STATE OF ILLINOIS

ILLINOIS COMMERCE COMMISSION

Illinois Commerce Commission :

On Its Own Motion : : 15-0512

Amendment of 83 Ill. Adm. Code 412 and : 83 Ill. Adm. Code 453. :

SECOND NOTICE ORDER

June 1, 2017

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Table of Contents

I. Procedural History ................................................................................................ 1

II. Commission Authority to Modify Part 412 ............................................................. 2

III. Electric Power and Energy ................................................................................. 15

IV. Competitive Parity .............................................................................................. 16

V. Section 412.10 Definitions .................................................................................. 19

VI. Section 412.100 Application of Subpart B .......................................................... 29

VII. Section 412.105 Use of Utility Logo and Name .................................................. 32

VIII. Section 412.110 Minimum Contract Terms and Conditions ................................ 36

IX. Section 412.115 Uniform Disclosure Statement ................................................. 38

X. Section 412.120 In-Person Solicitation ............................................................... 50

XI. Section 412.130 Telemarketing .......................................................................... 65

XII. Section 412.140 Inbound Enrollment Calls ......................................................... 67

XIII. Section 412.150 Direct Mail ................................................................................ 71

XIV. Section 412.160 Online Marketing ...................................................................... 73

XV. Section 412.165 Rate Notice to Customers ........................................................ 74

XVI. Section 412.170 Conduct, Training and compliance of RES agents .................. 86

XVII. Section 412.190 Renewable Energy Product Descriptions ................................ 90

XVIII. Section 412.210 Rescission of Sales Contract ................................................. 100

XIX. Section 412.230 Early Termination of Sales Contracts .................................... 104

XX. Section 412.240 Contract Renewal .................................................................. 106

XXI. Section 412.250 Assignment ............................................................................ 122

XXII. Section 412.310 Required RES Information ..................................................... 125

XXIII. Section 412.320 Dispute Resolution ................................................................. 129

XXIV. Section 412.330 Failure to Comply ................................................................... 131

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XXV. Section 453.20 Criteria by Which to Judge the Validity of an Electronic Signature .......................................................................................................... 131

XXVI. Findings and Ordering Paragraphs ................................................................... 132

STATE OF ILLINOIS

ILLINOIS COMMERCE COMMISSION Illinois Commerce Commission :

On Its Own Motion : : 15-0512

Amendment of 83 Ill. Adm. Code 412 and : 83 Ill. Adm. Code 453. :

SECOND NOTICE ORDER

By the Commission:

I. PROCEDURAL HISTORY

On September 10, 2015, the Illinois Commerce Commission (“Commission”) initiated a rulemaking to examine Illinois Administrative Code (“Code”) Parts 412 and 453, the Code Parts governing obligations of retail electric suppliers (“RESs”). 83 Ill. Adm. Code 412; 83 Ill. Adm. Code 453. This docket seeks to amend the existing rules based on information received during the Commission’s workshops and comments on its Notice of Inquiry, NOI-01-2014 (“NOI”). The NOI, initiated in 2014, sought to address the marketing practices of RESs, which are governed by Part 412 of the Commission's Rules, Obligations of Retail Electric Suppliers. Other pertinent Rules include Part 453, Internet Enrollment Rules, which establish rules governing online enrollment procedures.

On September 22, 2016, the Commission entered the First Notice Order (“FNO”) with accompanying Appendix A, proposed Part 412, and Appendix B, proposed Part 453. First Notice of proposed Parts 412 and 453 (“Proposed Rules”) was published in the Illinois Register on November 4, 2016, pursuant to the Illinois Administrative Procedure Act. 5 ILCS 100/5-40.

On December 20, 2017, First Notice Initial Comments (“FN Initial”) were filed by the National Energy Marketers Association (“NEMA”), the Environmental Law & Policy Center (“ELPC”), the Citizens Utility Board (“CUB”), Commonwealth Edison Company (“ComEd”), the Illinois Competitive Energy Association (“ICEA”), Ameren Illinois Company d/b/a Ameren Illinois (“Ameren”), the Retail Energy Supply Association (“RESA”), MidAmerican Energy Services, LLC (“MES”), Staff of the Commission (“Staff”), the Illinois Attorney General’s Office (“AG”), Sperian Energy Corp. (“Sperian”), Prairie Point Energy, L.L.C. d/b/a Nicor Advanced Energy (“NAE”), and the Coalition of Energy Suppliers (“CES”). Sperian filed Corrected Initial Comments on December 21, 2016. CleanChoice Energy, Inc. (formerly known as Ethical Electric, Inc.) (“CleanChoice”) filed its FN Initial Comments on January 6, 2017, but served the parties and the Administrative Law Judges (“ALJs”) on December 20, 2016.

First Notice Reply Comments (“FN Reply”) were filed on January 17, 2017, by ELPC, MES, ComEd, Ameren, RESA, ICEA, Staff, CES, the AG, CUB, and NAE.

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The ALJs issued a Proposed Second Notice Order on March 20, 2017. Staff, RESA, NAE, ICEA, ELPC, the AG, MES and CUB filed Briefs on Exception (“BOEs”) on April 3, 2017. On April 10, 2017, RESA, ELPC, ICEA, CUB, ComEd, Ameren, MES, CES, the AG, and Staff filed Replies to Exceptions (“RBOEs”).

Appendix A, proposed Part 412, and Appendix B, proposed Part 453, are attached hereto.

II. COMMISSION AUTHORITY TO MODIFY PART 412

A. AG

The AG states that during the course of this rulemaking, several RESs have challenged the Commission’s legal authority to promulgate some, if not all, of the changes contained in the Commission’s proposed amendments to Part 412 and Part 453 of the Code. The AG asserts that these challenges are groundless.

The FNO is correct in its assessment of the Commission’s legal authority to address issues impacting the provision of “fair and open competition in the provision of electric power and energy.” 220 ILCS 5/16-118. The Commission has been exhorted by the General Assembly to “promote the development of an effectively competitive electricity market that operates efficiently and is equitable to all consumers.” 220 ILCS 5/16-101A(d). To that purpose, the Public Utilities Act (“Act”) details, consumer protections “must be in place” to ensure that consumers benefit from retail competition “and receive sufficient information to make informed choices among suppliers and services.” 220 ILCS 5/16-101(d), (e).

The AG points out that RESA argued that Article XVI of the Act provides no general powers except those expressly conferred by the legislature. It further reasoned that since the Act’s definition of “public utility” specifically exempts RESs, the Commission has no authority to promulgate rules and regulations other than those specifically provided for in the Act.

The AG states that RESA’s view of the Act is incorrect, as it would unreasonably (and illogically) limit the Commission’s rulemaking authority to the explicit regulations associated with the certification of retail suppliers (as provided for in Section 16-115(f)), even while the General Assembly has charged the Commission with additional, broad and varied oversight responsibilities. As the FNO correctly points out, Article XVI expresses the legislature’s objective that the Commission play an active role in ensuring that consumers are equipped to deal with “…new marketers and sellers offering new goods and services, many of which the average consumer will not be able to readily evaluate. It is the intent of the General Assembly that: (i) electricity consumers be provided with sufficient and reliable information so that they are able to compare and make informed selections of products and services provided in the electricity market; and (ii) mechanisms be provided to enable consumers to protect themselves from marketing practices that are unfair or abusive.” FNO at 4, citing 220 ILCS 5/16-117(a).

The AG points to the FNO which cites the Act’s more explicit directives to the Commission that it: (1) regulate RESs’ marketing materials; (2) approve procedures for switching a customer’s electric supplier; (3) require documentation of supplier claims regarding technology or fuel sources; (4) impose billing and disclosure requirements; and

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(5) hear complaints regarding RES failure to abide by the terms of a contract with a customer. FNO at 4-5, citing 220 ILCS 16-115A(e)(i)-(iv); 220 ILCS 16-115B(a)(ii). It is unlikely that the Commission could accomplish any of these regulatory tasks and provide the requisite legal notice of these requirements to retail suppliers without the benefit of a formal rulemaking. It is equally unlikely that the Act would impose these regulatory tasks on the Commission but deny it the authority to modify its rules as circumstances dictated.

The AG argues that in light of the express assignment contained in the Act, any arguments suggesting that the Commission has no authority to promulgate or modify its own marketing rules for RESs is not credible. Section 9-201(c) requires that if the Commission initiates a hearing to consider the propriety of any rule or regulation, it must establish regulations which it finds to be just and reasonable. 220 ILCS 5/9-201(c). Therefore, the AG asserts that there are no viable legal grounds to challenge the Commission’s authority to refine and perfect these regulations.

The AG notes that Sperian challenges the Commission’s authority to adopt any rules or amendments to existing rules designed to enable consumers to protect themselves from unfair or abusive marketing practices of RESs. Sperian adopts this position despite the fact that the General Assembly has stated its specific intention that the Commission ensure that consumers are armed with “sufficient and reliable information” to make informed choices in the electricity market, additionally charging the Commission to see to it that “mechanisms be provided to enable consumers to protect themselves from marketing practices that are unfair or abusive.” 220 ILCS 5/16-117(a).

The AG states that Sperian claims that the Act does not grant the Commission “specific substantive power or directives” to support its adoption of rules or rule revisions governing RES marketing practices. Sperian FN Initial at 3. Sperian goes so far as to claim that the FNO fails to point to “specific RES marketing and enrollment practices” referenced in Section 16-115 or 15-115A [sic] of the Act,” even while the FNO explicitly sets forth each individual provision of those statutes – provisions which give the Commission substantive authority over RES marketing materials, switching practices, substantiation of claims regarding technology and fuel types, billing practices, and annual statements on prices, terms and conditions, as well as those granting the Commission authority to hear consumer complaints about RESs set forth in Section 16-115B of the Act. Additionally, Sperian’s opposition to the Commission’s implementation of the Act’s policies on RES marketing ignores the fact that the Commission already has rules in place governing RES marketing and sales. These rules have been in place since January 1, 2013. Ill. Commerce Comm’n On Its Own Motion, Docket No. 09-0502, Adopting Order at 2 (Dec. 5, 2012). The General Assembly’s Joint Committee on Administrative Rules (“JCAR”) reviewed the rules that are in place today without objecting to the Commission’s overall rulemaking authority with respect to RES licensing, operations, marketing, sales, and billing, thereby acknowledging the Commission’s authority to implement those portions of the Act. The instant case represents only the amendment of rules already sanctioned by the Illinois legislature. AG FN Reply at 5-6

The AG states that the Commission’s proposal to modify its existing rules is a continuing exercise of that duty. The Commission’s initiation of this rulemaking is a direct response to information gathered by its Staff over the past three years regarding RES marketing practices and the inability of the current rules to effectively ensure that

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customers are fully informed “regarding their rights and responsibilities in the marketplace.” FNO at 3. The FNO’s reliance upon Section 16-117 of the Act, which expressly conveys the General Assembly’s intention that “electricity consumers be provided with sufficient and reliable information” to make informed choices in the retail marketplace, and Section 16-115(f), in which the legislature charges the Commission with the promotion of “…an effectively competitive retail electricity market that operates efficiently and benefits all Illinois consumers” is an entirely appropriate recitation of its statutory authority to enact those regulations best designed to implement those policies. AG FN Reply at 7.

The authority of an administrative agency to adopt rules is defined by the statute granting the power to implement the statute’s provisions, and the agency’s rules must be in accordance with the standards and policies set forth in the statute. Gunia v. Cook County Sheriff’s Merit Bd., 211 Ill.App.3d 761, 769 (1991). As an administrative body having an acknowledged expertise on the subject of utility rates, services, products and practices, the Commission’s authority to enact rules consistent with the Act’s provisions is founded on this well-established principle of administrative law. In analyzing Commission orders, Illinois courts have held that decisions of the Commission are entitled to great deference, because they are the judgment of an administrative body that is “informed by experience.” Ill. Power Co. v. Ill. Commerce Comm’n, 316 Ill. App. 3d 254, 258 (2000) citing United Cities Gas Co. v. Ill. Commerce Comm’n., 163 Ill.2d 1, 12 (1994), quoting Vill. of Apple River v. Ill. Commerce Comm’n., 18 Ill.2d 518 (1960).

The AG notes that Sperian’s argument challenging the Commission’s authority over RES marketing fails to cite a single rule or amendment proposed in the FNO as an example of the Commission’s abuse of its regulatory authority or discretion. Instead, Sperian offers nothing more than a generalized complaint about the Commission’s legitimate attempt to respond to problems in the RES market by modifying its existing marketing and contract rules.

Instead, the AG points out that Sperian asserts that the General Assembly has limited the Commission’s authority to supervise RESs and adopt rules to effectuate that supervision. Without identifying specific instances of overreaching, Sperian claims that the rules proposed in the FNO: “are beyond the Commission’s general rulemaking power, which apply only to the specific powers and substantive areas of authority granted to the Commission by the legislature.” Sperian FN Initial at 2-3. In support of these claims, Sperian cites several cases for the principle that the Commission has exceeded the general rulemaking authority granted to it by the legislature, which gave it “specific and defined authority over RESs,” that did not include “…the general authority to enact any rule governing RES marketing and sale practices.” Id. at 3.

The decisions cited by Sperian identify the need for authorizing legislation to contain standards and criteria to guide administrative agencies in the exercise of their regulatory power. Id. at 2-3 citing Bio-Med. Lab., Inc. v. Trainor, 68 Ill.2d 552, 553 (1977) (“Bio-Medical”); Div. of the Horsemen’s Benevolent & Protective Ass’n. v. Ill. Racing Bd., 53 Ill.2d 16, 19 (1972). The AG argues that Sperian disregards the varied sources of regulatory authority the General Assembly has granted the Commission. Many of these provisions contain the very standards that Sperian claims are lacking in the Act to guide the Commission’s exercise of its discretion. AG FN Reply at 8-9.

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The AG states that the Act’s delegation of authority to the Commission to oversee RESs and the policies expressed by the General Assembly to achieve that goal constitute a comprehensive legislative scheme. In addition to Sections 16-115, 16-115A and 16-115B and 16-117, the FNO also references the Retail Electric Competition Act, which established the Office of Retail Market Development (“ORMD”). 220 ILCS 5/20-102. The legislature directed that the ORMD should “…monitor existing competitive conditions in Illinois” and propose solutions to promote retail competition that is safe, reliable and affordable. 220 ILCS 5/20-110. In response to this directive, the ORMD proposed the original version of Parts 412 and 453, which were subsequently enacted in 2013.

Sperian states that “…the Commission’s general rule-making power applies only to the substantive areas of authority given to it by the legislature.” Sperian FN Initial at 7-8, citing Bio-Medical at 533; Aurora E. Pub. Sch. Dist. v. Cronin, 92 Ill.2d 313 (1982). The AG argues that neither of these cases is relevant to the Commission’s authority under the Act because almost all of the Commission’s Proposed Rules focus on the disclosure of more relevant information to electric supply customers, a goal specifically and repeatedly mentioned as one of the substantive foundations of the Electric Service Customer Choice and Rate Relief Law of 1997 (“Rate Relief Law”) and spelled out in detail in Section 16-115A. Most of the FNO’s Proposed Rules address one of the following: (1) necessary disclosures of information related to the provision of alternative supply service, as specifically provided for in Section 16-115A(e)(i); (2) the appropriate process for switching a customer from one supplier to another and the disclosures to be made during that process, as per Section 16-115A(e)(ii); (3) representations made to customers to support claims made regarding sources of fuel and technologies used by the supplier as set forth in Section 16-115A(e)(iii); and (4) billing information describing products and services, and their associated prices, terms and conditions, as described in Section 16-115A(e)(iv).

These are clearly “substantive areas of authority,” yet Sperian claims that Section 16-115A does not support the Commission’s promulgation of rules related to these categories because that provision “…does not address RES marketing practices and contract terms, other than to require RESs to disclose and describe prices, terms and conditions.” Sperian FN Initial at 6. The conclusion that these provisions do not support the Commission’s authority to make rules is incorrect. Section 16-115A(e) states: “An alternative retail electric supplier shall comply with the following requirements with respect to the marketing, offering and provision of products or services to residential and small commercial retail customers.” 220 ILCS 5/16-115A(e)(emphasis added). It is precisely the disclosure of prices, terms and conditions in the course of RES marketing that underlies almost all of the FNO’s Proposed Rules.

The AG urges the Commission to reject Sperian’s attacks on its authority to enforce the provisions of the Act concerning RES operations and marketing and its lawful efforts to protect and inform retail electric consumers. AG Reply at 10-12.

B. ICEA

ICEA states that nothing argued by AG, CUB, or Sperian has changed ICEA’s position on the Commission’s authority. The AG and CUB suggest that legislative findings and prefatory language in Sections 16-101A and 16-117 of the Act provide the Commission with the authority to make the changes in the Proposed Rule. ICEA

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contends case law has held that prefatory language and legislative findings do not themselves vest agencies with authority. Aside from the FNO—which itself cites no contrary authority—neither the AG nor CUB cites any authority for the proposition that prefatory language or legislative findings can provide agencies with independent authority. Therefore, the AG and CUB’s argument should be rejected. ICEA FN Reply at 8.

ICEA states that the AG argues that Section 9-201(c) allows the Commission to establish any rules over RESs that the Commission believes are “just and reasonable.” AG FN Initial at 11. This argument implies that the Commission has unlimited jurisdiction over RESs by misapplying a monopoly ratemaking standard to non-monopoly competitive entities. Zahn v. N. Am. Power & Gas, LLC, 2016 IL 120526 at ¶ 20 (“As such—and there is no dispute on this point—the prices [RESs] are permitted to charge are not established by the [Commission] through the conventional rate-making process and do not have to be submitted to the [Commission] for approval under the ‘just and reasonable’ standard.”.) The statutory language requires that: “No . . . contract [or] practice . . . shall be found just and reasonable unless it is consistent with Sections of this Article.” 220 ILCS 5/9-201(c). This cannot apply to RESs, because the Commission does not approve individual RES contracts or practices under Article IX (or any other Article in the Act). Section 9-201(c) further makes its intended scope clear by describing the need for a hearing and requiring that the burden of proof “[i]n such hearing . . . shall be upon the utility.” 220 ILCS 5/9-201(c) (emphasis added).

ICEA contends that taken to its logical extreme, the AG apparently believes that the Commission should be able to price regulate RESs, which would be contrary to Article XVI and a blatant overreach of Commission authority. The Commission correctly rejected such an argument in its amicus curiae brief in Zahn, stating that:

For electric utilities, the Act tasks the Commission with ensuring that the rates, terms, and conditions of an electric utility’s tariffed services are just and reasonable and, if the Commission determines that such features are unjust and unreasonable, the Act requires that the Commission establish just and reasonable rates, terms, and conditions. 220 ILCS 5/9-101, § 9-201(c), § 9-250, § 16-103, § 16-108(d), § 16-108.5(c). In contrast, for RESs, the Act generally allows them to establish their own rates, terms, and conditions, subject to the Act, Commission rules and orders, and other applicable laws, and generally withholds from the Commission Article IX ratemaking authority.

Zahn, 2016 IL 120526, Brief of the Commission as Amicus Curiae at 18. The AG’s brief made a similar point, arguing that only sections in Articles XVII and IX that are explicitly cited in Sections 16-115 through 16-115B are applicable to RESs. Zahn, Brief of the AG at 14-15.

The AG provides no authority that Section 9-201(c) applies to Commission rulemakings over RESs and its position is contradicted by both the Commission and the AG in recent filings in the Supreme Court. Thus, the Commission should reject the AG’s

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argument that Section 9-201(c) provides open-ended authority to make rules regulating RESs. ICEA FN Reply at 9-10.

Next, ICEA notes that CUB repeats a position taken by Staff in proceedings prior to the FNO that Section 8-501 of the Act provides the Commission with general authority to make rules impacting RESs. See CUB FN Initial at 2. The AG does not join in, likely because it took the position in Zahn that arguing Section 8-501 provides the Commission with authority over a RES as if it was a utility:

. . . is a nonstarter because the provision, which states that the Commission ‘shall prescribe rules and regulations for the performance of any service or the furnishing of any commodity of the character furnished or supplied by any public utility,’ 220 ILCS 5/8-501 (2014), does not apply to RESs. Rather, the Rate Relief Law [Article XVI] enumerates which provisions of Article XIII apply to RES and § 8-501 is not among them. [citation omitted]. Additionally, this argument ignores the fundamental difference between an RES and a public utility—the Commission does not set an RES’s rates, whereas it does set the rates a public utility may charge.

Zahn, Reply Brief of the AG at 7. ICEA argues that therefore, Section 8-501 does not provide the Commission with authority.

