reviewed

by Staff do not contain any minimum length requirements or early termination fees. In

fact, Staff has identified only one of those offers so far.

ICEA further contends that some offers “are not generally available, such as

municipal aggregation prices that are location-specific.” (ICEA Comments, 37.) Despite

hundreds of municipal aggregation events conducted over the past approximately five

years, Staff has yet to encounter a single municipal aggregation contract that included a

variable rate. ICEA’s concerns in this regard are, accordingly, not well taken.

Q. Section 412.190 Renewable Energy Product Descriptions

The Environmental Law and Policy Center (ELPC) states that “a requirement that

corresponding RECs be retired will ensure that an electricity product marketed as ‘green,’

‘renewable,’ etc. will go above and beyond any requirement that attaches to the RES

under Illinois’ RPS.” (ELPC Comments, 3.) ELPC further states that “a REC retirement

requirement would also prevent RESs from counting electricity that is already being used

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to satisfy a renewable energy standard in another state, consistent with consumer

expectations.” (Id.) Although Staff is not necessarily opposed to a provision in the rule

that specifically addresses retirement of RECs, ELPC did not provide any language for

Staff or other parties to comment on. Staff has not attempted to draft a provision which

may or may not address ELPC’s concern. Although the AG’s Initial Comments do not

provide substantial support for its language in its proposed Section 412.190(d), Staff may

provide comments during the sur-reply round.

ELPC argues that “RESs should also be required to disclose whether the RES has

purchased the actual electricity along with the REC (‘bundled RECs’), or whether it has

purchased just the REC without a contract for the underlying electricity (‘unbundled

RECs’). (Id.) The AG appears to advance a similar, if not identical, proposal. However,

Staff is of the opinion that the AG’s proposed language for Section 412.190(e)(1) may not

prove helpful to consumers; under the AG’s proposal, a RES would be required to

describe the renewable energy resources as “e.g., wind, solar, RECs.” (AG Attachment

to its Initial Comments.)

In addition, ELPC’s contention that “the purchase of bundled RECs is a more direct

investment in renewable energy [than the purchase of unbundled RECs], and is more

likely to encourage new renewable energy development [,]” (ELPC Comments, 4), should

be discounted. As ELPC itself states, a wide variety of RECs are available for suppliers

to purchase and the “vintage” of a REC is a large factor in whether a REC purchase “is

more likely to encourage new renewable energy development.” Id.

ELPC urges adoption of three additional changes to the rule, but does not provide

proposed language for any of those changes. ELPC states that (1) “there should be

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minimum renewable energy percentage requirements for advertising electricity products

as ‘renewable,’ ‘green,’ etc.[;]” (2) “all sources and corresponding percentages of

renewable energy should be disclosed on all promotional or marketing material[;]” and (3)

“Section 412.190 should apply to responses by RESs to RFPs from municipal

aggregation programs.” (ELP Comments, 5-7.) While Staff is not necessarily opposed to

either of those proposals, it urges ELPC to submit draft language.

Both ICEA and RESA state that most suppliers do not commit to buying specific

RECs in advance of customers signing up for a particular “green” offer. RESA states that

“renewable products are not generally kept in a pre-purchased inventory of costs that

await customers to sign up.” (RESA Initial, 18.) Similarly, ICEA states that it “understands

that the general market practice is not to buy RECs in advance of acquiring customers.”

(ICEA Comments, 41.) Staff certainly does not propose to “recast how green products

are created and structured in a competitive market”, as RESA puts it. (RESA Initial

Comments at 18.) Instead, Staff proposes that the Commission require RES to disclose

whether a particular green offer has guaranteed attributes or whether the RES will decide

later how exactly it fulfills its renewable energy obligations. In other words, the

Commission should not require that each RES commit to a very specific resource mix

and location for every green product it offers. If a RES decides to not commit to a specific

resource mix and location in advance of signing up customers, the RES should be

required to disclose this when advertising such a product. However, Staff’s proposed

Section 412.190(c) and (e) might benefit from additional clarity. As a result, Staff

recommends that the Commission adopt the following revised Sections 412.190(c) and

(e):

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(c) A RES marketing “green”, “renewable”, or “environmentally

friendly” offers, or other offers of any description whatever which

convey the impression that such power or energy service has a

reduced impact on the environment shall clearly and conspicuously

disclose on such marketing materials the percentage of renewable

energy resources generated in the State of Illinois the RES has

committed to purchase, if any, used in order to supplying power or

energy to customers pursuant to each offer.

***

(e) A RES marketing “green”, “renewable”, or “environmentally

friendly” offers shall disclose, on its website, the generation sources

and the location of such generation sources applicable to each offer.

