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RESA: Blue Pilot Energy Decision Could ‘Shut Down’ Retail Telemarketing in Pennsylvania

August 1, 2016 By Cheryl Kaften

On July 27, the Retail Energy Supply Association (RESA) filed (Docket No. C-2014-2427655) a petition to intervene with the Pennsylvania Public Utility Commission (PUC) in a complaint case against Blue Pilot Energy, a Las Vegas-based retail energy broker/marketer.

RESA opposed an initial decision by the PUC in the case that found that failing to obtain a customer signature on a written contract after a cold call telesales would violate the state’s Telemarketer Registration Act (TRA) – and, therefore, violated the PUC’s regulations, as well.

“To be clear,” RESA stated in the filing, “[we are] not taking any position regarding the specific allegations against Blue Pilot Energy … involving its marketing practices and, to the extent the commission concludes that Blue Pilot violated …regulations, RESA supports appropriate enforcement action.

“However, included in the initial decision is a recommendation that the commission conclude that a wet signature is required for all telemarketing contracts. RESA’s exception … is limited to urging the commission to reject this one recommendation that would have a widespread negative impact on RESA members and consumers.”

“[I]f the unprecedented recommendation of the I.D. regarding wet signatures is adopted by the commission, the telemarketing sales channel for EGSs [electric generation suppliers] would no longer be a viable option,” RESA added.

Background

The original complaints against Blue Pilot, brought by Pennsylvania Attorney General Kathleen Kane and Acting Consumer Advocate Tanya McCloskey on June 20, 2015, included five separate counts – among them:

  1. Failing to provide accurate pricing information;
  2. Prices nonconforming to disclosure statement;
  3. Misleading and deceptive promises of savings;
  4. Lack of good faith handling of complaints; and
  5. Failure to comply with the Telemarketer Registration Act.

In an initial decision (I.D.) filed on July 7 of this year, the PUC found that, “Of the 83 witnesses, 63 testified that Blue Pilot’s sales agents led them to believe they would save on their electric bill, failed to give them accurate pricing information, did not  explain that the price would be variable after the 60-90 day introductory period, and led them to believe the price would be fixed for a longer period of time or that they would be notified of a price change before it became variable. At least 26 consumer witnesses testified they never received any disclosure statement or terms of service from Blue Pilot”.

In addition, the PUC said, “Blue Pilot engaged in widespread deceptive marketing by emphasizing initial introductory savings that would ‘reset every 60 days.’ in contrast to the disclosure statement pricing term that would establish variable prices each month. In none of the disclosure statements, sales contracts, verification recordings, or advertised materials are the price terms fully disclosed in a fair and meaningful manner. Instead, the sales scripts encourage the customers to call their agents back in 80 days to see what other savings they can receive.”

The commission directed Blue Pilot to refund $2.4 million to 2,516 customers affected by its deceptive pricing. In addition, the initial decision recommended that the commission direct permanent revocation of Blue Pilot’s EGS license in Pennsylvania.

Defending the Retail Industry

That initial decision “threatens to shut down the telemarketing sales channel which will negatively impact the competitive options available to consumers in Pennsylvania,” RESA said.

Further, the association stated,”[I]f the unprecedented recommendation of the I.D. regarding wet signatures is adopted by the commission, the telemarketing sales channel for EGSs would no longer be a viable option,” RESA added.

RESA noted that requiring suppliers to obtain a wet signature for telesales enrollments”would also negatively impact consumers. For those customers who would actually return the contract, they would experience an unnecessary delay between enrollment and effective date for the new EGS price.”

“Thus, the outcome of adopting the recommendation of the I.D. to require wet signatures on telemarketing contracts would negatively impact the efforts of the Commission to foster the development of a workably competitive market (as required by the Electricity Generation Customer Choice and Competition Act … and seriously undermine all the work of the commission and interested stakeholders in developing the commission’s regulations to clearly define the process EGSs are required to follow to successfully enroll customers,” RESA said

The association request that, if the commission declines to grant its petition to intervene, that instead the commission should grant an alternative request for leave to accept the exception of a non-party to the case.

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