Commenting for the first time on the FNO, Sperian argues that consumer protection is largely removed from the Commission’s purview. See Sperian FN Initial Comments at 14-16. Although ICEA agrees with the relatively uncontroversial position that State agencies are limited to statutory grants of authority, ICEA disagrees with any sort of blanket statement that the Commission is divested of all consumer protection authority. As ICEA has consistently argued, Sections 16-115A and 16-115B (among others) in Article XVI of the Act grant the Commission with authority to implement consumer protections within the confines of the statute. ICEA disagrees that the Commission completely lacks authority to promulgate any Part 412 Rules. ICEA argues, however, that there is no general plenary authority over RESs and any Commission authority to make rules regarding RESs must flow from an explicit statutory grant. ICEA FN Reply at 11-12.

C. ComEd

ComEd states that Staff, CUB, the AG, and ComEd offered a thorough and comprehensive analysis of the Commission’s authority to amend Parts 412 and 453, beginning with the fact that the Commission has already adopted these Rules and the proposed revisions only further clarify, strengthen, and build upon this existing framework. These parties also highlighted a variety of Sections in the Act that authorize the Commission to adopt the proposed amendments to the rules, including Sections 8-501, 10-101, 16-115A, 16-115C(a), 16-117(a) and (h), 16-118, and 16-121. Based on this authority, the Commission correctly concluded in its FNO that it has ample authority to promulgate and adopt the Proposed Rule. FNO at 2-6.

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ComEd points out that a new intervening party, Sperian, devotes the entirety of its FN Initial Comments to the issue of Commission authority. While it is unclear why Sperian is introducing its arguments for the first time well over a year after the parties submitted comments on this and other issues, ComEd notes that Sperian’s arguments are not new, and are ably addressed by the FNO and should be rejected. ComEd FNO Reply at 1-2.

D. Sperian

Sperian’s major concern with the Proposed Rule is a threshold issue; namely, whether the Act, 220 ILCS 5/1-101 et seq., gives the Commission authority to adopt rules or rule revisions designed to implement a broad policy goal to “protect consumers from ‘marketing practices that are unfair or abusive’” (FNO at 4) when such rules do not implement specific substantive powers or directives contained in the Act. Sperian submits that the Act does not provide such authority, or at most such authority is far more limited than reflected in the FNO. Sperian states that the Commission implicitly acknowledges that it has no express rulemaking authority for the Proposed Rule. Rather than point to specific RES marketing and enrollment practices referenced in Sections 16-115 or 15-115A of the Act, 220 ILCS 5/16-115, 16-115A, the Proposed Rule purports to implement Section 16-118 of the Act, 220 ILCS 5/16-118, and claims authorization under general rulemaking power via Sections 10-101 and 8-501, 220 ILCS 5/10-101, 8-501.

Sperian states that the analysis that concludes that the Commission has the authority to adopt the Proposed Rule (FNO at 2-6) does not withstand close scrutiny. First, the rules do not “implement” the substantive provisions of Section 16-118 which applies to certain services provided to RESs by utilities under tariffs, not RES marketing and sale practices. Further, the rules are beyond the Commission’s general rulemaking powers, which apply only to the specific powers and substantive areas of authority granted to the Commission by the legislature. See Horsemen’s, 53 Ill.2d at 19. Sperian continues that the Illinois legislature gave the Commission a specific and defined authority over RESs; there are no provisions in the Act which permit or suggest that this includes the general authority to enact any rule governing RES marketing and sale practices deemed helpful or desirable. Moreover, the absence of applicable standards, criteria or procedures in the Act to guide the agency in its exercise of the power claimed confirms that the legislature did not intend to delegate that power. See e.g., Bio-Medical at 552; Sperian Corr. FN Initial at 2.

Sperian argues that the language primarily relied upon by the FNO in support of its contrary conclusions is prefatory language from Sections 16-117 and 16-118 which express the legislature’s intent for those specific sections. It does not convey substantive power, and may not be relied upon here. Citizens Util. Bd. v. Ill. Commerce Comm’n, 166 Ill. 2d 111, 131 (1995). While Sperian appreciates that the Commission and other parties desire to address unfair and abusive marketing practices, “the desirability of a regulation … must be distinguished from the power to promulgate it.” Bio-Medical at 551. Legislative history (including changes to the Act, the Consumer Fraud and Deceptive Business Practices Act (“CFDBPA”) and the Illinois Attorney General Act) supports that the Illinois legislature largely reserved consumer protection authority claimed here by the Commission elsewhere, to those already possessing authority and relevant expertise in consumer protection.

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Sperian notes that the Act does not grant authority to the Commission to adopt RES marketing and contract rules. The source of the Commission’s authority must be found in the Act. Bio-Medical at 551 (“Inasmuch as an administrative agency is a creature of statute, any power or authority claimed by it must find its source within the provisions of the statute by which it is created”). The Illinois legislature has granted the Commission the authority to supervise RESs under Article XVI of the Act, specific rulemaking power for some but not all sections of Article XVI, and general rulemaking power elsewhere in the Act. The Commission may not issue regulations which exceed or alter its statutory power (Ruby Chevrolet, Inc. v. Dep’t of Revenue, 6 Ill. 2d 147, 151 (1955)) or which are contrary to the legislative purpose and intent of the statute. People ex rel. Illinois Highway Transp. Co. v. Biggs, 402 Ill. 401, 409 (1949). Sperian acknowledges that the Commission may exercise not only the authority expressly conferred in the Act, but “may also act according to that which, by fair implication and intendment, is incident to the express authority to accomplish the legislature’s objective.” Dep’t of Pub. Aid ex rel. Hartigan v. Hokin, 175 Ill. App. 3d 646, 653 (1988); see also Schalz v. McHenry Cty. Sheriff’s Dep’t Merit Commission, 113 Ill.2d 198, 203 (1986). But the Commission has neither the express authority to promulgate and adopt rules for RESs creating additional mandatory enrollment verifications, marketing practices, contract terms, operational practices, and contract renewal requirements, nor is it acting “according to that which, by fair implication and intendment, is incident to the express authority to accomplish the legislature’s objective.” Dep’t of Pub. Aid, 175 Ill. App. 3d at 653.

Sperian also states that the Commission’s authority to supervise RESs and to promulgate regulations applicable to RESs has been limited by the General Assembly. In interpreting the Act, the fundamental goal is “to ascertain and give effect to the intent of the legislature.” People v. Eppinger, 2013 IL 114121. The Court accomplishes that objective by looking at the “plain and ordinary meaning” of the words of the statute, being careful not to take individual words out of context and considering the statute in its entirety. Sperian Corr. FN Initial at 3-5.

Sperian submits that Sections 16-115B, 16-115, and 16-115A of the Act do not provide support for the authority claimed in the FNO. Section 16-115 contains the requirements for RESs to obtain a Certificate of Service Authority; it does not address, or authorize, the Commission to adopt RES marketing and contract rules. Section 16-115A, which describes the obligations of RESs, does not address RES marketing practices and contract terms, other than to require RESs to disclose and describe prices, terms and conditions. Sperian argues that this Section does not dictate what those prices, terms and conditions must be.

Sperian also asserts that sections of the Act under which “[t]he Commission has explicit authority over RESs” (FNO at 4), appear in only two places: (1) in 16-115(f) (specifically authorizing rules to carry out the certificate of service authority provisions of 16-115); and (2) in 16-115C(d) (specifically authorizing rules for the licensure of third-party agents, brokers, and consultants). When the legislature intended to delegate rulemaking authority applicable to RESs to the Commission, it did so expressly and specifically. See Aurora, 92 Ill. 2d at 326. Neither of these provisions provides the authority claimed by the FNO in this rulemaking. Sperian Corr. FN Initial at 5.

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Sperian avers that the provisions of the Act cited in the FNO do not give the Commission authority for this rulemaking. The reliance on general rulemaking authority is misplaced; this authority has limits which have been specified and detailed by the legislature in the Act. Aurora, 92 Ill. 2d at 327, citing Games v. County Bd. of Sch. Trustees, 13 Ill. 2d 78, 82 (1958). In other words, the Commission’s general rule-making power applies only to the substantive areas of authority given to it by the legislature. Bio-Medical at 540. See also Schalz, 113 Ill.2d at 202-203. The FNO’s reliance on Sections 16-118 and 16-117 is in error as neither of these sections permit or suggest that the Commission has the authority to determine or impose standards for RES marketing and contract practices. Sperian continues that Section 16-118 applies to specific aspects of the relationship between electric utilities and RESs, not RESs and customers, and requires the utilities to file certain tariffs relating to services provided to RESs. The FNO relies solely on the prefatory language of Section 16-118, but this language is simply a statement of intent for that section; it does not grant substantive authority or power to the Commission. Citizens Util. Bd., 166 Ill. 2d at 131. Sperian asserts that similarly Section 16-117, labeled “Commission consumer education program,” conveys no substantive power to the Commission to prescribe RES marketing and contract terms; rather, its substantive provisions specify measures that the legislature directed the Commission itself to take to gather, maintain, and make available consumer education information regarding RESs. Sperian Corr. FN Initial at 6-8.

Sperian states that while the FNO asserts that “several provisions in Section 16-117 indicate that the General Assembly desired the Commission to issue rules like Part 412,” this is not the case as nothing in the substantive provisions of that section prescribes direct obligations of RESs to customers beyond providing the Commission’s customer education internet address on their bills. As in the case of Section 16-118, the relied upon prefatory language of Section 16-117 is simply a statement of intent for that section (prescribing Commission obligations); that language does not grant substantive authority or power to the Commission.

Finally, Sperian notes that the FNO’s reliance on: (1) the rulemaking authority granted to the Commission in Section 16-115; (2) the language in the Electric Retail Competition Act; and (3) the Ameren Ill. Co. v. Ill. Commerce. Comm’n case (FNO at 5) are unavailing. The rulemaking authority granted in Section 16-115 states that the Commission shall have the authority to promulgate rules and regulations “to carry out” the provisions of that specific section; Section 16-115 specifies the eight requirements RESs must meet to obtain a Certificate of Service Authority. None of the eight requirements address, or authorize, the Commission to directly control RES marketing practices and contract terms. As for the Retail Electric Competition Act, the FNO again relies on language expressing legislative intent and grants no substantive powers (FNO at 5, citing Section 10-102(d)) or language which is too general to form the basis for the Commission’s claimed authority (FNO, citing Section 10-110). Finally, Sperian submits that the Ameren case --- a tariff case involving a public utility – does not apply and presents an entirely different legal analysis.

Sperian maintains that the legislature did not intend to delegate to the Commission the power which it claims is apparent for another reason: there are no standards or guidelines governing the asserted discretion to adopt and enforce RES marketing rules.

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It is a “fundamental constitutional principle” that the legislature cannot delegate its legislative authority to an administrative agency in a way that gives that agency “unlimited discretion to act;” that discretion must be “guided by standards under which it may be intelligently exercised.” Hepner v. County Bd. of Sch. Tr., 8 Ill.2d 235, 242 (1956). When the legislature gives an administrative agency unlimited discretion, it is an improper delegation of legislative power in violation of Article III of the Illinois Constitution. People v. Beekman & Co., 347 Ill. 92, 97 (1931).

Sperian states that the FNO cites no standards, guidelines or procedures in the Act which would guide the Commission in adopting RES marketing and contract rules; it does not do so because it cannot. The absence of such criteria in the Act confirms that the legislature did not intend to delegate the power claimed by the Commission. Sperian Corr. FN Initial at 10-13.

Sperian contends that relevant legislative history, including changes to the Act, the CFDBPA, and the Illinois Attorney General Act, supports the proposition that the Illinois legislature gave the Commission a specific and defined authority over RESs under the Act, and that consumer protection for electric service consumers is largely reserved elsewhere, to those possessing relevant expertise in consumer protection, notably the AG under the CFDBPA. When the Illinois General Assembly passed the Rate Relief Law, three other statutes were amended or created in the same Public Act (PA 90-0561): the CFDBPA, the Illinois Attorney General Act, and the Electricity Excise Tax Act. The contemporaneous changes demonstrate that the legislature desired to largely preserve the power and authority of the State's Attorneys or the AG under the CFDBPA.

Sperian states that these legislative changes, support that the authority claimed by the Commission was not granted to it by the legislature. Indeed, it is entirely logical that the legislature should have largely left the power “against fraud, unfair methods of competition, and other unfair and deceptive business practices” elsewhere to law enforcement authorities already possessing that authority, as well as expertise and experience in consumer protection. Sperian Corr. FN Initial at 14-16.

E. CUB

CUB states that the FNO correctly concludes that Sections 8-501 and 16-117 of the Act, which gives the Commission authority to “prescribe rules and regulations for the performance of any service or the furnishing of any commodity of the character furnished or supplied by any public utility,” 220 ILCS 5/8-501; 5/16-117, applies to RESs because suppliers supply the same electricity supplied by utilities. FNO at 3-5. By its own terms then, the Act gives the Commission authority to prescribe a rule governing the provisioning of that service. CUB notes that this is not limitless authority and no party argues that it is. For example, RESs are not subject to Part 280 of the Commission’s Rules, which apply only to utilities and govern nearly every aspect of the service relationship with customers, including connection, payment and disconnection. See 83 Ill. Admin. Code 280. Furthermore, the Commission’s authority to make the changes in the FNO has not been challenged by any party other than RES representatives. And most importantly, the Commission already promulgated Parts 412 and 453. CUB submits that this rulemaking only makes modifications and additions to those existing rules. The

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legal basis for and authority of the Commission to enact these rules has, therefore, already been met and cannot seriously be challenged. CUB FN Initial at 2.

CUB notes that the comments of ICEA, RESA, and Sperian that the Commission need not refine or modify the existing Parts 412 and 453 to address market problems ignore the Commission’s recognition that the instant rulemaking is needed to address RES marketing concerns. The Commission has already acknowledged that the problems observed by its Staff were significant enough to warrant revisions to existing administrative rules, rather than simply addressing customer complaints and some problems individually.

RESA again challenges the Commission’s authority to modify certain provisions of Part 412. CUB responds that the Commission’s authority to revise Parts 412 and 453 has universal consensus among non-RES parties, and has previously been upheld by JCAR when these rules were initially adopted. The FNO further accepts Staff’s legal argument that Section 8-501 of the Act, which gives the Commission authority to “prescribe rules and regulations for the performance of any service or the furnishing of any commodity of the character furnished or supplied by any public utility,” 220 ILCS 5/8-501, applies to RESs because suppliers supply the same electricity as utilities.

CUB will not respond to Sperian’s legal arguments and notes that Sperian raises these legal issues late in this proceeding, having just intervened in this multi-year process. CUB points out that Sperian is currently the subject of a citation proceeding in which Staff alleged that Sperian had violated multiple provisions of Part 412. Ill. Commerce Comm’n on its own Motion v. Sperian Energy Corp, Docket No. 15-0438, Citation Order at 2-4 (Jul. 25, 2015); CUB FN Reply at 4-6.

F. RESA

In general, RESA believes that the FNO’s reliance on Sections 8-501 and 10-101 of the Act is misplaced because those sections apply to public utilities, not RESs. RESs are not public utilities. Public utilities are defined in Section 3-105 of the Act, which specifically exempts RESs from the definition: “’Public utility’ does not include, however, alternative retail electric suppliers as defined in Article XVI.” 220 ILCS 5/3-105(b)(9).

RESA points out that the Commission’s analysis of Section 10-101 begins with a serious omission in quoting that section: “The Commission is authorized by Section 10-101 of the Act, which states that it ‘shall have the power to hold investigations concerning any matters covered by the provisions of this Act…subject to such rules and regulations as the Commission may establish.’” However, the complete sentence demonstrates that Section 10-101 only applies to public utilities: “The Commission, or any Commissioner or hearing examiner designated by the Commission shall have the power to hold investigations, inquiries and hearings concerning any matters covered by the provisions of this Act, or any other Acts relating to public utilities subject to such rules and regulations as the Commission may establish.” 220 ILCS 5/10-101(emphasis added).

RESA notes similarly that Section 8-501 of the Act pertains to public utilities, not RESs. However, the FNO accepts Staff’s argument that the application of Section 8-501 should be extended beyond public utilities to entities that provide service of the “character” supplied or furnished by public utilities. FNO at 3-4. RESA submits that the

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Commission’s logic would suggest that it can regulate any entity that supplies or furnishes a commodity or service of the character supplied or furnished by public utilities. If this were correct, then electric co-operatives, gas co-operatives, municipally owned gas companies, municipally owned electric companies, municipally owned water and sewer companies, and even propane dealers could be regulated because they provide service of the “character” supplied or furnished by utilities. However, like RESs, these entities are either specifically excluded from the definition of public utility or do not meet the Act’s definition, and the Commission has never sought to regulate these entities as public utilities. RESA FN Initial at 3-5.

RESA argues that the Commission, as a creature of statute, has no general powers except those expressly conferred by the legislature. “Since the Commission is a statutory creature, its powers are dependent thereon, and it must find within the statute the authority which it claims. Such agencies have no general or common law powers.” Bus. and Prof’l People for the Pub. Interest v. Ill. Commerce Comm’n, 136 Ill. 2d 192, 244 (1990).

RESA points to the Commission’s recognition of its limitations in its amicus curiae brief in Zahn. The Commission argued it did not have exclusive jurisdiction over a Section 9-252 reparations claim against a RES by a residential customer, only over such claims brought against public utilities. The Commission noted that the legislature did not make Section 9-252 applicable to RESs. By its express terms, Section 9-252 governs public utilities. Moreover, the provisions of Article XVI of the Act do not incorporate or otherwise make Section 9-252 applicable to RESs. RESA notes that the Illinois Supreme Court agreed with the Commission, finding that while Section 9-252 of the Act gives the Commission exclusive jurisdiction over reparation claims against public utilities, RESs are not public utilities. Zahn, 2016 IL 120526 at 6. RESA argues that the same analysis applied by the Commission to Section 9-252 in its amicus curiae brief in the Zahn matter applies to Sections 8-501 and 10-101 of the Act.

RESA suggests that the authority to regulate RESs is found in Article XVI of the Act. Consequently, the Commission must rely on its authority under Article XVI of the Act to enact Proposed Rules in this proceeding. RESA is not arguing that the Commission does not have authority to regulate RESs. However, clearly the General Assembly did not give the Commission the same authority over RESs that it gave the Commission over public utilities. The General Assembly did not intend for the Commission to regulate RESs as if they were public utilities and, in particular, did not intend for the Commission to micro-manage RESs in the manner that some of the provisions of the FNO would do.

RESA states it is important to keep in mind the limited authority of the Commission over RESs when the Commission proposes to adopt rules that conflict with existing statutes such as the CFDBPA and the Automatic Contract Renewal Act. RESA FN Initial at 6-7.

RESA states that both the AG and CUB claim, without any meaningful analysis, that the Commission has basically unlimited authority to regulate RESs. The AG fails to recognize that the Commission’s authority is found in Article XVI of the Act, not the remaining articles which give the Commission authority over public utilities. The AG cites Section 9-201 of the Act which clearly applies to public utilities, not to RESs. RESA

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maintains that to the extent the AG relies on Article XVI of the Act, its analysis is faulty. The AG references Section 16-101 which is merely the preamble to Article XVI and does not give the Commission authority to adopt rules. The AG relies on Section 16-117; however, this Section requires the Commission to maintain a consumer education program, which the Commission has basically done, with the exception of adopting a uniform disclosure statement, which the Commission is proposing to adopt in this proceeding. RESA notes that the AG also relies on various provisions of Section 16-115A which impose obligations on RESs and Section 16-115B which gives the Commission authority to hear complaints against RESs for certain specified potential violations of Article XVI, but neither of those Sections gives the Commission the authority to adopt rules.

CUB adds that the Commission’s authority to adopt the Proposed Rules “has not been challenged by any party other than RES representatives”. RESA responds that this is hardly surprising because adoption of the Proposed Rules would create burdensome requirements for RESs which would be costly to implement. Moreover, for the most part, the proposed revisions to existing Part 412 would not provide any benefit to customers and, in fact, would be detrimental to maintaining a competitive electric marketplace to the benefit of customers.

RESA agrees with the analysis and conclusions of Sperian, which concludes that the Act does not provide the Commission with such authority or, at most, the Commission’s authority is far more limited than that claimed by the Commission in its FNO. RESA FN Reply at 2-4.