If a particular offer contains a mix of renewable energy resources,

the RES shall specify the renewable energy resource that makes up

the greatest percentage of the portfolio for that offer. If a RES has

not committed to a particular mix, and corresponding shares, of

renewable energy resources at the time it markets such offers, the

RES shall disclose this fact on its website. If a RES has not

committed to a particular location, or locations, of renewable energy

resources at the time it markets such offers, the RES shall disclose

this fact on its website. For example, if a RES intends to purchase

renewable energy resources anywhere in the nation, the RES shall

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disclose this fact on its website. If a RES intends to purchase

renewable energy resources located within the area of a specific

Regional Transmission Organization, the RES shall disclose this fact

on its website.

RESA asserts that a “RES will not know the percentage of Renewable Energy

Credits that come from Illinois sources at the time the RES is marketing the product.”

(RESA Comments, 19.) The Commission should discount this. While Staff agrees that

most suppliers do not commit to a particular mix or location of renewable energy

resources at the time the offer is marketed, there are exceptions to this practice and it

should be noted that each RES has the option to commit to a particular mix and location

of renewable energy resources before enrolling customers. The fact that most suppliers

do not commit upfront does not make such upfront commitments impossible, as RESA’s

statement suggests.

ICEA states that it “could see a supplier voluntarily taking the steps outlined in

proposed 412.190(c) and (e) for its own marketing purposes” but “ICEA believes that it is

not the role of the Commission to mandate such steps” (ICEA Comments, 42.) Staff is of

the opinion that it should indeed be the role of the Commission to require RESs to

truthfully disclose whether, and how, they have committed to a particular mix and location

of renewable energy resources at the time they market particular offers. Staff’s modified

language above is intended to clarify this requirement further.

ICEA claims that “although Section 16-115D has geographic requirements for

RECs procured for the purposes of RPS compliance, other RECs are available on the

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market and should count as ‘renewable’ as long as the REC is consistent with Section

1-10 of the IPA as interpreted by the IPA.” (ICEA Comments, 40.) However, given that

Staff’s proposed definition of “renewable energy resources” encompasses any resource

“defined in Section 1-10 of the Illinois Power Agency Act”, it is not clear why ICEA

asserts that Section 412.190(a) somehow limits a RES’s options.

ICEA also states that while ICEA “is not unsympathetic to concerns about minimal

compliance with the RPS being labeled ‘renewable,’ there is no reason a RES should be

disallowed from making a truthful statement about compliance with Illinois RPS

requirements.” (ICEA Comments, 40.) While Staff is of the opinion that its proposed

Section 412.190(a) does not prohibit such truthful statements, Staff is not opposed to

ICEA’s proposed revision as follows:

Only No RES shall state or imply in any marketing or promotional

material that any power and or energy service marketed or sold by it

is “green”, “renewable” or “environmentally friendly” or any term or

descriptor of like or similar import which conveys that such power or

energy service has a reduced impact on the environment that

includes unless such power and or energy is purchased entirely

separate and apart from in addition to, and over and above, power,

renewable energy credits or alternative compliance payments

purchased or made to satisfy the renewable portfolio standard

requirements applicable to RES under Section 16-115D of the Act

can be marketed as "green", "renewable energy" or "environmentally

friendly." However, nothing in this subsection prevents a RES from

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stating that it complies with the Illinois Renewable Portfolio Standard,

if in fact it does so.

The AG proposes extensive revisions to Section 412.190 in an attachment to its

Initial Comments, yet offers little explanation of those revisions in its Comments.

Nevertheless, Staff is of the opinion that some of the AG’s proposed sections are largely

subsumed by Staff’s proposed Section 412.190. Other sections proposed by the AG may

have merit and Staff will review other parties’ responses to the AG’s proposed language

before commenting further.

R. Section 453.20 Criteria by Which to Judge the Validity of an Electronic

Signature

Staff appreciates RESA’s proposed addition to the definition of electronic signature

to include digitized recording of the handwritten signature of the executing person (RESA

Attachment B, 1.) However, RESA does not suggest how this might be accomplished in

the context of internet enrollments, nor does it indicate how disputes of authenticity of

such enrollments might be addressed. Staff requests additional comments from RESA

regarding its proposal before indicating support or opposition.

Section 453.20(b)

ICEA asserts that Staff’s proposed revisions exceed the Commission’s statutory

authority by modifying an existing descriptive and permissive list within the Illinois

Electronic Commerce Security Act, 5 ILCS 175/1-101, et seq., to a restricted and

prescriptive list. (ICEA Initial Comments, 43.) Similarly, RESA asserts that Staff’s

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proposal to substitute “shall for “may” in this subsection makes the provision overly

restrictive and unnecessary and is unaware of any complaints. (RESA Comments, 21.)