G. Commission Analysis and Conclusion

The Commission discusses its authority at length in the FNO. FNO at 2-6. RESA and ICEA raise the same arguments in opposition to the Commission’s authority to modify Part 412 that were addressed in pre-First Notice proceedings: (1) that the Commission has limited jurisdiction, generally; and (2) the Act limits rulemaking authority over RESs. Sperian objects to the Commission’s authority to promulgate rules regulating RES marketing practices, but takes no specific objection to the Commission’s modifications to the existing Part 412.

The Commission will not reiterate or reaffirm its authority to amend Parts 412 and 453. The Commission will again point to Section 16-117(a) of the Act which states that:

The restructuring of the electricity industry will create a new electricity market with new marketers and sellers offering new goods and services, many of which the average consumer will not be able to readily evaluate. It is the intent of the General Assembly that (i) electricity consumers be provided with sufficient and reliable information so that they are able to compare and make informed selections of products and services provided in the electricity market; and (ii) mechanisms be provided to enable consumers to protect themselves from marketing practices that are unfair or abusive.

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220 ILCS 5/16-117(a). Section 16-117 of the Act as well as Sections 16-115, 16-115A, 16-115B, and 16-115D discuss explicit authority that the Commission has over the RES market. The FNO also describes the Commission’s role in carrying out the Retail Electric Competition Act and establishing the Commission’s ORMD. FNO at 4-6. Even the RESs challenging specific Sections of Part 412 admit the Commission has some authority to regulate RESs and protect consumers from misleading business practices. The Commission agrees with ComEd that Part 412 has been effective law since 2013, and the proposed revisions only further clarify, strengthen, and build upon this existing framework. In the Commission’s view, the Proposed Rule appropriately strikes the balance between allowing for a robust and competitive retail electric market while ensuring that customers are “protect[ed] from marketing practices that are unfair or abusive” as mandated by the Act.

In BOEs, several parties claim that the Commission’s modifications to Parts 412 and 453 are undercut by the position the Commission took in the Zahn case. RESA states that, in Zahn, the Commission stated it did not have exclusive jurisdiction over a Section 9-252 reparations claim against a RES because RESs are not public utilities and Section 9-252 is not applicable to RESs. RESA BOE at 2-3. The Commission continues to agree with these arguments. The Commission does not find that its position in Zahn prohibits it from promulgating rules for RES marketing because the holding in Zahn is limited to whether a RES is a public utility, not whether the Commission can regulate RESs. Notably, the Zahn case addressed a customer who claimed she was misled about a RES’s introductory price. As described above, the Commission has explicit authority under Section XVI of the Act to enact rules which protect electric supply consumers.

III. ELECTRIC POWER AND ENERGY

A. Ameren

Ameren recommends that consistent language be used throughout the Proposed Rule in order to avoid any unnecessary confusion between a utility’s “electric delivery service” and a RES’s “electric supply service(s).” Ameren recommends using the term “electric supply service(s)” instead of “electric service(s).” The inclusion of “supply” will ensure that future readers of the Proposed Rules understand that certain services discussed in the Proposed Rules pertain to a RES supply service rather than the utility’s delivery service. This simple modification will avoid any misunderstanding of whose services are being discussed. Ameren FN Initial at 1-2.

B. ICEA

ICEA agrees with Ameren, and recommends that the Commission adopt Ameren’s proposed global amendment to change “electric service” to “electric supply service” as dictated by context. ICEA FN Reply at 15.

C. ComEd

ComEd shares Ameren’s goal of ensuring that Part 412 is consistent and clear. However, ComEd is confused by the FNO’s replacement of the phrase “power and energy” with the more vague term “electric service(s)” throughout Part 412. This change appears to be new to the FN Proposed Rules, and was not proposed by any party to this docket. Moreover, the FNO provides no explanation for the change. ComEd proposes

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that the Proposed Rules be revised to restore the use of the term “power and energy” throughout the rules, which is consistent with Article XVI’s pervasive use of the well-established phrase “power and energy.” See generally 220 ILCS 5/16 (using the phrase “power and energy” nearly 160 times). ComEd also notes that the term “power and energy” is used heavily throughout its tariffs and a change to “electric service(s)” may be confusing to customers. See generally ComEd Schedule of Rates for Electric Service (using the phrase “power and energy” over 530 times). ComEd FN Reply at 6-7.

D. Commission Analysis and Conclusion

The Commission finds that the Proposed Rule would benefit from the retention of the phrase “power and energy” after the word “electric” and the Proposed Rule now reads “electric power and energy.” This will add clarity to the Proposed Rule to distinguish between the utility electric distribution service and RES electric supply service. It is also consistent with Article XVI of the Act. See 220 ILCS 5/16 et seq. The Commission notes that Article XVI uses “electric power and energy” the vast majority of the time, but occasionally uses “electric power or energy.” The Proposed Rule uses the phrase “electric power and energy” except where quoting the statute.

IV. COMPETITIVE PARITY

A. RESA

RESA states that, when considering additional requirements in Illinois retail electric markets, it is important to consider the effect such requirements have on the competitive parity between RES products and default supply service from electric utilities. RESA supports consumer protection, but notes that there is a cost to comply with consumer protection rules. If all products in the market abide by the same rules, and are subject to the same costs, additional standards may benefit the market and customers, assuming a resulting efficacy in the rules themselves. However, as is the case in the current retail electric market, regulatory requirements that apply to all RES products often do not apply to default supply service. Moreover, the costs of regulatory requirements that apply to utilities are recovered by them through their distribution rates, not their supply charges, in contrast to RESs which must recover their costs through their supply prices. RESA FN Initial at 7.

RESA believes that the presence of a robust and vibrant competitive retail electric market benefits all customers and encourages innovation. However, if the Commission continues to add requirements for RESs’ products, and requires no corresponding efforts to create parity between RESs’ products and default service, a situation could one day arise where RESs’ products are no longer able to compete in the market or against default service. Ultimately, this will greatly diminish the benefits competition has brought consumers in Illinois. RESA FN Initial at 8.

While RESA appreciates the Commission’s consideration of some of RESs’ costs in this rulemaking process, RESA respectfully submits that there should be greater comparison of the costs to RESs of proposed revisions to Part 412 and the expected benefits, if any, to customers of those revisions. In particular, acceptance of RESA’s proposed revisions would, in RESA’s opinion, eliminate requirements that would impose significant costs on RESs, with minimal, if any, benefit for customers. However, the

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competitive parity point is that if the proposed rules, for example, increase the costs of retaining customer calls for RESs, RESs are at a greater comparative disadvantage to the electric utilities which will not experience those same costs (and, even if they did, would recover such costs in their distribution rates, essentially resulting in duplicate payments by customers). RESA FN Initial at 8-9.

The FNO goes on to state that if RESA is suggesting that more of electric utility supply costs should be recovered through their supply rates, then this suggestion goes beyond the scope of this rulemaking proceeding. FNO at 7. RESA suggests that the Commission should, in a separate proceeding, investigate whether there are costs currently recovered by electric utilities through their distribution charges, which should instead be recovered through their supply charges. RESA FN Initial at 9.

RESA notes that, while not addressing the issue of competitive parity specifically, ICEA, NAE and CES express their concern that the FN Proposed Rules would negatively impact RESs’ ability to offer competitive services in Illinois. RESA FN Reply at 5-6.

B. ComEd

ComEd notes that RESA again raises the issue of competitive parity, although its purpose in doing so is unclear. ComEd states that the FNO offers examples of where the Commission rejected certain proposals because of the cost to RESs. As a result, ComEd argues that RESA has already received the result it requested. ComEd avers that no further action is warranted. ComEd FN Reply at 2-3.

C. CUB

In response to RESA’s parity argument, CUB states that it is important to note that the costs imposed on RESs to comply with reasonable regulations (consisting largely of notifications) are costs imposed on firms selling a life-sustaining commodity in Illinois. Electric utilities are subject to comprehensive regulatory oversight – including both price regulation and regulations governing every interaction with a customer (like Part 280 of the Commission’s Rules), regulations so comprehensive (and which impose significant costs on the utility, recovered through distribution rates), that they cannot reasonably be compared to the marketing rules at issue here. Furthermore, each jurisdiction in which a RES operates has different regulations that undoubtedly cause a RES to alter its business practices to comply. There are fair, reasonable and rational reasons supporting each of the proposed modifications to the rules that correspond to helping consumers better understand RES products. Although RESA claims that these revisions may increase their costs, CUB argues that this has not been demonstrated with specificity, so the Commission cannot know the impact beyond a general allegation. Thus, CUB asserts, the argument that these modifications to Part 412 are unfair and unduly burdensome should fail. CUB FN Reply at 6-7.

CUB notes RESA’s complaint that these regulations could cause “a situation [to] one day arise where RESs’ products are no longer able to compete in the market or against default service.” RESA FN Initial at 8. In response, CUB states that this complaint falsely assumes that RES products have been able to successfully compete in the market or against default service – at least non-municipal aggregation RES products (and that statement would be false today with regard to most municipal aggregation products

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currently being offered). CUB maintains that there is zero evidence in this docket, or any other for that matter, that RES products have provided individually-contracting residential consumers any economic benefit, and CUB has not observed any of these alleged benefits either. This reality may very well explain the very impetus behind the revisions, modifications and additions to Part 412 proposed in the FNO – that is, a product that cannot price compete against the default, regulated supplier is very difficult to sell to residential customers, causing sales agents to use aggressive and misleading marketing claims. At this point, according to CUB, the overarching concern is not with RESs’ ability to compete, but rather providing consumers with accurate and complete information about RES products such that they can understand what is being marketed. Finally, CUB states that the policy positions and concerns articulated by the consumer representatives in this proceeding (the Commission, CUB and the AG) who support these rules and do not stand to economically benefit from increasing (or reducing) RES costs should put to bed RESA’s continued allegation that the revised rules have no benefit to customers. CUB FN Reply at 6-7.

D. ICEA

ICEA has concerns about utility-RES parity that go beyond supply-delivery functionalization. As an initial matter, ICEA takes no position at this time on the question of whether ComEd and Ameren properly allocate costs between supply and delivery functions other than to observe that the issue (as applied to ComEd) has been extensively litigated over the last ten years in at least five dockets. However, even assuming that costs are perfectly allocated between supply and delivery, the Proposed Rules would disadvantage RESs relative to utility supply rates. ICEA FN Reply at 13.

Every RES serving residential and small commercial customers must always compete against utility supply rates because of the utility’s obligation to provide default service. See 220 ILCS 5/16-103(c)-(d). However, ICEA states, if a new regulatory burden is introduced that equally impacts RESs and utilities, and utilities recover their compliance costs through supply rates, utilities still have a competitive advantage. This is because the utility is guaranteed cost recovery over several years—sometimes with a rate of return built in—whether they serve 10,000 supply customers or 1,000,000 annually. Although particularly extreme cases (such as all customers leaving the utility) can be theorized, generally speaking, utilities do not face volumetric risk in recovering their supply-related regulatory compliance costs. See, e.g., 220 ILCS 5/16-111.5(l) (utilities may recover all compliance costs related to Illinois Power Agency procurements); ICEA FN Reply at 13.

On the other hand, ICEA notes, a RES faces volumetric risk in recovering its regulatory compliance costs. If a RES wants to amortize a project over multiple years, the RES faces the risk that there will be less volume of sales to try to recoup those compliance costs in future years. According to ICEA, competitive pressures may prevent a RES from acquiring customers at a price sufficient to cover compliance costs. ICEA FN Reply at 13-14.

ICEA notes that Part 412 applies almost exclusively to RESs and has little to no significant impact on incumbent utilities. Even though published pricing lasts for only 12 months for ComEd and Ameren, the utilities need not call or otherwise contact customers taking default supply rates to inform them of annual price changes. ComEd and Ameren

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need not disclose and obtain affirmative customer consent to their general terms and conditions or specific tariff language to a customer electing to take service under any utility supply rate. While ICEA is not arguing that all of Part 412 should apply equally to incumbent utility supply rates as to a RES, ICEA does wish to contrast the compliance burden. ICEA FN Reply at 14.

ICEA stresses that simply because a proposed rule imposes a cost on a RES is not itself a reason for the Commission to reject that rule. However, ICEA maintains, the fact that increased compliance costs—especially that only apply to RESs and not to incumbent utilities—put RESs at a competitive disadvantage should be weighed by the Commission against the marginal consumer benefits (if any) of a particular proposal. ICEA FN Reply at 14-15.

E. Commission Analysis and Conclusion

As stated in the FNO, the Commission considers the costs to RESs whenever it has been specifically raised and several proposals have been rejected for that reason. Moreover, it is clear that despite RESA’s suggestion, utilities are also heavily regulated. The Commission has already considered these arguments in the FNO and no changes to the Proposed Rule are warranted from the competitive parity arguments.

V. SECTION 412.10 DEFINITIONS

A. Staff

Staff notes that the Commission requests the parties address the effect the definition of variable rate may have on dynamic or time-of-use rates. Staff states that the current definition of a variable rate is a rate that “changes at any time during the term of the contract.” Since the same definition also provides that the variable rate does not change “more than once a month,” Staff sees no reason to revise the definition. Further, the variable rate notice requirements in proposed Section 412.165 (Rate Notice) do not appear to apply to contracts with dynamic or time-of-use rates. Staff FN Initial at 5.

Ameren proposes amending the definition of “Enrollment” to include the concept that the enrollment is not complete until the RES has submitted a valid direct access service request to the utility. Ameren FN Initial at 2-3. Staff sees no reason to recommend that the Commission reject Ameren’s proposal. Staff FN Reply at 2.

B. ICEA

ICEA had recommended that the Commission separately define “Index Variable Rates” and “Non-Index Variable Rates”, but the FNO opted not to distinguish between the two, finding that: “As Staff points out, this Rule is meant to be used by customers, RESs, Staff, and others. It is important to keep definitions clear and easily understood by persons unfamiliar with the energy market. Using “Index” and “Non-index” does not add clarity.” FNO at 17. ICEA states that consumer reactions to these terms is inapposite. ICEA is unsure whether a customer needs to know whether a variable product is Index or Non-Index, except to the extent that falling under different definitions would trigger different customer disclosures under ICEA’s proposal. ICEA proposes the different definitions because Index Variable and Non-Index Variable products, as ICEA has defined them, are uniquely different products that require different regulatory treatments.

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ICEA states that the first difference between “Index” and “Non-Index” is disclosing to the customer whether the rate is calculable in advance (with no supplier discretion) or set at the supplier’s discretion but disclosed in advance. If a customer’s actual price can be wholly determined by a public formula and an index price, that is valuable information for a customer. Because the RES would have to identify the index as part of the product description, the customer could look at the historic performance of the index to determine whether the volatility and pricing make that a desirable product. However, to the extent that the RES has any discretion to adjust the variable product price absent a regulatory or legal change, the customer should know that. ICEA FN Initial at 6-7.

The second difference between “Index” and “Non-Index Variable” is that if pricing is solely based on index values less than 30 days before the month starts, the RES may not be able to provide 30-day advance warning of price changes. ICEA points out that unless the Commission explicitly intends to ban such products—and there is no evidence in the record of any such intent or that such products are undesirable—RESs offering such products must be exempt from advance disclosure requirements with respect to these products. The tradeoff is that once the index is available, the customer knows exactly what their pricing will be, and the customer can look at historic performance of the index.

ICEA notes that the difference is also reflected in Section 412.165(d). As that section is written in the Proposed Rule, a RES must provide a formula for all products—even if the formula (as in a Non-Index Variable product) is proprietary or based on proprietary information. A Non-Index Variable product will be subject to advance price disclosure requirements, so the customer has the necessary information to make an informed decision without having a proprietary formula. In contrast, because advance disclosure is impossible for many Index Variable products, presenting a formula to customers is the preferred method for providing the customer with actionable information. This trade-off is the primary reason why ICEA proposed a two-tiered Index/Non-Index approach for the definition. ICEA FN Initial at 8.

With regard to dynamic and time-of-use products, all such products by definition must change more than once over the term of the contract and thus would be considered “Variable” under the Proposed Rule’s definition. Under the Proposed Rule, such a definition would subject dynamic and time-of-use products to all of the requirements of Section 412.165 (Rate Notice to Customers). Imposing Section 412.165 on such products would likely stymie the dynamic and time-of-use market. ICEA requests that the Commission define dynamic and time-of-use products as neither “Variable” nor “Fixed”, and not subject to Section 412.165.

ICEA recommends that dynamic and time-of-use products be defined in a way that such products are not subject to the requirements of Section 412.165. As an initial matter, ICEA notes that within the category “dynamic or time-of-use rates” are nearly infinite possibilities for product design. On one extreme would be supply prices changing as frequently as energy markets (currently, hourly in PJM and MISO). Another extreme would be a product that has a fixed rate six days a week and a different fixed rate on the seventh day. Within that spectrum, the customer’s retail supply price can be: 1) Fixed for any period of time—as short as an hour or for the majority of hours in a year; 2) Calibrated to a pattern such as having the same price every weekday during certain hours

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and a different price during other hours, or being set and reset based on factors (like an index) that generally does not follow a pattern; 3) Set in advance by a proprietary pricing model such as a pre-set on peak and off peak price, or dynamically based on an index such as day-ahead hourly pricing (similar to Ameren and ComEd RRTP rates); or 4) Dependent solely on the time of day the energy is used such as hourly pricing or on-peak off-peak pricing, or dependent on other factors such as a block-pricing model or a product designed to interface with distributed generation, batteries, smart thermostats, or other technology.

As ICEA and other RESs work with the Commission and utilities to bring dynamic and time-of-use products to market, imposing any of the Proposed Section 412.165 (Rate Notice) requirements on dynamic and time-of-use products would narrow the field of products that an individual RES could or would offer. The Commission would be disincentivizing RESs from offering dynamic and time-of-use products precisely at the time the ComEd Advanced Metering Infrastructure (“AMI”) rollout will be nearly complete and Ameren’s nears completion. ICEA recommends that the Commission allow ICEA and other stakeholders to work collaboratively to eliminate certain market barriers to such RES product offerings instead of imposing a Proposed Rule that will stifle a competitive supplier’s ability to develop and offer such products in the AMI environment. ICEA FN Initial at 11-12.

ICEA argues that the Commission should reject CUB’s recommendation that dynamic and time-of-use products should be subject to all the enhanced consumer protections of variable products. In support of this recommendation, CUB provides the following justification:

The definition “variable” should apply whether the rate changes once a month or several times a month. In either case, the rate paid by the customer changes. The fact that the intervals at which the rate changes are more frequent with a dynamic or real time price should not supersede the basic fact that the rate changes during the contract term.

CUB FN Initial at 4. This justification must be rejected. ICEA believes that CUB misses the point of the “enhanced consumer protections” for Variable products. ICEA proposed the 30-day advance notice requirement as a way to provide consumers with actionable information when their RES has the contractual right to reset prices every month but no contractual obligation to disclose how that price is set. The result is that the customer can make an informed decision every month whether their current pricing is acceptable or whether another product would provide better value. An alternative way to accomplish the same goal is for the RES contract to set the variable product price based solely on an index (where the RES has no discretion within the contract to set prices) allowing the customer to study the index in advance to determine if that product provides customer value. ICEA FN Reply at 18-20.

ICEA agrees with Staff’s interpretation that, under the Proposed Rule, dynamic and time-of-use products are not “Variable” based upon the definition of “Variable.” Although ICEA interpreted the Commission’s question to be asking whether dynamic and time-of-use products should be regulated like variable products, Staff accurately

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construed the Proposed Rule as it exists. ICEA notes that Staff’s interpretation would alleviate all of the concerns ICEA raised about application of Section 412.165 to dynamic and time-of-use products. Because the Proposed Rule avoids imposing market-killing restrictions on dynamic and time-of-use products, ICEA agrees with Staff that the Commission should keep the FNO’s approach. ICEA FN Reply at 20.

ICEA agrees that there is some inherent ambiguity between the use of the phrases “contract term,” “term of the contract,” and “length of the contract” and recommends that the terms be defined in the Proposed Rule. ICEA understands the terms to have the following meanings:

“Contract term” means the duration of the contract, not including any renewal terms, but including evergreen provisions if the terms and conditions do not change. This may be expressed in terms of a length of time (measured in units of time, such as months) or description of the beginning and end dates.

“Term of contract” means the length of time (measured in units of time) or description of the beginning and end date of the contract, not including any renewal terms, except potentially an evergreen provision if the terms and conditions do not change.

“Length of contract” means the measure of a contract term in units of time or description of the duration of the customer-supplier relationship, which would include renewal(s) or evergreen provisions.

ICEA notes that, depending on the context, it may be more appropriate and consumer-friendly to describe the contract duration in terms of units of time (“12 months”) or beginning and end date (“your next meter read cycle until the May meter read cycle”).

ICEA encourages the Commission to consider instead the definitions set out above. The above definitions are “trade usages” that have arisen through operation of the retail market and already inform how regulatory changes using the terms are implemented. In absence of formalization of these, or significantly similar definitions, the Commission risks undermining the fundamental contractual relationships upon which the market is based. ICEA recommends that the Commission memorialize the working market definitions above in the present rule. ICEA FN Initial at 8-10.

For the reasons described in ICEA’s comments on Sections 412.120 (In-Person Solicitation) and 412.170 (Conduct, Training, and Compliance of RES agents), ICEA recommends that the Commission add definitions consistent with the FNO’s definition of “solicitation” because ICEA believes that they are not currently reflected in the rule text. ICEA believes that minor changes to the definition of the term “RES agent” consistent with its comments on Section 412.170 (Conduct, Training, and Compliance of RES agents) would further resolve confusion. ICEA FN Reply at 16.

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C. RESA

RESA states that the Commission adopted CUB’s definition of “Variable rate.” Unless the Commission modifies proposed Section 412.165 of the Proposed Rule, it would basically be impossible for RESs to offer dynamic or time-of-use rates. Proposed Section 412.165 clearly contemplates a variable rate that changes monthly, not a dynamic or time-of-use rate that can change hourly. For example, proposed Section 412.165 states that at least 30 days prior to the start of a calendar month, a RES must make available on its website, or through the customer’s account log-in, the variable rates for its residential customers applicable for the billing cycle starting during the calendar month. Dynamic or real-time rates are clearly not available a month before customer usage. RESA FN Initial at 22-23.

RESA points out that Staff stated that since the definition of “variable rate” states that a variable rate does not change more than once a month, the disclosure requirements associated with variable rates do not apply to contracts with dynamic or time-of-use rates. RESA agrees with Staff’s analysis that time-of-use and dynamic rates are not included within the definition of variable rates. RESA FN Reply at 13-14.

RESA sees latent ambiguity among the phrases “contract term”, “term of the contract”, and “length of the contract.” “Contract term” could mean the predetermined length of a contractual relationship or a term or express provision within a contract. The phrase “term of the contract” could mean a predetermined period during which express duties and obligations are to be performed or the period of time during which a contractual relationship exists between a customer and a RES. The term “length of the contract” could be interpreted to mean the length of time during which a contractual relationship exists, but could be interpreted to mean a predetermined period during which certain duties and obligations exist between the contracting parties. RESA FN Initial at 23.

D. Ameren

Ameren proposes amending the definition of “Enrollment.” Currently, the proposed term is defined as “contracting with a RES to provide the supply portion of electric service.” Ameren proposes including language that clearly defines the “enrollment” process as one not only involving the RES, but also the utility. The current language does not contain, nor does it accurately represent the full “enrollment” process. The “enrollment” of a customer with a RES is a multiple step process. The “enrollment” does not end once the customer has signed a contract with the RES to procure electric supply service. Instead, the “enrollment” is completed when the RES has submitted a valid direct access service request (“DASR”) to the utility. A DASR is necessary to inform the utility of the new customer-RES contract and effectuate the supply switch. Without the DASR, a utility will not know to switch the customer to RES supply and the enrollment will not be completed. It is imperative that customers are made fully aware of the entire “enrollment” process in order to eliminate any confusion. Ameren proposes amending the definition to include the following language:

“Enrollment” means the customer contracting with a RES to provide the supply portion of electric service and the RES submitting a valid direct access service request to the utility to effectuate that contract.

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This language will help inform customers that an “enrollment” only occurs when a customer has contracted with a RES and the RES has sent a valid DASR to the utility. Ameren FN Initial at 2-3.

Ameren proposes amending the definition of “Inbound Enrollment Call.” Currently, the proposed definition uses the term “consumer”; however, “consumer” is not defined in the Proposed Rules. Ameren suggests that the term “consumer” be replaced with the term “customer”, which is already a defined term in Section 412.10. Because “customer” is a defined term, its use would help avoid confusion. Ameren FN Initial at 3.

E. CUB

CUB states that the Commission correctly adopted a straightforward and sensible definition of “Variable rate.” As CUB noted throughout the proceeding, it is not reasonable to expect consumers to understand that a “Fixed” rate is only fixed for a portion of the contract term. CUB agrees with the Commission that, “[t]o call a 12-month rate “fixed” that remains fixed for only three or six months, and then varies by month, does not accurately describe what the customer is agreeing to and creates the potential for confusion.” FNO at 18. The definition adopted by the Commission would not frustrate RESs from offering any product they choose to offer. Rather, the Commission’s definitions of “Fixed” and “Variable” will provide clear and direct descriptions of products with rates that fluctuate and products with rates that remain the same, which is the most basic consumer understanding of the difference between “Fixed” and “Variable.” CUB also supports the Commission’s finding that “ICEA’s and NAE’s suggested definitions only add confusion and their adoption would only undermine the purpose of this Rulemaking.” FNO at 18.

CUB states that a time-of-use rate is a rate that changes at specific intervals, but usually more often than once a month. The definition “Variable” should apply whether the rate changes once a month or several times a month. In either case, the rate paid by the customer changes. The fact that the intervals at which the rate changes are more frequent with a dynamic or real time pricing should not supersede the basic fact that the rate changes during the contract term. In line with the Commission’s stated policy goal of describing rates in the most sensible, straightforward way, time-of-use/dynamic rates should fall under the “Variable rate” definition and should be subject to all the enhanced consumer protections that accompany it. CUB FN Initial at 3

CUB is unconcerned by the interchangeability of the terms “contract term,” “term of the contract,” and “length of the contract”, but it would be preferable to use one term to describe the length of the contract. Currently, only the Section 412.115 uses the term “length of the contract.” For consistency, it would make sense to change this to “contract term,” as that is the more prevalently used term in Part 412. CUB FN Initial at 4.

CUB notes that NAE opposes the requirement that enrollments through a transferred call require both an audio recording and a third-party verification. NAE’s main concern is that a customer-initiated call should not be considered “transferred” even though the customer likely did not initiate the call to engage in a marketing pitch from a RES. Because the call by definition was “transferred” to the RES, the customer did not “initiate” the call to the RES. CUB’s concern is that the customer often does not understand to which entity he is being transferred and does not have the context or the

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understanding that he is speaking with a RES, because the customer did not initiate a call to the RES. The example provided by NAE is of particular concern to CUB, which is that a customer calls an Alternative Gas Supplier (“AGS”) to inquire about their gas service and is then transferred to the AGS’s RES affiliate once the AGS portion of the call is complete. Here, even with purported “consent,” the customer may not understand he is talking to a different entity (likely with a substantially similar, if not identical name) about electric service. Because of the significant potential for confusion, treating a transferred call like a telemarketing call is a warranted and reasonable consumer protection. CUB FN Reply at 9-10.

F. AG

The AG agrees with Staff’s position on this question of potential ambiguity among the terms the phrases “contract term,” “term of the contract,” and “length of the contract,” because the three phrases can mean different things. The AG supports Staff’s position that the phrase “duration of the contract” be used to mean the period during which a contract is in effect. “Contract term” should be used to identify particular provisions of contracts. Finally, the term “contract length” should be used to identify the number of pages in a contract. AG FN Reply at 12.

G. NAE

NAE objects to the definition for “Transferred call” because, and to the extent, it prevents enrollments from customer-initiated calls which are transferred to a prospective RES with the authorization of the customer from being treated as an inbound enrollment call that can be confirmed via a date-stamped, time-stamped audio recording that elicits the statutorily-required information. NAE opposes the proposed new requirement that the enrollment of a customer resulting from a subscriber initiated call to a RES must be verified by both: (i) a date-stamped, time-stamped audio recording consented to by the customer eliciting the statutorily required information; and (ii) an oral authorization from the customer obtained from a qualified independent third party eliciting the same statutorily required information. This proposed new requirement is redundant, costly, ineffective, burdensome to customers, harmful to the competitive marketplace, and contrary to law. NAE maintains that a transferred call constitutes an inbound enrollment call and must be treated as such. See 815 ILCS 505/2EE(c); NAE FN Initial at 3.

A customer-initiated call transferred to a RES at the direction or authorization of the customer factually meets the statutory condition – “[w]hen a subscriber initiates the call to the prospective electric supplier” – allowing verification of enrollment via a “date-stamped, time-stamped audio recording.” Id. Statutory terms are to be given their plain meaning. Central Ill. Pub. Serv. Co. v. Ill. Commerce Comm'n, 268 Ill. App. 3d 471, 483 (4th Dist. 1994); Metro Util. Co. v. Ill. Commerce Comm'n, 262 Ill. App. 3d 266, 273-74 (2nd Dist. 1994). Merriam-Webster defines “initiate” as “to cause or facilitate the beginning of: set going.” Merriam-Webster.com. Accessed December 12, 2016. https://www.merriam-webster.com/dictionary/initiate. Thus, “a subscriber initiates the call to the prospective electric supplier” when the subscriber causes or facilitates the beginning of a call. When a customer places a call which is subsequently forwarded to a RES at the customer’s direction and/or consent, the call is one which the subscriber has caused or facilitated (i.e., initiated). However, NAE agrees that a call which originates as

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a live or automated call to the customer is not factually a customer initiated call even if such call is later forwarded to a RES agent. Rather, such calls have all the hallmarks of an outbound telemarketing call and are appropriately treated as such.

NAE states that the terms and directives in the definition of “Transferred call” are also inconsistent with paragraph (c) of Section 2EE of the CFDBPA, 815 ILCS 505/2EE(c), which specifically identifies a recorded call as an allowed method to confirm an enrollment for a subscriber initiated call to a prospective RES.

The proposed definition of “Transferred call” and its substantive directives are contrary to the CFDBPA to the extent it would prohibit a call initiated by a subscriber and transferred to a RES at the customer’s direction or authorization from being treated as a subscriber-initiated call. As such, the proposed definition is beyond any Commission authority derived from Section 16-115A(b) which provides that a RES must “obtain verifiable authorization from a customer, in a form or manner approved by the Commission consistent with Section 2EE of the Consumer Fraud and Deceptive Business Practices Act, before the customer is switched from another supplier.” 220 ILCS 5/16-115A(b). There is no basis to prevent customer-initiated calls transferred to a RES from being treated as what they are, a customer initiated call to a prospective RES, where the call started as a customer initiated call and the customer authorizes and directs the transfer. NAE FN Initial at 9-10.

NAE provides the example of a RES and AGS deciding to engage in a joint marketing campaign whereby potential customers are offered competitive electric supply by the RES and competitive gas supply by the AGS. Such a campaign could generate acquisition cost savings that allow potential discounts to customers enrolling for both gas and electric supply. If the consumer calls an AGS to enroll for competitive gas supply in such a situation, the call would logically and reasonably include a transfer to a RES agent if the customer desires to enroll for electric supply service too. If the customer authorizes or directs such a transfer, there is no basis for forcing the customer to hang up and make a new call. There is also no basis in that situation to treat joint marketers differently than a single entity certified as both an AGS and a RES. The Proposed Rule reasonably allows a call to a RES call center to be transferred to a RES, and would therefore permit a call to the call center of a combination RES/AGS entity to be transferred to a RES agent after processing an enrollment with an AGS agent.

While NAE opposes adoption of the “Transferred call” definition, NAE is not opposed to reasonable regulations designed to ensure that calls which are transferred to a RES are transferred at the direction or authorization of the customer. Specifically, and in the alternative, NAE would not oppose revising the language of proposed subsection (d) of Section 412.140, Inbound Enrollment Calls, as follows:

A third party verification must be used to authorize a customer’s enrollment. If a date-stamped, time-stamped audio recording or third party verification is used to confirm a customer’s enrollment, it The third party verification must require the customer to verbally acknowledge that he or she understands the disclosures required by (i) subsections (a) and (c) through (m) of Section 412.110 and (ii) any information

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included in the Uniform Disclosure Statement required by Section 412.115 that is not included in subsections (a) and (c) through (n) of Section 412.110. Each item must be disclosed to the customer individually, requiring acknowledgment of each disclosure. A RES agent initiating a 3-way conference call or a call through an automated verification system shall drop off the call and not participate in or listen to the call, but shall not cause the call to be terminated, once the 3-way connection has been established. If a date-stamped, time stamped audio recording is used to confirm a customer’s enrollment, the RES agent must also elicit confirmation that the customer directly dialed the RES or that the customer directly dialed someone other than the RES and directed or authorized transfer of the call to the RES; and

NAE FN Initial at 10-13.

NAE agrees with Staff that the correct meaning of the phrases “contract term,” “term of the contract,” and “length of the contract” is apparent from the context in which they were used in the Proposed Rule, but these terms are capable of being construed to have more than one meaning (i.e., a provision in a contract, the period of time during which a contract is in force, and the number of pages or words in a contract). Staff stated that if the phrase “duration of the contract” was used whenever the reference is to the period during which a contract remained in force and effect, the phrase “term of the contract” could be eliminated, “contract term” could be used exclusively to describe a specific condition or provision of the contract, and “length of the contract” could be used exclusively to describe the number of pages or words of a written contract. It is not clear to NAE if Staff intended to limit its proposal to Section 412.110, which Staff observed to be the only section containing all three terms. NAE FN Reply at 4.

NAE states that while Staff’s proposal is well intended and conceptually reasonable, Staff did not propose specific language edits. It appears that implementation of Staff’s proposal to the actual language of the rule may contribute to rather than alleviate potential confusion in certain instances.

NAE states that while the terms in question present the potential for confusion from a conceptual perspective, the actual use of these terms in the Proposed Rule does not appear confusing, and NAE recommends the Commission not revise the referenced terms unless it identifies specific language that is potentially confusing as written. At a minimum, any implementation of Staff’s proposed remedy needs to review the specific language of the rule and not make revisions where it would contribute to additional ambiguity or potential confusion. NAE FN Reply at 5-6.

NAE disagrees with Staff’s comments regarding the definition of “Variable rate.” The definition of “Variable rate” in Section 412.10 of the Proposed Rule does not provide that a variable rate “does not change ‘more than once a month.’” The only reference in the Proposed Rule to a rate that does or does not change “more than once per month” is with respect to the “price” disclosure requirements for the Uniform Disclosure Statement (“UDS”). This instruction with respect to how to disclose a price that changes “more than

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once per month” in the UDS only impacts the UDS disclosure, does not change the definition of “variable rate,” and does not purport to exempt such rates from the rate notice requirements under Section 412.165 of the Proposed Rule.

NAE finds that CUB’s assertion that dynamic and time-of-use rates are variable because they change more than once a month is factually correct, but fails to address the impact of adopting a single broad definition for variable rate given the obligations imposed on RESs to report information on variable rates that does not exist. NAE FN Reply at 6-7.

H. ComEd

ComEd agrees that the phrases “contract term,” “term of the contract,” and “length of the contract” could benefit from clarification, but takes no position on which of the proposals should be adopted.

ComEd supports Ameren’s proposals to clarify two other items in Section 412.10. Specifically, Ameren proposes to: (1) refine the definition of “enrollment” to clarify that enrollment of a customer with a RES is only completed when the RES has submitted a valid DASR to the utility; and (2) replace “consumer” with “customer” in the definition of “inbound enrollment call,” as “consumer” is not a defined term, but “customer” is. ComEd adds that specifying “new customer” may provide additional clarification. ComEd FN Reply at 3.

I. Commission Analysis and Conclusion

The Proposed Rule in the FNO states:

"Variable rate" means the charge for electric service changes at any time during the term of the contract.

As many parties have pointed out, the FNO’s definition conflates variable rate to include “time-of-use” rates, which render other Sections of the Proposed Rule incorrect. The Commission recognizes ICEA and RESA’s concern that imposing all of the FNO’s Section 412.165 requirements on dynamic and time-of-use products would narrow the field of products that an individual RES could or would offer. The Commission also agrees with CUB that the fact that the intervals at which the rate changes are more frequent than once a month should not supersede the basic fact that the rate changes during the contract term and therefore should be subject to the enhanced consumer protections that accompany it. The Commission therefore adds a definition for “time-of-use” rates to include any rate that varies more than once a month. The Commission also modifies the definition for “Variable rate” to exclude time-of-use products which have prices that change more than once a month. The Commission modifies Section 412.165 to address the differing notification requirements for variable and time-of-use rates, discussed below, in that Section. For the reasons stated in the FNO, the Commission declines to adopt ICEA’s suggestion to include “Index” and “Non-Index” in Section 412.10.

The FNO directed the parties to comment on whether there is ambiguity between the use of the phrases “contract term,” “term of the contract,” and “length of the contract.” Staff, RESA, the AG and ComEd agree there could be ambiguity, but they either do not propose specific replacement language, or the Commission finds their proposals are unworkable. ICEA proposes definitions for the three phrases that it describes as “trade

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usages.” Upon review, the Commission finds that ICEA’s proposals include terms like “evergreen” which are not commonly understood, and would require further definition. NAE points out that attempting to limit the usage to one or two of the terms may actually provide less clarity, and the terms themselves are used appropriately within the Proposed Rule as is. The Commission agrees with NAE. Therefore, the Commission declines to modify any language at this time.

The Commission adopts Ameren’s proposal to add clarification to “Enrollment” because the enrollment process is not complete until the RES submits a valid DASR to the utility. It appears no party objects to this modification.

The Commission agrees with Ameren that the definition of “Inbound enrollment call” should use the term “customer” instead of “consumer” because “customer” is already a defined term in the Proposed Rule. The Commission declines to adopt ComEd’s proposal to add “new” in front of customer because the customer may be a former customer, or a current customer seeking to enroll in a new product.

NAE continues to object to the definition of “Transferred call” and the fact that “Transferred calls” are subject to the provisions of Section 412.130 (Telemarketing). The Commission continues to agree with CUB that customers that are offered the option to be transferred to a RES agent by either a utility, a utility-affiliate, or an AGS do not always fully understand to whom they are transferred or why. NAE complains that there is no basis to force a customer to hang up and make a new call to a RES instead of allowing the customer to be “transferred.” NAE objects to these calls then being subject to the Telemarketing rules instead of inbound enrollment call rules. The Commission maintains that to ensure with certainty that a customer understands to whom he or she is speaking, the distinction between transferred call and inbound enrollment call should be maintained. If the customer is truly interested in RES service, he or she will not object to the Section 412.130 (Telemarketing) requirements.

Finally, the Commission modifies the definition of “Customer” to reference the Act.

VI. SECTION 412.100 APPLICATION OF SUBPART B

A. AG

AG opposes MES’s proposed subsection 412.100(c) granting MidAmerican permission to use the name of its utility affiliate when selling competitive retail electric services. The AG notes that granting such an exception to accommodate just one utility affiliate undermines the purposes of competition, and are contrary to public policy already established in favor of consumer protections. The AG counters that the mere fact that MidAmerican Energy Company, MES’s public utility affiliate, has, in the past, operated under a certificate of service authority to sell retail electric service outside of designated regulated service territory does not provide a basis for exemption MES from the marketing restriction contained in Section 412.105, where MES is acting as a retail alternative electric supplier. AG BOE 5–7.

The AG explains that MES now operates as a RES, not a utility selling competitive service outside its service area, and The Commission should not adopt a rule that promises to undermine its efforts to prohibit RESs from using utility names and logos as set forth in Section 412.105. The AG warns that adoption of this rule, while apparently

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applying only to MES, could encourage other utility companies to seek the same treatment. Utility-affiliated RESs know that they enjoy a competitive advantage by being able to use the utility name and logo because customers are familiar with the utility name and logo. Unregulated affiliate companies want to take advantage of that familiarity to sell their products and services. AG BOE 8–10. The AG further argues that permitting the use of these marketing devices improperly lures customers into the belief that they are purchasing a regulated product, when in fact they are buying electric power and energy from a company whose prices are not regulated. AG RBOE 6–7.

B. MES

MES explains that MidAmerican Energy Company (“MEC”) is an Illinois public utility serving customers in its utility service territory in and around Moline and Rock Island, Illinois. From the outset of the competitive retail electric market in Illinois in 1999, MEC participated in the competitive electricity markets as a RES, as permitted by Section 16-116 of the Act, selling electricity in what are now the service areas of ComEd and Ameren. MES notes that Section 16-116 of the Act explicitly provides that an electric utility itself may provide competitive service outside its service area. Although it may form an affiliate, the utility is not required to form an affiliate in order to compete outside its service area. Thus, for over 15 years, the Unregulated Retail Services division of MEC ("MEC Unregulated") used the name, logo, and other related information of MEC because there was no separate entity; MEC Unregulated was a division of the utility. MES FN Initial 1-2.