It is not clear to the Staff that the Electronic Commerce Security Act imposes

requirements governing electronic signatures or security procedures; rather, it appears to

the Staff more accurate to say that the Electronic Commerce Security Act sets standards,

and creates evidentiary rules and presumptions, especially those governing admissibility.

Insofar as the Electronic Commerce Security Act is directly applicable, it appears to

provide that “qualified security procedures”, which satisfy certain requirements, including

but not limited to using algorithms and technology sufficiently secure that the Illinois

Secretary of State is prepared to certify them, 5 ILCS 175/10-135, may be used to

generate “secure electronic signatures.” 5 ILCS 175/10-110. If RESs are prepared to

qualify their security procedures in this manner such that electronic signatures will be

secure within the meaning of the Act, this may be a useful resolution. Staff urges ICEA,

RESA, NAE and any other interested party to propose a provision which authorizes the

use of secure electronic signatures within the meaning of Section 10-110 of the Electronic

Commerce Security Act.

Currently, Staff’s review of responses to complaints and of supplier practices,

indicate that a majority of RESs that employ internet enrollment use internet protocol (IP)

addresses as validation. Apart from not remotely constituting a “secure electronic

signature” within the meaning of the Electronic Commerce Security Act, an IP addresses

is not definitive proof that a consumer authorized a switch in suppliers. Passively

capturing a customer’s IP address associated with their e-mail is not an affirmative act by

a customer demonstrating assent in any way similar to a signing, nor is the capture of

82

some identifying information that could easily be acquired in public records or social

media, such as a customer’s date of birth. (Staff Comments, 46.)

RESA also proposes the inclusion of digitized version of the handwritten signature

of the executing person as self-authenticating. (RESA Attachment B, 3.) Again, RESA

does not suggest how this might be accomplished in the context of internet enrollments

nor does it indicate how disputes regarding authenticity of such enrollments might be

resolved. Staff urges RESA to submit additional comments regarding its.

Staff does not oppose RESA’s proposed revisions to the following subsection of

453.20 (b):

An internet protocol (IP) address alone will not satisfy the requirements

of this section. This information may not include any information that is

also necessary to effect a switch of RESs the customer’s account

number.

Staff urges the Commission to reject all of ICEA’s and RESA’s proposed revisions

to Section 453.20(b). Staff, however, requests additional proposals regarding this

provision.

Section 453.20(b)(3)

Staff supports ICEA’s proposed revisions to Staff Proposed Revisions to Section

453.20 (b) (3) as follows:

The security procedure must shall be provided on a securely

encrypted web page; security and encryption shall meet or exceed

current industry practices.

83

(ICEA Attachment A, 31.)

Section 453.40(a)

Staff does not object to ICEA’s proposed revisions to Staff Proposed Revisions to

Section 453.40(a) as follows:

In addition to the requirements set forth in information and structure

formal requisites set out required for an LOA in 815 ILCS 505/ by

Section 2EE of the Illinois Consumer Fraud and Deceptive Business

Practices Act [815 ILCS 505/2EE], by virtue of being in electronic

form, an electronic LOA must shall provide the following additional

information:

(ICEA Attachment A, 34.)

84

IV. Conclusion

WHEREFORE, the Staff of the Illinois Commerce Commission respectfully requests

that its proposed revisions to Code Parts 412 and 453 be adopted.

Respectfully submitted,

/s/___________________________

Matthew L. Harvey

Kelly A. Turner

Counsel for the Staff of the

Illinois Commerce Commission

Illinois Commerce Commission

Office of General Counsel

160 North LaSalle Street

Suite C-800

Chicago, Illinois 60601

(312) 793-2877

November 19, 2015

STATE OF ILLINOISILLINOIS COMMERCE COMMISSION

Illinois Commerce CommissionOn Its Own Motion

Docket No. 15-0512Amendment of 83 III. Adm. Code 412 and83 III. Adm. Code 453

AFFIDAVIT OF TORSTEN CLAUSEN

Torsten Clausen, being first duly sworn on his oath, states and declares as follows:

1. My name is Torsten Clausen. I am the same Torsten Clausen who

submitted an Affidavit in support of Staff’s Verified Initial Comments.

2. All assertions of fact contained in the attached Verified Reply Comments

are true and correct, except where stated on information and belief, in which case I am

informed and believe them to be true and correct.

Further Affiant Sayeth Not

ccTorsten Clausen

Subscribed and Sworn before methis 19th day of November, 2015 —

%yPuJç

CEFICLAL SEAL

t%LAvs.IN0s.