MES further explains that, in 2015, MES was formed as a result of a corporate restructuring involving MEC and MEC Unregulated. The Commission approved the transfer of assets of MEC Unregulated to MES in Docket No. 15-0386, and licensed MES to operate as a RES in Docket No. 15-0440. MES continues to participate in the Illinois retail electric market only outside MEC's public utility service territory in Illinois. Indeed, pursuant to the Commission's August 18, 2015 Order in Docket No. 15-0440, MES is specifically licensed to provide competitive electric service only in the service territories of ComEd and Ameren. MES FN Initial at 2.

MES/MEC Unregulated states that it has never been the subject of a complaint by an Illinois consumer relating to confusion over the "MidAmerican" name, logo, or other related information. Further, MES's continued use of the "MidAmerican" name, logo, and related information was not even raised as an issue by the Commission, Staff, or any other party in the corporate restructuring proceeding (Docket No. 15-0386) or in the MES RES certification proceeding (Docket No. 15-0440). Nevertheless, the FNO and accompanying proposed Part 412 Rules include language that would impose significant costs upon MES by restricting its use of the MidAmerican name, logo, and other related information. MES FN Initial at 2-3.

Finally, to the extent that customer confusion arises in connection with RES names, if MES now were required to abandon use of the MidAmerican name, logo, and other related information, after having used them for nearly two decades without any issues, MES argues that it would likely increase customer confusion, and may result in customers falsely believing that MES (which would then have to participate in the market using some other corporate name) is no longer affiliated with MEC. MES FN Initial at 3.

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MES proposes language which is based on the language that MES proposed at the exceptions stage, but is slightly modified to address an unintended potential loophole that was brought to light during the discussions with Staff and CUB. MES FN Initial at 5.

MES notes CUB’s arguments about the constitutionality of precluding the use of a utility name/logo. However, CUB’s comments are specifically in response to arguments advanced by other parties. MES’s proposed language is not dependent upon, and can be implemented regardless of, any decision relating to the constitutionality issues to which CUB is responding. MES FN Reply at 5.

If anything, CUB’s comments should give the Commission pause, and actually encourage the Commission to adopt the carefully tailored middle ground that MES offers. MES states that CUB does not reference any evidence that any consumers have actually been (or could be) misled. MES maintains that CUB’s arguments offer no basis to omit the carefully tailored language offered by MES, which is consistent with Section 16-116 of the Act. MES FN Reply at 5.

C. ComEd

ComEd does not oppose MES’s request. ComEd FN Reply at 4.

D. Ameren

Ameren believes that MES’s proposed language addresses the business and financial concerns that have been raised by RESs, while continuing to protect the consumer and utility. Ameren supports the language proposed by MES. Ameren FN Reply at 1-2.

E. Staff

Staff notes that MES proposes modifications to this subsection that would carve out an exception to the use of the utility name/logo, which Staff understands would apply only to MES. Staff does not object to modification of the Proposed Rule in a manner which would allow MES to continue to use the name and logo of MEC in providing retail electric supply outside of the MEC service territory. Staff FN Reply at 2.

F. Commission Analysis and Conclusion

The Commission recognizes the specific permission given to utilities in Section 16-116 of the Act to provide competitive market services outside of the utility’s service territory. Based on that provision, in Docket No. 15-0440, the Commission granted MES a certificate of service authority to operate as an RES in the territories of ComEd and Ameren. The Commission also recognizes that MES asserts, and no party disputes, that it has never been the subject of a complaint by an Illinois consumer relating to confusion over the "MidAmerican" name. However, the Commission agrees with the AG that the existence or lack thereof of consumer complaints is not a necessary predicate to the amendment of Commission rules in the exercise of its regulatory authority.

Notably, no mention is made regarding MES’s logo in the Commission’s Order in Docket No. 15-0440. The Commission does not believe that MES’s requested exemption should be extended to the logo and there is no statutory reason to require that MES be allowed to use MidAmerican’s logo. In the FNO, the Commission stated that it “agrees with CUB that there is no legitimate business need for RESs to use a utility logo in its

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marketing.” FNO at 24. Also, in the area adjacent or near to MEC’s territory, there is the potential for customers to be confused about whether they are signing up for service from MEC or MES.

The above reasoning concerning a RES’s use of its utility affiliate’s logo in its marketing applies equally to any deceptive or misleading use of the utility name as prohibited by the Proposed Rule. The Commission finds that granting such a blanket exception to accommodate just one utility affiliate undermines the purposes of competition, and are contrary to public policy already established in favor of consumer protections against consumer confusion. The Commission therefore does not adopt MES’s proposed subsection 412.100(c).

VII. SECTION 412.105 USE OF UTILITY LOGO AND NAME

A. AG

With one important modification, the AG recommends that the Commission adopt proposed Section 412.105, which prescribes the proper use of utility names and logos to prevent deception of retail customers. The AG believes that the Commission has generally found the right balance in its proposed Part 412.105, to ban the use of utility logos in RES marketing “in any manner,” and to prohibit the use of utility names “in any manner that is deceptive or misleading.” AG FN Reply at 14-15.

The AG notes that MES has asked that the Commission amend this proposal to permit MES – and presumably only MES – to continue to use the utility name and logo. The AG does not agree that an exception should be made for MES. The reason is contained in MES’s own argument in favor of the exception: MES wants customers to believe that they are affiliated with the public utility company, MEC. This is the very problem the rule was intended to prevent – luring customers into the belief that they are purchasing a regulated product, when in fact they are buying electric power from a company whose prices are not regulated. AG FN Reply at 15.

The FNO states that it has rejected MES’s request to modify this rule, but the AG notes that the language of 412.105(b) appears to grant MES’s request:

b) A RES shall not utilize the name of a public utility in any manner that is deceptive or misleading including, but not limited to, implying or otherwise leading a customer to believe that a RES is soliciting on behalf of or is an agent of a utility when no such relationship exists.

Leaving the last five words in this provision would enable a RES that wants customers to link the RES’s service with that of the utility – to believe, in other words, that there is a relationship between the RES and the utility – to convey exactly that information. This is contrary to the FNO’s statement that: “The attached rule further prohibits RESs from misrepresenting that the product they are offering is in any manner related to a public utility. This is intended to prohibit suggestions that the power or energy the RES is offering is from a utility – whether a gas or electric utility.” AG FN Reply at 15-16.

The AG therefore recommends that the Commission modify Section 412.105(b) to delete the phrase “when no such relationship exists.” AG FN Reply at 16.

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B. ComEd

ComEd supports the Commission’s proposed Section 412.105, and agrees with CUB that the proposed prohibitions regarding use of the utility’s logo and name are an important step in eliminating deceptive marketing practices that take advantage of the utility’s position as a regulated entity. ComEd FN Reply at 4.

Separately, CES asks the Commission to include “an express statement providing that nothing restricts a RES from: 1) stating that the RES offers service within a particular utility’s territory; and 2) referencing that customers may choose their electricity supplier [sic] a particular utility service territory.” CES FN Initial at 4-5. ComEd observes, however, that usage of the utility’s name in the manner described by CES is already permitted by the proposed Section 412.105. Indeed, the rule only precludes usage of the utility name in “any manner that is deceptive or misleading.” FNO Appx. A at 6. As a result, ComEd asserts that the Commission should decline to adopt this change. ComEd FN Reply at 5.

C. CUB

Out of concern “that RES use of utility name and logo amplifies customer confusion in the retail energy choice market” (FNO at 23) the FNO prohibits the use by a RES of a utility logo and the use of a public utility name in any manner that is deceptive or misleading. FNO at 24. While CUB argued throughout this proceeding and continues to maintain that the use of the utility name is also problematic and should be prohibited, the FNO adopts reasonable restrictions that seek to prevent the type of misleading use of the utility name CUB identified. CUB cited an example from Clean Energy Option, one of the assumed names of Ethical Electric, which sent direct mail solicitations that used the ComEd name in the context of the letter to create the net impression that the customer is staying with the utility and not switching to a RES. See CUB’s Surreply at Attach. 2 and 3. The FNO found that these materials “use ComEd’s utility name in a manner that makes it appear that the product being offered is part of a utility program; the amendments adopted throughout the attached Rule seek to address this sort of marketing.” This conclusion gives CUB some reassurance that the Commission views such use of the utility name as misleading, which would be prohibited by the Proposed Rule. CUB FN Initial at 4-5.

CUB notes that RESs have cited constitutional protections of commercial free speech. NAE BOE at 5-10. While the First Amendment protects commercial speech, CUB asserts that it is not limitless protection. Commercial speech remains subject to state regulation because of the nature of such speech. Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 456–57 (1978). Regulation of commercial speech is permissible by means of appropriate time, place, and manner restrictions and where such speech is false or misleading, or related to unlawful activity. Desnick v. Department of Professional Regulation, 171 Ill.2d 510 (1996), citing Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. at 748, 771-72 (1978). The protection available for particular commercial expression turns on the nature both of the expression and of the governmental interests served by its regulation. Central Hudson Gas & Electric Corp. v. Public Service Comm'n, 447 U.S. 557 at 563 (1980). A challenge to application of a commercial speech restriction is analyzed under the four-part framework set out in

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Central Hudson Gas: it must first be determined whether the commercial speech at issue is protected speech under the first amendment, that is, the expression concerns lawful activity and is not misleading. If so, the commercial speech may be regulated nonetheless, provided the government asserts a substantial interest in support of its regulation; the regulation is shown to directly and materially advance that interest; and there exists a reasonable “fit” between the government’s ends and the means chosen to accomplish those ends. Central Hudson Gas, 447 U.S. at 564-65. Here, the Commission’s interest in regulating RES use of utility logos is clearly to protect against misleading advertising and marketing of an unregulated product. The Commission’s means to achieve that end is a reasonable fit because it does not prohibit use of the utility name, and certainly does not foreclose the RES from marketing itself as anything other than the utility. CUB FN Initial at 5-6.

Furthermore, the court in Ill. Power Co., 316 Ill. App. 3d 254, supports the FNO’s ban on use of a utility logo:

If utility affiliates advertise themselves jointly with an existing utility, they imply a distribution affiliation that no longer exists due to the deregulation. Therefore, customers should not choose their service provider decision on that basis. If left unregulated, joint marketing could lead to discrimination between affiliates and unaffiliated ARES because of customer confusion and the creation of entry barriers. Hence, we believe that the regulation of joint advertising and marketing advances the substantial governmental interest of developing a competitive utility-provision market.

Id. at 261. The Illinois Power court makes the very point that supports the FNO ban: use of the utility logo implies a distribution affiliation that no longer exists. The FNO has concluded that customer confusion regarding the identity of a RES using the utility name and logo is likely, which justifies a ban on use of a utility logo. While CUB believes there is equal justification for a ban on use of a utility name also, CUB believes the FNO’s legal analysis is sound and supports its proposed ban. CUB FN Initial at 6.

Furthermore, CUB maintains that the prohibition on use of a utility logo is an important step in prohibiting utility affiliated RES from deceptively portraying the RES as a regulated utility. It is critical that consumers have a complete understanding of which entity they are contracting with and that the RES is not price regulated like the utility. Any attempt to mislead a consumer by a supplier as to that supplier’s affiliation with, approval of, or connection to, a utility company is misleading and is rightfully prohibited. CUB FN Initial at 7.

D. CES

CES appreciates the Commission’s careful consideration of the extent to which RES use of utility names and logos should be restricted. CES believes that the FNO, which prohibits RESs from using utility logos and utilizing utility names in a manner that is deceptive or misleading, generally strikes an appropriate balance between reducing customer confusion and allowing RESs to make legitimate business disclosures that reference the utility. FNO at 23-25. That said, CES requests that the Commission

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incorporate in the Part 412 Rule revisions an express statement providing that nothing restricts a RES from stating that the RES offers service within a particular utility’s territory and referencing that customers may choose their electricity supplier in a particular utility service territory. This clarification could be accomplished by inserting in Section 412.105 the language previously offered by ICEA, which reads as follows:

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 electric supplier in the customer’s utility service territory.

This modification appears to be consistent with the Commission’s intent expressed in its Order. See FNO at 23 (“The Commission finds that there could be a rational reason to use an electric utility’s name during a solicitation…”). CES FN Initial at 4-5.

E. Ameren

In general, Ameren supports the Proposed Rule’s prohibitions on the use of a utility’s name, logo, and related information by a RES. Ameren states that the Proposed Rule’s prohibitions protect consumers from RESs’ deceptive practices and eliminate consumer confusion. Ameren understands, however, in certain limited situations, a RES’s use of a utility’s name, logo, and related information may be acceptable and appropriate. Ameren FN Reply at 1.

F. ICEA

Upon reviewing the comments of CES, ICEA understands how proposed Section 412.105(c) could be interpreted to prevent a RES from noting on marketing materials or its website the utility territories in which it offers a product. See CES FN Initial at 4-5. To avoid doubt, ICEA wishes to reiterate its recommendation that the Commission add language to Section 412.105(c) to clarify that RESs may state on marketing materials which utility service territories in which a product is offered and that RESs’ websites may ask a customer their utility service territory. See ICEA FN Reply at 20.

G. Commission Analysis and Conclusion

CES and ICEA ask that the Proposed Rule be amended to give express permission for certain usages of a utility’s name. The Commission finds that such express permission for use of a utility’s name is not necessary. As discussed in the FNO, the Commission decided that specific statements are not adopted as permissible, but rather a general ban on deceptive or misleading use of a utility’s name is adopted. The Commission sees no reason to amend the Proposed Rule.

As discussed in the previous section, the language of MES is adopted to allow the continued use of utility names that have been in use for a long time. The AG points out that MES does not need its proposed amendment because subsection 412.105(b) already allows MES to use the “MidAmerican” name because the phrase “when no such relationship exists” excludes utility affiliates from this subsection. The Commission finds that MES’s proposal is a better method to grant MES’s request because it only allows the use of the utility name outside the territory of the public utility. Thus, the language of 412.105(b) is amended to delete the words “when no such relationship exists.” The

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Commission, in the FNO, stated that “[t]his prohibition applies to any public utility, not just an electric utility, because the use of any public utility name can mislead customers.” FNO at 24. Deletion of this language renders the Proposed Rule consistent with the Commission’s discussion.

VIII. SECTION 412.110 MINIMUM CONTRACT TERMS AND CONDITIONS

A. NAE

While self-described as a "disclosure" requirement, NAE opines that the FN Proposed Rule revisions go much further than requiring disclosures. Instead, the Proposed Rule specifically prohibits inserting any contract language before the required provisions and dictates what provisions must be included in a contract, where they will be placed, and their order. NAE FN Initial at 11.

NAE notes that some RESs currently utilize a separate disclosure statement that is incorporated by reference as part of their customer agreement. This practice would be prohibited under the proposed new rule provisions. NAE argues that the Act does not delegate authority or responsibility to the Commission with respect to contract terms and conditions as such. NAE FN Initial at 12.

Moreover, NAE asserts that mandating the specific content, order, and structure of a RES's contract could potentially conflict with the advice or direction a RES receives from its own counsel. Further, the mandatory contract language does not contain the typical contract language confirming the basic agreement between the parties. The practice of dictating contract terms conflicts with long-standing principles affording parties the freedom of contract. Retailers universally retain wide latitude to develop contracts and agreements that comply with applicable laws and regulations and include terms and conditions that best reflect the intent of the parties. Forcing a RES to adhere to a specific contract content, format, and order as mandated by the Proposed Rule is particularly troublesome given there is no indemnification or assurance provided to a RES that the requirements mandated by the proposed rule's mandatory contract structure and content fully comply with applicable legal requirements. NAE FN Initial at 12-13.

NAE states that the rigid requirement regarding placement and order of certain contract terms will also increase costs and prevent RESs from developing a contract form that can be utilized in multiple jurisdictions, without any corresponding benefit to customers. RESs will need to revise their terms and conditions even if they already include all required disclosures proposed by the rule but in a slightly different order. Further, NAE suggest that, as written, the common practice of using a fixed set of universal terms and conditions with customer-specific terms set forth in a cover page or other document will no longer be allowed. NAE recommends that suppliers be provided flexibility in this regard by not rigidly specifying the order in which required information is to be provided. NAE FN Initial at 13.

NAE further notes that Section 412.110 of the Proposed Rule requires the new minimum contract terms and conditions to be in at least 12 point font, but does allow additional contract language to be printed in 10 point type. NAE continues to recommend that all contract terms and conditions be allowed to be in 10 point or larger type. The proposed 12 point font requirement will add costs and is not necessary. NAE states that RES contracts will become longer if RESs have to increase font size for the minimum

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terms and conditions. Such a result would not be beneficial to the consumer. The current 10 point minimum font size specified in the current rule is common in the energy sector and other industries as well. Also, there was no evidence that changing minimum allowed font size from 10 point to 12 point improves a customer's awareness or understanding of the terms and conditions included in the customer's contract. NAE FN Initial at 13-14.

B. CUB

CUB notes that NAE suggests that the Commission exceeds its authority under 220 ILCS 5/16-115A(e) by requiring RES terms and conditions to be presented in a specific order and font size. NAE Initial at 10-14. The Commission’s authority is clear and is derived from Section 16-115A(e)(ii): the RES “shall give the customer written information that adequately discloses, in plain language, the prices, terms and conditions of the products and services being offered and sold to the customer.” CUB argues that requiring information in a particular font size and sequence hardly amounts to interference with the parties’ freedom of contract, as suggested by NAE and NAE cites no legal authority supporting such a notion. Similarly, the requirement that the contract terms be in 12 point font is obviously to make it easier to read – again, a rational and reasonable restriction on the presentation of the contract that should be upheld. CUB FN Reply at 10-11.

C. ICEA

Upon reviewing the comments of the AG, it came to ICEA’s attention that proposed Section 412.110(d) would require RESs to “provide an estimated total bill.” This is a change from the existing Part 412, in which the parallel section only requires an estimate of the supply portion of the bill. See 83 Ill. Admin. Code § 412.110(p). A RES should not be forced to make a total bill—as opposed to supply portion—comparison because rates for delivery charges and non-supply riders frequently change and RESs generally speaking have no ability to affect (or special insight into) how they will change over time. As a result, ICEA recommends that proposed Section 412.110(d) be revised to only require estimation of the supply portion of the bill. ICEA FN Reply at 21.

D. Commission Analysis and Conclusion

NAE complains that the Proposed Rule is too restrictive and infringes on RESs’ freedom to contract. The Commission disagrees. The requirement that certain contract terms be presented in a certain order and font size is adopted by the Commission not only to make the contract easier to read, but also to ensure that important contract terms are not buried in the body of the contract. Also, Section 412.110 of the Proposed Rules has no requirement regarding the substance of the contract, merely the presentation of the terms in the contract. NAE raises no arguments that compel the Commission to change its mind.

The Commission declines to adopt ICEA’s proposed revision to subsection (d). In the FNO, the Commission stated that “[s]ubsection (d) recognizes that customers that are being marketed a product for which some, but not all, of the customer’s electric bill will be fixed should be informed of what the estimated total bill amount will be at different usage levels.” FNO at 32. ICEA proposes that a comparison should only be required for the supply portion of the bill. The Commission does not agree and finds that many customers

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may only know the amount of their total electric bill and this provision will allow customers to make an apples-to-apples comparison. The attached Appendix A does not alter this provision.

For the first time in its BOE, ELPC suggests that Section 412.110(c) should include specific requirements regarding explanation of dynamic pricing electricity products. The Commission finds this proposal to be untimely and also not a notable improvement over the current language.

IX. SECTION 412.115 UNIFORM DISCLOSURE STATEMENT

A. Staff

Staff comments on whether time-of-use rates constitute variable rates in Section 412.115(b)(8). To avoid any potential confusion in this Section, Staff recommends the Commission add the same language it adopted for Section 412.115(b)(4). This makes it very clear that if it is a rate that changes more than once a month, the RES must include the phrase “time-of-use” in the UDS. Staff recommends this language to be added to the end of subsection (b)(8):

If the price is a price that varies more than once a month, the UDS shall include the phrase “time-of-use; refer to contract[.]”

Staff FN Initial at 5-6.

Staff also submits comment on whether Section 412.115(b)(12) should include language requiring that a new RES customer’s first bill include information regarding the customer’s right to cancel the contract. Staff is not opposed to such a requirement and Staff’s understanding of ComEd’s and Ameren’s bill formats is such that there is likely to be space for such a message. At the same time, it is not clear to Staff that such a standard bill message should be automatically generated by the electric utility’s billing system whenever a customer switches to a RES, or whether the new RES should be responsible for submitting such bill messages to the utility for publication on the customer’s bill. If the Commission seeks to require such a disclosure, the Staff notes that the most appropriate place for such rule language might well be in Section 412.230 instead of Section 412.115 and proposes specific language. Staff FN Initial at 6-7.

Staff recommends that the Commission stand by its earlier rejection of the AG’s proposal to require that RESs provide a price comparison of their proposed rate to the utility default rate as part of the UDS required by Section 412.115 for several reasons.

First, Section 412.110(j) of the Proposed Rule already requires that “if a RES represents that a customer will realize savings under any conditions or circumstances, the RES shall provide a written statement, in plain language, describing the conditions or circumstances that must occur in order for the savings to be realized. The statement shall disclose the entity or entities and price(s) to which the RES is comparing its own offer for purposes of assessing or calculating savings.” This will obviate the need for a price comparison of the proposed rate to the utility default rate in the UDS.

Second, the utility’s supply rate is subject to frequent changes, even when ignoring the monthly fluctuations of the Purchased Electricity Adjustment. In addition to the procurement events typically occurring in the spring and fall, changes in the utility’s supply

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rate occur after the Commission issues an Order in the utility’s formula rate cases and potentially after other Commission decisions affecting the utility’s supply and/or transmission rates.

Third, typical RES offers for residential customers feature fixed rates for 12 months or more. Thus, even ignoring the PEA and the other rate changes resulting from Commission Orders, a RES offer with a 12-month fixed rate would only know the utility’s rate for the entire 12 months if the marketing of the offer is limited to the few weeks (and sometimes only days) between when the upcoming utility supply rate is published in the month of May after the regular procurement events and the rate becomes effective in June. Of course, RESs do not limit the marketing of their offers to this very short time period and some of the RESs’ residential offers feature fixed rates for periods longer than 12 months. Staff FN Reply at 4.

Finally, the AG’s proposal does not limit any potential price comparison to the supply portion of a customer’s bill. The AG proposes that the UDS include an “estimated percentage savings on the total bill.” If the Commission were to adopt the AG’s proposal, a RES would have to essentially guess what the utility’s delivery service rates would be, as well as what any changes (or lack thereof) might be during the time period of the residential offer in question. For the foregoing reasons, Staff recommends that the Commission not adopt the AG’s proposal. Staff FN Reply at 4.

Staff encourages the Commission to reject CleanChoice’s position that UDS content requirements should be different for direct mail solicitations, in order to accommodate the fact that such mailers may not come from a specific individual sales agent, and the RES using such a marketing tool does not know the day upon which it will reach the potential customer. The UDS should not be customized to meet every possible scenario for marketing. If certain portions of the UDS do not apply to a solicitation, the simplest answer is for a RES to either leave those blank or mark “not applicable.” With regard to CleanChoice’s specific concerns, it is not inconceivable that an individual agent might send a direct mail piece to a consumer. For mass mailings where individual agents are not involved, the RES might comply by marking that space on the UDS a number of ways, including as stated above, “not applicable,” or place the corporate identity of the third party contractor sending it if the mailer does not originate in the RES’s own shop. Regarding the date of solicitation, it stands to reason that could be the date it was sent (mailed) to the customer, since the RES cannot possibly know any other dates. As above, “not applicable” would also be acceptable since the solicitation itself arrives on an unknown date in the future. Staff FN Reply at 5.

B. ICEA

ICEA urges the Commission to remove the agent ID requirement in the UDS in subsection (b)(16). As an initial matter, ICEA notes that in some cases, no individual solicits the customer, such as direct mail (where the customer completes and returns a Letter of Agency (“LOA”)) or online enrollment (where the customer guides her or himself through the online enrollment process). If a UDS is sent by an automated system in either case, it is unclear who the RES agent would be for compliance purposes. ICEA FN Initial at 13.

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ICEA argues that even to the extent a specific agent can be identified, such an approach could impose significant costs on certain RESs. In the case of telemarketing or an inbound enrollment call, not all RESs have information technology systems that can seamlessly integrate the RES representative speaking on the phone into the system that sends out the UDS. Information technology system upgrades—especially when the systems must interface with complex and highly regulated internal and utility systems—often are time-consuming and costly.

ICEA has not changed its position that RESs should be able to identify the agent that solicited a customer in a door-to-door (in-person) or telemarketing contact upon request. ICEA’s proposed changes are not intended to modify this requirement. However, the marginal benefit to identifying the telemarketing agent on the UDS is small compared to the costs of technology upgrades to support this proposed mandate.

ICEA does not oppose this requirement for in-person solicitations on a policy level. ICEA is concerned, however, that pre-printing large volumes of UDS (especially when multiple products are being solicited) with RES agent ID numbers would likely be a waste of resources as certain terms and conditions (like price) may change frequently. ICEA can support this requirement if it is clear that the RES agent may apply their ID number by hand rather than requiring the document to be pre-printed.

ICEA members are still analyzing the costs of complying with proposed subsection 412.115(b)(15), which requires that the UDS contain the date of solicitation. However, ICEA notes that its earlier concerns with information technology system upgrades and pre-printing for in-person solicitation would appear to be the same. ICEA FN Initial at 13-14.

ICEA recommends that the Commission reject additional disclosure of subsection (b)(12) language with the customer’s first bill for two reasons. The first reason is technical and practical. ICEA and other parties have previously pointed out the technical and business difficulties with the Commission compelling a bill message in a particular bill. In addition, due to limited space, it may be challenging to convey such a complex message.

ICEA’s second reason against this subsection is a business reason. Every additional time a RES is forced to invite customers to cancel or rescind their contract, the RES may be forced to add a risk premium to customer pricing models to account for customers who will cancel or rescind who would not otherwise have done so. ICEA supports existing compelled disclosures of customer rescission or cancellation rights in Part 412. However, each marginal disclosure requirement in the FNO is expected to have a negative effect on customer retention and to increase RES marketing costs. Either or both outcomes will have a chilling effect on retail competition and electric choice with little or no consumer protection benefit.

ICEA opines that there will be little or no customer protection benefit from a new required bill message about cancellation. First, ICEA is concerned that if a customer is constantly and repeatedly told she or he can cancel or opt out, the customer will grow unnecessarily concerned about the quality of the product or service they are receiving. Second, ICEA is concerned that RESs are being forced to constantly market against themselves to their own customers. Third, there is no evidence in the record suggesting that a customer who ignored or missed the previous string of disclosures during the

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solicitation and enrollment process would then notice it on a bill message. ICEA FN Initial at 14-16.

ICEA states that the Commission should reject the AG’s two recommendations for the UDS related to the utility price. First, the AG recommends that the UDS contain “a price comparison of their proposed rate to the utility default rate,” and disclose an “estimated savings.” Second, the AG proposes a new disclosure variable rates at different usage levels. AG FN Initial at 6.

ICEA states that it is unclear as a policy matter why these items should be added to the UDS. Both existing Section 412.110(o) and Proposed Section 412.110(j) require the RES contract to disclose anticipated savings (if claims of savings are made) and the circumstances under which they would be realized. Both existing Section 412.110(p) and Proposed Section 412.110(d) require estimates of pricing if the RES makes anything but a per kWh rate available to customers. The Proposed Rule copies the per kWh disclosure in two places in the UDS. Proposed Section 412.115(b)(4), (6) and (8). Proposed Section 412.165(a) (as edited by ICEA) would require any customer on whose pricing can change month-to-month and is not exclusively based on an index receive per kWh pricing 30 days in advance. These disclosures have the cumulative effect of providing the customer with more than sufficient information to compare their pricing to other products and the utility default supply rate. Because a per kWh monthly price makes it straightforward to compare with the utility pricing during a particular month, the customer can make an informed decision both at the outset of the contract and on an ongoing basis (especially as a Non-Index Variable price changes). ICEA claims that the AG’s proposed changes are not necessary. ICEA FN Reply at 21-23.

ICEA explains that these requirements could lead to substantial legal liability for a RES after the Illinois Supreme Court’s decision in Zahn. Zahn, 2016 IL 120526 at ¶ 20. ICEA claims that the basis for liability is that it is impossible for a RES to fully and fairly quantify future utility supply rates, especially in the context of the space-limited and highly prescriptive UDS. Because a quantification of future utility rates is necessary to disclose anticipated savings, both disclosures are impossible.

ICEA notes that both of the AG’s proposals would also make RESs estimate the entire bill. The RES must estimate not only the utility’s supply rate, but also its delivery rates (which are subject to annual formula updates and reconciliations) and pass-through riders. Pass-through riders add several layers of complexity, forcing the RES to estimate the following: (1) a utility’s environmental recovery remediation costs; (2) future energy efficiency rider recovery, which is subject to annual updates and reconciliations; (3) annual zero emission credits and renewable portfolio standard (“RPS”) defined costs, both of which are subject to annual adjustments and neither of which will have significant historic values when Part 412 first becomes effective to project future pricing; and (4) taxes.

ICEA notes that none of these are RES-generated charges, and RESs, generally speaking, have no control over these costs. ICEA admits that each should be knowable in the very short term. However, if a RES offers a product during which at least one price update occurs for any of these riders (or delivery charges), the RES is guaranteed to provide incorrect total bill estimates for after the price update(s) take effect. ICEA further

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notes that AG’s proposal including the word “estimated” does not make a material difference in relieving this impossibility. ICEA FN Reply at 23-24.

In support of its proposed subsection, the AG alleges that it is parallel to a rule in New Jersey. The AG attempts to justify imposition in Illinois because some RESs in Illinois also operate in New Jersey. ICEA maintains that rules in other states should not be imposed in Illinois simply because they have been imposed elsewhere. Instead, the rule must be examined in the greater regulatory context of the other state, which then must be compared to Illinois. The AG undertakes no such analysis, but ICEA notes that due to New Jersey’s procurement approach to utility default supply, the utility supply rate is fixed and does not have an equivalent to Illinois’ Purchased Energy Adjustment. Second, the New Jersey requirement is for disclosures in “marketing materials,” not a UDS. Although ICEA would still strongly oppose including the AG’s proposed disclosure on marketing materials for several reasons, marketing materials that do not have the UDS’s highly-restrictive content limits would at least allow a RES to more fully explain its estimate and the risks of future total bill changes to those estimates. Parallel to ICEA’s commentary on “estimated” savings above, even the additional explanatory language does not provide RESs a safe harbor for these disclosures. However, explanatory language (that a RES would be unable to add to a UDS) would at least provide some marginal protection to RESs, especially against lawsuits brought in court by the AG or individuals after Zahn. Zahn, 2016 IL 120526 at ¶ 20.

ICEA states that proposed Sections 412.115(b)(4), (6), and (8) should be clarified to confirm that a RES must estimate only the supply (as opposed to total bill) rates per kWh. This is because, as detailed above, pricing for delivery services and non-supply riders frequently change and are, generally speaking, out of a RES’s control. ICEA FN Reply at 25-26.

ICEA agrees with Staff’s recommendation to subsection (b)(8) which clarifies that time-of-use products are not variable. ICEA FN Reply at 26-27.

C. RESA

RESA states that there are a number of problems with subsection (b)(12) including language requiring that a new RES customer’s first bill include information regarding the customer’s right to cancel the contract. First, subsection 412.115(b)(12) is erroneous and needs to be corrected. The right to terminate a contract within 10 business days after the date of the first bill only applies to contracts which contain an early termination fee. See Section 412.230 (Early Termination of Sales Contract). Second, subsection 412.115(b)(12) sets forth what needs to be included in the UDS, it is not the appropriate place to set forth a requirement as to what must be included in the sales contract. Third, both the sales contract and the UDS inform the customer of his or her right, if the contract contains an early termination fee, of terminating the sales contract within 10 business days after the date of the first bill with the RES charges on it, without payment of the early termination fee. RESA argues there is no need to include the same language on the utility bill, especially given the fact that other provisions of the Proposed Rule already interfere with a RES’s limited space on the electric utility’s bill. RESA FN Initial at 23-24.

The AG proposes that the Commission would require a RES to provide customers with a comparison between its price and the utility default price. RESA states that the

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AG’s proposal ignores the realities of the competitive marketplace. Utilities’ rates are subject to change periodically, including possible monthly adjustments. Moreover, the AG ignores the fact that RESs offer many products including fixed rate products, variable rate products, fixed bill products, clean energy products, and various bundled offers. The UDS contemplated by the Proposed Rule is already a less than useful document because of the Commission’s rejection of RESs’ proposals to expand that document to explain pertinent features of their offers. RESA FN Reply at 11-12.

D. Ameren

Ameren does not oppose the inclusion of language requiring that “a new RES customer’s” first bill include information regarding the customer’s right to cancel the contract. However, Ameren interprets this language to mean that every time a customer switches to a new third party supplier, information regarding the customer’s right to cancel the contract must be included on that customer’s first bill; to that effect Ameren requests clarification as to the Commission’s intent of this language. Ameren is concerned with the limitations of its billing capabilities, which the FNO acknowledges. FNO at 95. Specifically, Ameren has concerns that the inclusion of this message may pose a practical issue with respect to customers on Ameren Rate Ready utility consolidated billing and purchased receivables (“UCB/POR”) billing option. Ameren is able to attach up to two RES messages on a UCB/POR bill. However, the number of customers who receive these messages varies depending on whether an account is billed using the Rate Ready UCB/POR billing option or the Bill Ready UCB/POR billing option. Under Rate Ready billing, a RES is capable of attaching up to two messages on each bill. But, these messages can only be entered: (1) at the RES level, meaning that all accounts receive the same message(s); or (2) at the rate code level, meaning that all accounts assigned to a given rate code would receive the same message(s). Rate Ready billing is not designed to allow RESs to enter individual, account-specific messages. Due to this limitation, it may be difficult, if not impossible, to include information regarding the customer’s right to cancel the contract on a new RES customer’s first bill if the utility is billing under Rate Ready. Ameren FN Initial at 4.

Staff commented that it is not opposed to the inclusion of this requirement and understands that ComEd’s and Ameren’s bill format is such that there is likely to be space for such a message. Ameren clarifies that Staff is mistaken in thinking that the issue is whether there is enough space on a customer’s bill to include the proposed message, as there are other technical considerations. Ameren FN Reply at 2.

E. CUB

CUB supports the compromise in Section 412.115(b)(17) that the UDS state that “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.” This strikes an appropriate balance between the need for a uniform and concise list of information and terms on the UDS, while also providing a resource to customers for additional relevant information that is important to guide their decision-making. From a consumer perspective, evaluating how a particular supplier’s rate fluctuates is valuable information. For example, some RESs were able to absorb the large price spikes that occurred during the polar vortex of 2014, and some were not. CUB does not suggest historical price

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information aids in predicting precise future rates, but it is certainly valuable information in assessing the risks inherent in switching electric suppliers, which are not subject to price regulation. CUB supports the FNO’s requirement that one year of pricing data be separately available for each product offered by a RES. CUB FN Initial at 7.

CleanChoice complains that the requirement for a UDS sent through direct mail solicitations should be modified to exclude requirement of the agent ID and date of solicitation, because these are not relevant to that form of solicitation. This issue is not a barrier to adoption of the FNO’s proposed UDS. CUB agrees with NAE’s suggestion that “it would be appropriate to indicate ‘N/A’ in a UDS in those circumstances.” NAE FN Initial at 16; CUB FN Reply at 11.

F. AG

The AG recommends that the FNO be modified to require RESs to provide a price comparison of their proposed rate to the utility default rate as part of the UDS required by proposed Section 412.115. This information would permit customers to perform a straightforward, apples-to-apples comparison of the price being offered by a prospective RES and the default utility price. The FNO rejects the AG’s proposal, stating that it is redundant because “proposed Section 412.115 ... directs customers to PlugInIllinois.org to find the current utility supply prices as well as offers from RESs.” FNO at 130. While PlugInIllinois.org can be a valuable resource, especially in evaluating solicitations made by mail or on a RES’s website, it is unlikely that a consumer will take the time to go to PlugInIllinois.org when confronted with a telemarketing call or in-person solicitation. AG FN Initial at 4.

According to the AG, RESs’ telemarketing pitches are not designed to accommodate a deliberative process, whereby potential customers are encouraged to take the time and effort during the call to go to the PlugInIllinois.org website to locate the utility price-to-compare and to evaluate whether the RES is offering a price or product that makes economic sense. Rather, the scripts the AG has reviewed appear to be designed to provide minimal information and to push the potential customer in the direction of enrolling with the RES. Because in-person solicitations do not permit close monitoring, the AG does not have direct knowledge of the content of such sales techniques. The AG opines that in-person solicitations, like telemarketing calls, are high-pressure and are not intended to encourage potential customers to find the utility price-to-compare in order to make an informed decision.

The language the AG proposes be included in Section 412.115 is substantially similar to a provision New Jersey’s regulations concerning that state’s RES-equivalents. NJ Admin. Code §14:4-7.4(b)(c). According to their websites, various members of RESA and ICEA provide service in New Jersey. Because these RESs are able to comply with such a provision in New Jersey, there should be no reason that they cannot comply with a similar requirement in Illinois. AG FN Initial at 4-6.

The AG points out that NAE opposes the requirement that RESs offering a variable-rate product include in its UDS a one-year price history of the variable-rate product. NAE complains that RESs, unlike utilities, offer many rate options and, accordingly, it may be difficult, if not impossible to include the required information in its UDS. NAE’s argument should be rejected. It is the AG’s experience that variable rates

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are a major source of customer confusion and frustration. Quite often customers are given a “teaser” rate for a product that lasts for a relatively short period of time (perhaps two or three months). The rate is then converted to a variable rate which can wildly fluctuate. While this concept seems clear, it is obvious that customers are frequently unaware of this and are surprised when their rate changes, sometimes dramatically. Providing a 12-month history of how variable rates change can provide prospective customers notice of potential fluctuations of their rate.

Moreover, the AG notes that in the Commission’s Order initiating the NOI process that preceded this case, the first topic the Commission asked be addressed was variable rates. Requiring RESs to provide a 12-month price history addresses the Commission’s clear concerns regarding variable rates. Such information would be helpful to customers in understanding the potential value – or lack of value – in specific variable-rate products. The suggested added subsection is taken almost verbatim from a very similar Texas regulation. Tex. Admin. Code, Chapt. 25, Sub Chapt. R, §25.475. According to their websites, various members of the RESA and ICEA provide service in Texas. AG FN Reply at 17.

The AG agrees with Staff’s position that the Commission add the language in Section 412.115(b)(4)-(b)(8) to clarify that rates that may change more than once per month are time-of-use rates.” The Commission should also consider defining “time-of-use rates” in Section 412.10.

The AG believes that Section 412.115(b)(12) should require that a customer’s first RES bill include language stating that the customer can cancel the contract. ICEA opposes this suggestion stating that it might not be practical to include such a message on the utility bill and that it would cause RESs to incur additional costs. While the AG understands ICEA’s concerns, there is no doubt that residential and small commercial customers do not fully understand retail competition. There is also no argument that some RESs have used aggressive and misleading sales techniques to take advantage of customers’ lack of understanding. Moreover, the General Assembly made clear that “mechanisms be provided to enable consumers to protect themselves from marketing practices that are unfair or abusive.” 220 ILCS 5/16-117(a). Informing customers of their right to cancel a contract that they may have entered into without fully understanding its import or meaning is one such mechanism. AG FN Reply at 13.

G. NAE

Subsection (b)(13) of proposed Section 412.115 requires the UDS to state that “[t]he seller is not endorsed by, representing, or acting on behalf of…a governmental body or a governmental program...’” NAE notes that this language does not include the parenthetical exception for the very same disclosure also required by Sections 412.110(l), 412.120(a), 412.130(a), 412.140(a), 412.150(a), and 412.160(a) – “(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).” The same parenthetical exception should be added to Section 412.115(b)(13).

NAE states that subsection (b)(16) requires a UDS to include an agent ID. Certain solicitations (e.g., direct mail and internet) are conducted without a RES agent. NAE understands it would be appropriate to indicate “N/A” in a UDS in those circumstances.

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NAE proposes to revise subsection (b)(16) to read “The UDS shall include an agent ID, if applicable” to clarify the Proposed Rule. NAE FN Initial at 18.

NAE states that subsection (b)(17) requires a UDS for a variable rate product to “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.” The corollary requirement for a RES to post or provide such information is contained in proposed Section 412.170(f), although that requirement only applies if a RES “currently enrolls residential customers on a variable rate for three consecutive months in any electric utility’s service [territory].” Both of those sections also provide that “A RES shall not rename a product in order to avoid disclosure of price history.”