1

STATE OF ILLINOISILLINOIS COMMERCE COMMISSION

Illinois Commerce CommissionOn Its Own Motion

Amendment of 83 III. Adm. Code 412 and83 III. Adm. Code 453

)))))

Docket No. 15-0512

follows:

AFFIDAVIT OF PETER A. MUNTANER

Peter A. Muntaner, being first duly sworn on his oath, states and declares as

1. My name is Peter A. Muntaner. I am the same Peter A. Muntaner who

submitted an Affidavit in support of Staff’s Verified Initial Comments.

2. All assertions of fact contained in the attached Verified Reply Comments

are true and correct, except where stated on information and belief, in which case I am

informed and believe them to be true and correct.

Further Affiant Sayeth Not

SPERANTh DE LOS SANTOSNOTARY pialt - STATE OF ILLINOiS

Peter A. Muntaner

Subscribed and Sworn before meof November, 2015

1

TITLE 83: PUBLIC UTLITIES

CHAPTER I: ILLINOIS COMMERCE COMMISSION

SUBCHAPTER c: ELECTRIC UTILITIES

PART 412 OBLIGATIONS OF RETAIL ELECTRIC SUPPLIERS

SECTION 412.150 DIRECT MAIL

Section 412.150 Direct Mail

a) RES agents contacting customers for enrollment for power and energy service by

direct mail shall include items (a) and (c) through (m) of Section 412.110 in the

solicitation. Direct mail material shall not make any statements of representation

of, endorsement by or acting on behalf of the electric utility or electric utility

program, a governmental body or program run by a governmental body (unless

the RES has entered into a contractual arrangement with the governmental body

and has been authorized by the governmental body to make the statements), or a

consumer group or program run by a consumer group (unless the RES has entered

into a contractual agreement with the consumer group and has been authorized by

the consumer group to make the statements). Direct mail shall not utilize the name

or logo of the customer’s utility in any manner.

b) If the direct mail solicitation includes a written Letter of Agency, the direct mail

solicitation shall include items (a) and (c) through (i) of Section 412.110 in the

solicitation and the UDS according to Section 412.115 of this Part. If a written

Letter of Agency is being used to authorize a customer's enrollment, it shall

comply with Section 2EE of the Consumer Fraud and Deceptive Business

Practices Act and shall contain a statement that the customer has read and

understood each of the disclosures required by subsections (a), (c) and (e) through

(m) contained in the uniform disclosure statement of Section 412.110.

c) If the direct mail solicitation allows a customer to enroll by telephone, and the

customer elects to do so, Section 412.140 shall apply. If the direct mail

solicitation allows a customer to enroll online, and the customer elects to do so,

Section 412.160 shall apply.

cd) A copy of the contract must be sent to the customer within three business days

after the electric utility's confirmation to the RES of an accepted enrollment.

TITLE 83: PUBLIC UTLITIES

CHAPTER I: ILLINOIS COMMERCE COMMISSION

SUBCHAPTER c: ELECTRIC UTILITIES

PART 412 OBLIGATIONS OF RETAIL ELECTRIC SUPPLIERS

SECTION 412.160 ONLINE MARKETING

Section 412.160 Online Marketing

a) Each RES offering power and energy service to customers online shall clearly and

conspicuously make all disclosures required by subsections (a) and (c) through

(m) of (Section 412.110) for any services offered through online enrollment

before requiring the customer to enter any personal information other than zip

code, electric utility service territory, and/or type of service sought. The RES

internet and electronic material shall not make any statements to the effect that it

is a representative of, is endorsed by or is acting on behalf of the electric utility, or

an electric utility program, an governmental body or program run by a

governmental body (unless the RES has entered into a contractual arrangement

with the governmental body and has been authorized by the governmental body to

make the statements), or a consumer group or program run by a consumer group

(unless the RES has entered into a contractual agreement with the consumer group

and has been authorized by the consumer group to make the statements). Online

marketing shall not utilize the name or logo of the customer’s utility in any

manner.

b) The uniform disclosure statement must be printable in a PDF format not to exceed

two pages in length and shall be available electronically to the customer.

c) The RES shall obtain, in accordance with 83 Ill. Adm. Code 453 and Section

2EE(b) of the Consumer Fraud and Deceptive Business Practices Act, an

authorization to change RES that confirms and includes appropriate verification

data by encrypted customer input on the RES website.

d) The enrollment website of the RES shall, at a minimum, include:

1) All items disclosures required by subsections (c) through (m) ofwithin the

uniform disclosure statement (Section 412.110);

2) A statement that electronic acceptance of the terms is an agreement to

initiate service and begin enrollment;

3) A statement that the customer should review the contract and/or contact

the current supplier to learn if any early termination fees are applicable;

and

4) An e-mail address and toll-free phone number of the RES where the

customer can express a decision to rescind the contract.