NAE states that as preliminary technical corrections, these corollary provisions should by synchronized with respect to the three month variable rate offer threshold. Thus, Section 412.115(b)(17) should be revised to read “[f]or a variable rate product offered by a RES that currently enrolls residential customers on a variable rate for three consecutive months in any electric utility’s service territory, the UDS shall...” NAE FN Initial at 19.

NAE claims that in attempting to broaden the regulation of RESs to something more akin to the Commission’s regulation of utilities, the Proposed Rule inappropriately treats all RESs and their products as uniform and homogenous which is the opposite of competitive suppliers and what competitive products represent. This results in requirements that render compliance difficult to impossible as well as costly. The variable rate posting requirements will be relatively easy to comply with for a RES that – as might be expected for a utility -- has a single uniform, homogenous variable rate that applies to all residential customers regardless of when they signed up for service). NAE explains that such a RES could post a simple list of 12 variable rate prices for the last 12 months. Other competitive suppliers may have variable rate offers and contracts with price structures that change over time in response to market conditions and developments as well as other factors. For example, a RES with a variable rate structure based on a publicly-available index plus a fixed adder may change its adder each month over time. Such a RES would potentially have 12 different prices in effect in any given month and as many as 144 variable rate prices over the course of a year. Such a RES could also have multiple variable rate products, such as a variable rate with a cap or a product that is part fixed price and part variable price. Such a RES could have hundreds if not more than a thousand different prices over the course of a year, particularly if the RES varies the “cap” or “fixed/variable” blend over time. NAE FN Initial at 20-22.

NAE argues that it may be impossible or extremely burdensome for some RES to manually comply with the rate disclosure requirement under these circumstances, and equally burdensome and costly to develop automated systems to pull and calculate such data. Putting aside that historical price information is not necessarily a good or reliable predictor of future prices (and thus of very limited use to a consumer), the multitude of different variable prices for such a RES would render such data even less useful and potentially confusing for consumers. For all the forgoing reasons, NAE asserts that the proposal for automatically providing a variable rate history should be rejected. NAE FN Initial at 22.

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NAE does not oppose Staff’s proposed clarification that Section 412.115(b)(8) include language as in Section 412.115(b)(4) requiring a RES to include the phrase “time-of-use; refer to contract” in the portion of the UDS addressing “subsequent price after the initial price” if the variable rate disclosure language does not apply for a rate changing more than once per month.

NAE agrees that if the requirement to include language necessitating that a new RES customer’s first bill include information regarding the customer’s right to cancel the contract is adopted it should be included in Section 412.230, as stated by Staff. The opportunity to terminate the contract without a termination fee or penalty within ten business days after the date of the first bill is already communicated at least three times to a RES customer through a combination of the sales presentation, the enrollment verification, the UDS, and the contract. Another repetition of the same disclosure is unnecessary. NAE states that rather than serve any reasonable notice function, such a repetitive requirement necessarily amounts to forcing a RES to promote termination of its own contract. Also, the Commission’s authority to regulate RES rates and prohibit termination fees beyond the limitations on cancellation fees contained in Section 16-119 of the Act has not been established. 220 ILCS 5/16-119.

NAE finds the AG’s proposal to modify Section 412.115 so as to also require the UDS to provide customers a comparison between the RES’ price and the utility default price to be both unnecessary and unworkable. AG FN Initial at 3-6. The Commission’s PlugInIllinois.org web page already contains information to enable customers to compare and make informed choices with respect to competitive electricity products, as well as educational material to enable customers to better protect themselves in the competitive marketplace. NAE continues that the UDS is intended to be a short and simple presentation of key information that customers can use to easily assess and/or compare offers. The AG’s proposal complicates the UDS and would no doubt make it impossible to achieve the one page document envisioned. NAE FN Reply at 8-9.

According to NAE, the AG’s proposal is unworkable because it purports to require a RES to present information it does not have. As to the “estimated percentage savings,” a RES may be offering a product that offers predictability but does not guaranty savings. Depending on the month of the year, utility default prices may not be known for a significant portion of the term of the contract. While procurement of default electric supply for Illinois electric utilities currently focuses on annual procurements which are effective for a full planning year and make utility default prices fairly predictable and constant over that time period, that could change over time if more frequent procurement events are included in approved procurement plans and make utility default pricing less predictable. NAE explains if utility default rates are only available for a portion of the proposed contract period, the RES will not know the utility default rate to be used for the balance of the contract. This particular issue becomes even more problematic if a RES is offering a multi-year contract where no published utility supply rate even exists.

NAE states that the UDS as currently proposed clearly discloses if an offer involves a variable rate, and refers the customer to the document where details can be obtained rather than creating a complicated and unworkable UDS. The Commission was correct to reject the AG’s proposal, and should continue to do so. NAE FN Reply at 9-11.

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H. CES

CES believes the UDS will be helpful to the Commission, customers, and RESs to: (1) clarify that the Part 412 Rules require the inclusion of a UDS with other contracting materials; and (2) prescribe the form and content of the UDS. CES FN Initial at 7-8.

CES requests that subsections (b)(13) and (b)(14) be modified slightly to refer to the transaction between the customer and the RES as a “contract” rather than a “sales solicitation.” This modification accounts for the fact that, by the time the customer receives a hard copy of the UDS or the UDS statements are read by the Third Party Verification (“TPV”) agent over the phone, the customer has taken affirmative steps to complete the switch, and significant disclosures regarding the RES’s product and service have already been communicated. Accordingly, the term “contract” rather than “sales solicitation” in this portion of the UDS more accurately depicts the near-final enrollment interactions between the customer and the RES at the late stages of the transaction. CES FN Initial at 8-9.

I. ComEd

ComEd shares some of Ameren’s operational concerns on whether subsection (b)(12) of the Proposed Rule should include language requiring that a new RES customer’s first bill include information regarding a customer’s right to cancel the contract, and recommends that the FNO clarify that any bill messaging for consolidated utility bills must conform to the existing requirements and limitations of the utilities, as the utility may not have the ability to target individual customers in a manner that is consistent with this requirement. It is the RES’s responsibility to ensure their new customer is properly informed of their rights to cancel the contract. ComEd FN Reply at 5-6.

J. CleanChoice

CleanChoice remarks that two components of the UDS may pose an issue: the date the customer was solicited and an agent ID. While a RES could certainly include the date the mail was sent on the UDS, it cannot indicate the date the customer was “solicited” if the customer enrolls as a result of direct mail. Similarly, the customer does not have interaction with an agent during receipt of direct mail, therefore there is no “agent ID” to be provided. CleanChoice respectfully requests that the applicable requirements of the UDS be modified when used with direct mail such that the date of solicitation and an agent ID may be omitted. CleanChoice FN Initial at 1-2.

K. Commission Analysis and Conclusion

The Commission agrees with Staff and NAE that subsection (b)(8) should be modified to include time-of-use contracts, similar to the language in subsection (b)(4). This change, coupled with the modification to Section 412.165, should alleviate the concerns of several parties to this subsection as well as what were to be the ramifications to Section 412.165.

The FNO requests comment on whether subsection (b)(12) of this Proposed Rule should include language requiring that a new RES customer’s first bill include information regarding a customer’s right to cancel the contract. The Commission agrees with several parties that this information is provided to the customer in several sections of the Proposed Rule. The Commission is also cognizant of the technical considerations

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explained by ComEd and Ameren that may make it difficult for the RES and/or the utility to provide this information consistently across all new RES customers. The Commission points out that adding this language to Section 412.230 instead of 412.115 does not alleviate the concerns raised by the utilities. Because the customer is made aware of his or her right to cancel the contract in Sections 412.110(k) and 412.115(b)(11), adding this information to his or her bill, considering the technical issues that may arise, seems unnecessary.

The Commission adds the parenthetical to subsection (b)(13) which mimics language in proposed Sections 412.110(l), 412.120(a), 412.130(a), 412.140(a), 412.150(a), and 412.160(a), as pointed out by NAE regarding affiliations with governmental entities. The Commission also adds this language to the UDS’s Appendix to the Proposed Rule.

The Commission declines to modify subsections (b)(13) and (b)(14) as requested by CES. CES wishes to remove “sales solicitation” because the UDS is more effectively described as a “contract.” The Commission disagrees. While the UDS may be provided to a customer about to enroll in supply service from a RES, the UDS is more of a synthesis of the important information of a RES’s offer, not the RES’s contract. As the FNO describes in detail, the UDS is intended to be a “standard form with the most important disclosures, prices and terms and conditions of a RES offer.” FNO at 44 (emphasis added). The RES contract would consist of significantly more information and is not regulated by the Proposed Rule, provided it includes the information described in Section 412.110.

CleanChoice raises a concern about subsection (b)(15). It seems obvious to the Commission that a RES may not be able to provide information for every section of the rule, or that certain requirements may not be applicable. The UDS is meant to provide a snapshot of what the Commission deems is the most relevant information from a sales offer by a RES. Not every subsection will apply to every RES or every offer. Each RES can use its own business judgement to include the information it has available to provide the customer with the relevant information that it has to allow the customer to make an informed decision.

Similarly, the Commission declines to remove the requirement for a RES agent ID in subsection (b)(16). If that information is not available because of an online enrollment, or other automated system, the RES can leave the information blank or enter “not applicable.” However, in situations such as in-person, it is imperative that the customer have some way to identify the RES agent. The Commission declines to add NAE’s proposed language specifying “if applicable” to subsection (b)(16). All of the information required in the Proposed Rule is to be provided “if applicable” or available, so there is no reason to add that language.

The Commission rejects the AG’s proposals to add two new price disclosures to Section 412.115. As ICEA correctly points out, this information is already disclosed to customers as part of Section 412.110’s minimum terms and conditions, and will be difficult, if not impossible, for RESs to accurately disclose utility comparisons for numerous reasons discussed at length above.

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In its BOE, ELPC raises for the first time a suggestion to modify the UDS to require electric utilities to include a “price to compare” on customers’ monthly bills, which would be the total rate in cents per kWh that customers would no longer be charged by the utility if they switch to RES service. ELPC BOE at 2. ELPC also recommends this requirement be added to Part 410 of the Commission’s Rules. 83 Ill. Adm. Code 410.210. This recommendation is rejected, as it is beyond the scope of this rulemaking.

X. SECTION 412.120 IN-PERSON SOLICITATION

A. Staff

Staff states that Section 412.120(c) of both the existing rule and the Proposed Rule require that the sales agent’s identification be “visible at all times” and that the required information be “prominently display[ed].” The Proposed Rule clearly indicates that the information must be easily read by the prospective customer. Moreover, while standardizing the agent’s badges might reduce confusion, it might also have the unintended consequence of exacerbating a problem that the Commission is attempting to address elsewhere in the rule by prohibiting sales agents from implying or stating that they are working on behalf of a “program” instead of attempting to enroll a customer with an independent RES. Staff finds that standardization could have this effect by making badges appear too similar, so that individual companies no longer stand out as separate brands. While the supplier logo might obviate some of this concern, the requirements of the Proposed Rule are, according to Staff, already adequate to identify the sales agent, and this will be further reinforced by the much improved UDS Form requirement of the Proposed Rule. Therefore, in Staff’s view, further standardization of the badges is unnecessary. Staff FN Initial at 7-8.

The Commission requests comment on what constitutes “consent” under Section 412.120(i) of the Proposed Rule to market to customers within multi-unit buildings. FNO at 62. The Commission further seeks comment on who should be allowed to give such consent. In Staff’s opinion, only the prospective customer should be authorized to give consent to any marketing at his or her premises within a multi-unit building. Allowing persons other than the individual customer to give such consent is almost certain to result in marketing to customers who do not wish to be solicited. Further, such a rule would be difficult to enforce. The prospective customer, who is typically the one complaining to the Commission on his or her own behalf, has specific knowledge of whether he or she consented to be solicited. Allowing other parties, such as building managers, security guards, maintenance personnel, and condominium associations, to consent to marketing on residents’ behalf will mean that individual customers will have a difficult time alleging that marketing was improper, even where such customers did not consent to it. Moreover, Section 412.120(i) of the Proposed Rule requires individual consent from each prospective customer, thus effectively prohibiting anyone else from giving that consent. Staff FN Initial at 8-9.

Staff states that there does not appear to be a need to standardize or define further what is meant by “consent.” This is a simple pass/fail standard on its face. Either the customer agreed, and thereby allowed access to his or her door within the building, or did not do so. Pursuant to the Proposed Rule, no sales agent should be anywhere beyond the main entry of a multi-unit building unless the customer who the agent is preparing to

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solicit has already given the agent consent to do so. Further, since sales agents wandering freely within a multi-unit limited access building may be trespassing, there is a legitimate security and law-enforcement issue involved. Any Commission effort to define what constitutes “consent” could have the unintended consequence of conflicting with state law or local ordinances on the subject.

Staff states that the Commission further requests comment on whether RES agents engaged in in-person solicitations should be required to wear a uniform. FNO at 63. This appears to Staff to present questions similar to those related to standardizing the contents of agent badges. While intended to make clear that RES sales agents are not utility employees or agents, the unintended consequence of such a requirement might be confusion about the role of the agents as sellers for independent suppliers. Such a requirement might give the appearance that all RES agents work for the same entity. Staff FN Initial at 9.

Staff notes that certain parties assert that requiring both a LOA and TPV of enrollment conflicts with Section 2EE of the CFDBPA. Significantly, the AG, who enforces the CFDBPA, appears to have no such reservations. Staff asserts such an assertion is in any case meritless. The CFDBPA, as the Illinois Supreme Court has declared, is:

[A] regulatory and remedial enactment intended to curb a variety of fraudulent abuses and to provide a remedy to individuals injured by them. Its stated purpose, set forth in its preamble, is to protect Illinois consumers … against fraud, unfair methods of competition, and other unfair and deceptive business practices. The [CFDBPA] is clearly within the class of remedial statutes which are designed to grant remedies for the protection of rights, introduce regulation conducive to the public good, or cure public evils.

Scott v. Ass’n for Childbirth at Home, Int’l, 88 Ill. 2d 279, 288 (1981). Staff finds that it is difficult to see how requiring an LOA and TPV conflicts with the intended purpose of the CFDBPA; indeed, it might be said to effectuate that purpose.

Staff continues that, as a remedial statute, the CFDBPA is to be liberally construed to effectuate its remedial purpose in light of the purpose of its enactment and the evils to be remedied. Cripe v. Leiter, 184 Ill. 2d 185, 191 (1998). Staff argues that construction of Section 2EE as a limitation on consumer protections therefore is facially inconsistent with the liberal construction which must be given to Section 2EE, as well as with legislative intent. Staff FN Reply at 6.

Staff states that the argument that requiring an LOA and TPV conflicts with Section 2EE of the CFDBPA cannot succeed without manufacturing a conflict where none exists. Section 2EE provides that a RES may use either an LOA or TPV. 815 ILCS 505/2EE(a), (b). Staff states that nothing in the statute specifically prohibits the use of both. This is significant, because – at least in the context of federal conflict preemption, a state regulation is preempted by federal law based on conflict only where “‘compliance with both federal and state requirements is a physical impossibility.’” Spitz v. Goldome Realty Credit Corp., 210 Ill. App. 3d 215, 219 (1st Dist. 1991), quoting Florida Lime and Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43 (1963). State regulations must “irrevocably

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conflict” with the federal scheme. “A hypothetical or theoretical conflict is insufficient to warrant [conflict] preemption.” Flying J, Inc. v. Hollen, 621 F.3d 658, 662 (7th Cir. 2010). Staff notes that if a RES complies with the Proposed Rule, it has by definition complied with Section 2EE, and there is no conflict. Staff FN Reply at 7.

B. ICEA

ICEA states that the FNO provided a well-reasoned approach to the definition of “solicitation”, specifically as it relates to face-to-face interactions. FNO at 56. ICEA believes the Commission’s clear and useful definition should be explicitly incorporated into the rule. ICEA agrees with the Commission’s analysis, wherein the Commission described a practical, workable bright line: the Commission regulates an interaction to the extent that the customer can be enrolled through that interaction. ICEA recommends that this bright line be incorporated explicitly into Part 412 in its own Section. ICEA notes that the Proposed Rule clearly addresses the same issue in Proposed Section 412.150 (Direct Mail). Instead of restricting this language to that Section and the FNO, ICEA recommends instead a new Section:

Applicability of Sections 412.120, 412.130, 412.140, 412.150, 412.160, and 412.170. All of the minimum requirements of Sections 412.120 (In-Person Solicitation), 412.130 (Telemarketing), 412.140 (Inbound Enrollment Calls), 412.150 (Direct Mail), or 412.160 (Online Marketing) of this Subpart for a particular interaction only to the extent that a RES or RES agent actually enrolls a customer during that interaction through the methods described or is able to enroll a customer. The training requirements of Section 412.170 (Conduct, Training, and Compliance of RES agents) only apply to the extent the RES agent actually interacts with a customer or is ultimately responsible for the substance of a written communication to a customer. If a customer cannot enroll through a particular interaction, the corresponding Section does not apply. Nothing in this Section waives any other requirements of law related to the interaction between a potential customer and the RES or RES agent.

In the alternative, ICEA recommends that if the Commission wishes to restrict the language described above to Sections 412.120 and 412.150, the following language should be added to memorialize the contents of the FNO in Section 412.120:

Scope. This Section 412.120 shall only apply to in-person interactions where the RES agent has the ability to enroll the customer in power and energy service. If the customer must enroll through a method regulated by a different Section in this Subpart, the requirements of that Section apply instead.

ICEA FN Initial at 16-17.

ICEA does not identify any objections or opposition to the FNO’s standard for solicitation. ICEA points out that CES recommends that the Commission modify the

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Proposed Rule to not apply Section 412.120 when an enrollment does not occur. Although ICEA sees the logic on some level, ICEA also understands that such phrasing may lead to concerns that an exploitable loophole exists in the rule. ICEA does not believe such concerns would be valid, but ICEA believes a better approach would be ICEA’s proposal that Section 412.120 only apply when the in-person marketer is able to enroll a customer. ICEA FN Reply at 27-28.

ICEA states that it generally supports badging requirements for RES agents, particularly in door-to-door situations. ICEA also did not oppose the requirement that the RES agent’s full name appear on the badge, a carryover from the currently existing door-to-door solicitation rule. However, ICEA has become aware of concerns about providing too much personal identifiable information of RES agents on badges. Specifically, ICEA became aware of a petition in New York to alter badging requirements because displaying first and last names made RES agents “easily identifiable through internet searches” and that certain RES agents “were stalked and harassed through social media.” See Petition of Green Mountain Energy to Amend Certain Sections of the Uniform Business Practices, N.Y. PSC Docket No. 98-M-1343 at 2-3 (Oct. 7, 2016).

ICEA recommends that the Commission act proactively on this issue to reduce the chances of stalking and harassment through social media of RES agents. The petitioner in the New York petition recommended that badges include a first name and ID number only. ICEA recommends that the Commission adopt this approach in Proposed Section 412.120(c) and remove the last name requirement in proposed Subsection 412.120(c)(1). ICEA notes that both Staff and RESA opposed further badging and uniform requirements in their respective FN Initial Comments. In particular, ICEA agrees with Staff’s concern about over-standardization of uniforms because it might give the appearance that all RES agents work for the same entity. ICEA FN Reply at 29.

Proposed Section 412.120(d) requires that RES agents cease in-person solicitations at residences at the earlier of 7 PM or “sunset.” ICEA remarks that while the term “sunset” has a dictionary definition, sunset itself is a process that occurs over a period of time. Because of the ambiguity of when “sunset” occurs, it is hard for a RES to instruct its agents in how to comply and monitor compliance. ICEA believes that strong market rules reduce and eliminate ambiguity to the extent feasible.

ICEA recommends that the Commission delete “sunset” from the final rule because during wintertime, sunset by almost any definition will frequently take place before close of business, preventing RES agents from contacting many potential customers who work during business hours. Although ICEA does not wish to relitigate general issues of Commission authority, ICEA believes the Commission does not have the authority to restrict the hours of in-person sales activity. Nevertheless, ICEA does not oppose the concept of reasonable restrictions on the hours for door-to-door sales on policy grounds. ICEA FN Initial at 18-19

ICEA recommends that the Commission reject any proposed uniform requirement for RES agents conducting in-person solicitations. While ICEA believes that some sort of context-specific dress code is a best practice for RES agents and that RES agent dress should not violate other requirements (such as implying endorsement of a utility), ICEA urges the Commission to reject a universal RES agent dress code. As an initial matter,

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ICEA is unaware of state-required uniforms for any other form of in-person solicitations outside of this proposed requirement on RESs. ICEA is also unsure of what uniform would be equally appropriate for all RES agents. RES agents as a category include both exclusive and non-exclusive agents, and they may offer products or services in addition to RES supply that do not require a RES Certificate to offer. ICEA FN Initial at 19-20.

ICEA continues to believe that the consent required under subsection (j) to enter a multi-unit building should depend on the RES’s actions authorized, and RESs should be free to act within authority granted by property management companies. ICEA addressed this issue extensively prior to the FNO. Among other issues, ICEA noted that the Act and Commission Rules already address many potential bad acts. ICEA also notes that a customer’s remedies are not restricted to the Act, because nothing in the Act waives RES agent liability for violating criminal or common law restrictions on property access. ICEA has concerns about the policy and authority bases for the Commission restricting the options of building owners or managers. ICEA FN Initial at 21.

ICEA believes that the type of consent should track the permission requested—especially if requested from the property manager. To the extent that a RES agent is operating a booth or kiosk in a common area, especially in larger buildings, the entity responsible for building management (such as the property manager or the condominium association) should be able to give consent. Furthermore, if the RES agent is dropping off literature at individual unit doors but not making contact with residents (not knocking on individual doors), building management should also be empowered to give consent. ICEA understands, however, a higher bar for initiating an in-person interaction at a resident’s door—especially for a smaller building such as a three- or six-flat where consent is necessary from fewer entities. ICEA FN Initial at 21-22.

ICEA urges the Commission to reject CUB’s proposal requiring audio and video recordings of in-person solicitations. CUB argues that the rationale for video and audio recording of in-person solicitation is the same as recording of telemarketing calls. As an initial matter, ICEA has objected to recording of telemarketing calls that failed to result in an enrollment on the basis of cost, and the same objections would apply equally to in-person solicitations. This is because not only must a RES collect the video and audio files from the RES agents, those files must be tagged, be accessible on short notice in the event of a Commission inquiry, and retained for the appropriate time period. ICEA anticipates that the challenges will be even greater in the in-person context, because (unlike telemarketing) the recordings will be obtained in the field and will need to be centralized with adequate controls to ensure all recordings are made, properly identified, and stored. ICEA’s cost objections apply in this context as well. ICEA FN Reply at 28.

C. RESA

RESA argues that Section 412.120 of the Proposed Rule should be revised by changing the heading back to the existing Section, Door-to-Door Solicitation, and making conforming changes throughout that Section. Other types of face-to-face solicitations should be covered in a new Section 412.125, as proposed by RESA prior to the FNO.

RESA states that, in support of applying a modified version of the requirements that are currently limited to door-to-door solicitation, the FNO mistakenly relies on the Affidavit of Mr. Peter Muntaner, formerly the Director of the Commission’s Consumer

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Services Division (“CSD”): “Mr. Muntaner has observed trends of common allegations and problems, many of which are face-to-face interactions.” FNO at 55. However, a review of Mr. Muntaner’s affidavit shows only the following two allegations related to in-person solicitation and both of those concern door-to-door marketing:

(k) RES agents’ failure or refusal to observe signs or notices which prohibit soliciting on customer premises. Customers allege that RES agents disregard such notices, and attempt to solicit enrollment on premises where customers have specifically requested that it not take place; and (l) Marketing in restricted areas, including in communities where marketing is restricted and in limited access high-rise living centers. Consumers allege that RES agents gain access to a limited-access building either by obtaining the permission of one resident, or based on some pretext, and then attempt to enroll other residents throughout the building without consent to do so.

Affidavit of Mr. Muntaner at 6; RESA FN Initial at 9-10.

RESA states that to the extent that these are problems, they are adequately addressed in proposed subsections (h) and (i) of the Proposed Rule, although they should be appropriately limited to door-to-door solicitation, because these two subsections do not address other types of in-person solicitation. The FNO ignores the fact that RESA modified its proposed Section 412.125 as part of its Brief on Exceptions to address the criticisms in the ALJ Proposed FNO.

RESA objects to the FNO’s attempt to treat all forms of face-to-face contact in the same manner as traditional door-to-door solicitation. There needs to be a distinction between the situation in which a RES agent goes to a potential customer’s residence and other face-to-face contacts in which the customer can choose to initiate the sales discussion. The Commission’s expansion of current Section 412.120 to apply to in-person solicitations other than door-to-door would lead to some requirements that defy common sense. For example, Subsection 412.120(d) would require the RES agent to “leave the premises at the customer’s, owner’s, or occupant’s request”, apparently even if the premises were owned or leased by the RES. RESA FN Initial at 10-11.

RESA’s proposed revisions to Section 412.120 and its proposed new Section 412.125 make the necessary distinctions between door-to-door marketing and other types of in-person solicitation. Again, RESA is not asserting that types of in-person contacts, other than door-to-door, do not require governing rules, but rather that those rules should be different than those for traditional door-to-door solicitations, which the customer did not solicit.

RESA is concerned about two requirements that were added by the Commission to the ALJ Proposed Order’s Proposed Rules. First, Section 412.120(d) would prohibit RES agents, in the absence of local ordinances or regulations, from soliciting customers at residential dwellings before 9AM and after 7PM or sunset whichever is earlier. Basically, the Proposed Rule would prohibit RESs from marketing when most customers would be home. The Commission’s rationale is that this modification is being made “to

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ensure the safety of all involved.” FNO at 59. RESA is not aware of any evidence in the record that the hourly restrictions that the Commission proposes to impose address any safety issue. If the local authority does not impose such restrictions on solicitation by any entity, it does not make sense that the Commission should limit marketing by RESs in a community where other entities are free to solicit customers regarding storm doors, siding, window replacements, charitable contributions, etc.

RESA is also concerned about proposed subsection (k) which would require RESs to perform criminal background checks on all employees and agents engaged in in-person solicitation and further would require that the background check be performed by an “independent contractor that is a licensed private detective or a similarly qualified entity”. RESA is not aware of any Commission rule that places a similar requirement on public utility employees that interact with customers, nor is RESA aware of any evidence in this proceeding that indicates that the substantial costs of hiring private detectives to conduct background checks of RES employees and agents is justified by any benefit for customers. At a minimum, if criminal background checks are to be required, the pertinent rules should be less prescriptive, and RESs should be granted the discretion of seeking that service from a public agency or a commercial entity in the business of providing that service. RESA FN Initial at 11-12.

RESA questions the Commission’s authority to require RESs utilizing in-person solicitation, to obtain both a LOA and a TPV. This proposed requirement in subsection (g) is in direct conflict with Section 2EE of the CFDBPA. Under the Commission’s Proposed Rule, the RES must not only obtain the written LOA, it must now also obtain a TVP before it can effectuate the switch. RESA states that People ex rel. Ryan v. Illinois Commerce Comm’n involved an argument that the Commission’s rules provided additional time for filing beyond that authorized by the Act. Specifically, appellants had argued that 83 Ill. Adm. Code 200.150(c) of the Commission’s Rules of Practice entitled them to four additional days beyond the 30-day statutory limit to file their application for rehearing of a Commission order. The Illinois Appellate Court found that the Commission does not have the power to modify the statutory 30-day period for filing an application for rehearing under Section 10-113 of the Act:

The Commission derives its power from the Public Utilities Act and only has the authority that is expressly conferred upon it. Because the Commission is a creature of the legislature, its acts or orders that fall beyond the purview of the statute creating it are avoid. Since the 30-day time period for filing a rehearing petition is statutory, neither the Commission nor the parties may extend it.

People ex rel. Ryan v. Ill. Commerce Comm’n, 298 Ill. App. 3d 483, 488 (2nd Dist. 1998)(citations omitted). RESA FN Initial at 12-14.

RESA states that the Commission’s consideration of whether to regulate identification badges is micro-management. Proposed Section 412.120 already requires the identification badge to “prominently” display the RES’s agent’s full name in “reasonable size font”, the agent’s ID number, the RES agent’s photograph, and the trade name and logo of the RES. The concept of further regulating identification badges is

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excessive. RESA also notes that the Commission does not have regulations governing the identification badges of public utility employees.

RESA argues that proposed subsection (i) is too vague for RESA to provide comments on the Commission’s questions; rather the Commission’s language begs additional questions by RESA. For example, whether the multi-unit building is an apartment building, a condominium, or a strip mall. If it is an apartment building, whether it is a two-flat or a hundred-unit building. If it is a two flat, whether there is one access door that must be unlocked or whether the RES agent can walk up or down the stairs and knock on both doors. If it is a condominium unit, whether the by-laws permit the condominium association to allow access to all of the units. If it is a strip mall, whether the RES agent can go into each business. In RESA’s opinion, Section 412.120(i) should be deleted. RESA FN Initial at 24-26.

RESA finds that requiring RES agents to wear uniforms is another example of micro-management. A RES has the discretion to require representatives to wear different business attire, such as suits, rather than uniforms, as long as the representatives wear the required identification badge appropriately and prominently identifying the RES which they represent. RESA FN Initial at 26.

D. ComEd

ComEd generally shares Staff’s view that no additional changes to this Section are required, because the Proposed Rule’s requirements regarding badges and uniforms are already adequate to identify the sales agent and minimize the risk of confusion or deception. ComEd FN Reply at 6.

E. CUB

CUB states that the FNO rejects its proposal to require in-person solicitations to be audio and video recorded, citing potential costs, despite the fact that there is no evidence in this docket about the actual cost of performing this activity. Other than calling it “costly,” RESA did not specifically address the costs, and ICEA did not even raise cost as an argument against the proposed requirement. There can be no doubt, and no party argues, that the public policy reasons for recording telemarketing calls, which the FNO requires, and recording in-person sales are the same: to provide a record of a sale (or attempted sale) to ensure that the sale complies with all existing laws and rules. Because there is virtually no oversight and no record of the interaction at the door step, it is very difficult to ascertain exactly what a customer is told at the door. CUB states that an audio and video recording of the sales pitch would assist both consumers and RESs in resolving disputes, and would serve as a significant deterrent to RESs from misleading pitches. Instead, RESs would be required to accurately and clearly explain the terms and conditions of their products. CUB FN Initial at 8.

CUB argues that it is not enough to simply encourage RESs to pursue this practice, as the FNO suggests. The evidence of marketing abuses shown by Staff, CUB and the AG demonstrate that recording of in-person solicitations is even more essential than for telemarketing calls for the purpose of identifying and averting misleading sales, because of the high-pressure nature of the in-person sales channel. Further, the FNO itself points out that some RESs already use this practice. CUB agrees that, with the advent of

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inexpensive tablet computers, RESs and their agents often already carry tablets to enroll customers at the door. In this case, the cost to record the interaction would be reduced.

CUB states that parties’ vague complaints about the potential costs do not present sufficient reason to decline to adopt this requirement. First, neither NAE nor RESA even attempt to quantify the potential cost of recording each sale, so the Commission has no real basis on which to conclude that the practice is cost-prohibitive. Second, ICEA did not even raise cost as an objection to the proposal. Third, other RES objections about the cost of telemarketing recordings are exaggerated. Thus, basing the rejection of CUB’s proposal to audio and video record in-person sales on the potential costs is speculative at best and does not consider the benefits that would outweigh those undefined costs. CUB suggests to mitigate the Commission’s concerns about cost, the requirement to record could be limited to audio, like the requirement to record telemarketing solicitations. At a minimum, the Commission should reconsider adopting the requirement to audio record in-person solicitations, for all the same reasons telemarketing calls are required to be recorded. CUB FN Initial at 8-9.

CUB points out that RESA objects to the FNO’s attempt to treat all forms of face-to-face contact in the same manner as traditional door-to-door solicitation. RESA could not demonstrate, however, that the other locations where sales occur are initiated by the customer or that the customer understands what is being sold in those settings. For example, there can be little difference between a RES sales agent standing in front of a table at a community fair talking to potential customers walking by, attempting to get them interested in switching suppliers, and standing on someone’s doorstep. In either scenario, the agent is in the customer’s face potentially aggressively marketing their product. The customer could simply walk away or slam the door in an agent’s face, but many people find such behavior socially inappropriate no matter how unacceptable the marketing practice. CUB FN Reply at 9.

CUB notes that the source of disagreement between the supplier groups and all the consumer representatives in this proceeding (including Staff), is whether the face-to-face interaction in places other than the consumer’s doorstep warrants fewer disclosures and protections. The consumer advocates have all made clear that any face-to-face interaction (i.e. in-person) deserves the protections that are triggered by the “in-person solicitation” definition, whether on the doorstep or not. CES cites situations like permanent storefronts, temporary kiosks, trade show booths, and affinity programs as ones that are distinguishable from doorstep sales in that the customer, not the RES agent, initiates the sales conversation. Those situations, however, arguably warrant more protections than provided for by the “in-person solicitation” definition – not less. CUB explains that it is the high-pressure social nature of the interaction that is problematic in any face-to-face sales scenario. Moreover, there is no reason to believe that a salesperson at a kiosk (at an airport, for example), would exert any less aggressive sales tactics than at the doorstep. Without the disclosures and formalities required under the rules, a salesperson could manipulate the interaction to the detriment of the prospective customer. The implementation challenges discussed by CES are insignificant inconveniences for which a workaround could easily be adopted.

Regarding CES’s proposed language to address the Commission’s intent that the definition of in-person solicitation not extend to dinner table conversation, CUB submits

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CES’s proposed language would gut the intent of this definition because the potentially high-pressure nature of such an interaction calls for at least the same protections provided for doorstep sales. Furthermore, attempting to carve out exceptions like this in the rule could result in more harm than good by exempting interactions that may warrant consumer protections. CUB FN Reply at 9.

F. AG

The AG agrees with Staff’s arguments on the issue of consent in multi-unit dwellings. The Proposed Rule requires that an individual provide consent to marketing at his or her premises in a multi-unit building. One building tenant’s decision to allow a RES to market to him or her should not give a RES carte blanche to market to other building tenants that may have no interest in listening to sales pitches. The same is true for building employees, who should not be able to give consent to RESs to market to building tenants that may have no interest in receiving sales inquiries. Moreover, as Staff notes, a RES agent should only be permitted to be in the part of a multi-unit building for which she or he has received consent to be in. AG FN Reply at 14.

The AG argues that the Proposed Rule which expands regulations concerning door-to-door sales to all in-person marketing should be retained. While persons may have some experience with door-to-door sales, they may be more vulnerable when approached in other situations. Moreover, in the physical presence of a sales agent, a customer will often feel compelled to make a quick decision. This may create an impression that the customer feels that she cannot carefully review the offer. In addition, in-person sales are more difficult for RES management and Staff to monitor or review, inasmuch as the sales transaction is not recorded, regardless of where the conversation takes place. Finally, it is more efficient to have one set of regulations that apply to all in-person marketing rather than trying to craft different rules for different in-person sales situations. The AG submits that the simple concept of a standard definition which applies to sales and solicitations in which the RES agent is physically present with a customer provides clarity. AG FN Reply at 14.

G. NAE

NAE agrees with Staff that the requirements of the Proposed Rule are already adequate in this regard, and further standardization for badges is not required.

As to what constitutes “consent” under Section 412.120(i) of the Proposed Rule, NAE observes that what appears to be at issue here is a RES agent knocking on the door of an individual unit in a multi-unit building to attempt to conduct marketing. Subsection (d) of this Section requires the RES agent to “leave the premises at the customer’s, owner’s, or occupant's request.” This provision would appear to require a RES agent to cease marketing to an individual unit owner if asked to stop after knocking. NAE FN Reply at 11-12.

NAE takes no position on the substantive issue, but observes that the issue of what constitutes “consent” to enter a multi-unit building highlights the problem with the Proposed Rule attempting to address matters not specifically delegated to the Commission by the legislature. Nothing in the Act purports to address much less decide what constitutes trespassing or the rights of condominium associations, apartment

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building owners, and others who may have control over access to multi-unit buildings to grant or deny such access to a RES agent. Indeed, nothing in the Act explicitly addresses these issues even as to a RES agent, and such matters are traditionally controlled and enforced by the village, city, or other local governmental entity.

While the Commission’s jurisdiction is limited to that delegated to it by the legislature, NAE states that this does not mean that violations of laws or regulations concerning a RES’s performance cannot ultimately be considered by the Commission. But the access to multi-unit building provisions of the Proposed Rule are another example of the Proposed Rule exceeding the Commission’s authority and jurisdiction. NAE FN Reply at 12-13.

NAE states that Staff does not recommend a uniform requirement and believes that a uniform may contribute to confusion as to whether a customer is dealing with a utility representative or a RES agent. NAE does not support a uniform requirement for all in-person solicitations. The proposed in-person solicitation requirements apply to more than at-home sales solicitations, including booths at fairs, kiosks at malls, and in-person meetings with existing small-commercial business customers. NAE maintains that RESs should remain free to choose the specific attire of their RES agents in these situations. As noted above with respect to “consent” to enter multi-unit buildings, this issue also addresses a matter not specifically delegated to the Commission and beyond the Commission’s authority and jurisdiction. NAE FN Reply at 13-14.

H. CES

CES requests that the Commission reconsider the issue of in-person marketing by creating a regulatory distinction between door-to-door and non-door-to-door sales or, in the alternative, clarifying in the Proposed Rule itself (rather than in the Second Notice Order) that an in-person solicitation does not include a conversation during which a customer enrollment does not occur. As CES and other parties have explained, the Proposed Rule should differentiate between door-to-door sales and other types of in-person marketing channels, through which the customer -- rather than the RES agent -- initiates the sales conversation. These other types of marketing situations include permanent storefronts, temporary kiosks, trade show booths, and affinity programs. The over-regulation of in-person sales that are not door-to-door does not protect or bring advantages to customers. CES FN Initial at 2.

CES states that the FNO’s extension of door-to-door solicitation to all types of in-person sales may prove challenging or impossible for a RES to implement. For example, the FNO provides that in-person solicitations that lead to enrollments require a LOA and TPV. The FNO further provides that the RES agent must be in a location where he or she cannot hear the customer while the TPV is conducted. If a RES establishes a permanent storefront at which a customer may receive information regarding the RES’s products and enroll for service, and the store is visited by a customer wishing to enroll, the RES agent assisting the customer must: (1) retreat to the back of the store, assuming such a space exists; or (2) ask the customer to leave the premises and take the TPV call on his or her cell phone. If an RES sets up a temporary booth at a trade show at which its agents can explain the benefits of its products and a customer would like to immediately enroll, that may lead to a similar result. The Proposed Rule would force the

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RES agent to: (1) abandon the kiosk; or (2) ask the customer to move elsewhere to take the TPV call. Given these implementation challenges, CES recommends that the Commission create a regulatory distinction between door-to-door and other in-person sales. This could be accomplished by adopting a new Section similar to RESA’s proposed Section 412.125, which establishes a workable set of disclosures for non-door-to-door sales initiated by the customer. If such a proposal were adopted, door-to-door solicitations, which are initiated by the RES agent, would continue to be governed by Section 412.120. CES FN Initial at 2-3.

CES appreciates the Commission’s clarification in the FNO that its extension of the door-to-door sales regulations to all in-person marketing channels is not intended to restrict “friends and family” network conversations or “refer-a-friend” programs. FNO at 56. Specifically, the Commission states that “this sort of conversation would (not) fall under Section 412.120 because there is no enrollment.” FNO at 54. With this explanation, CES understands that the Commission does not intend to capture in the expanded in-person solicitation regulations “dinner table-type” conversations among family, friends, and business associates, during which RES products are discussed; this is because an enrollment has not occurred. Nevertheless, given that the Part 412 Rules themselves, rather than the Commission’s analysis in its Order, will serve as the key source of authority and primary reference point for consumers and RESs in years to come, CES requests that if the Commission declines to create the regulatory distinction between door-to-door and non-door-to-door sales described above, the Proposed Rule should expressly provide that the in-person solicitation provisions of Section 412.120 do not cover marketing situations in which enrollments do not occur. This could be accomplished with this slight modification to the definition of “In-Person Solicitation” in Section 412.10:

“In-person solicitation” means any sale initiated or conducted where the RES agent is physically present with the customer, but does not include a communication during which an enrollment does not occur.

CES FN Initial at 3-4.

The FNO provides that a RES that uses in-person marketing must verify a customer enrollment with both an LOA and a TPV. This double verification requirement is inconsistent with the CFDBPA and, for that reason, CES recommends that it be removed from the Proposed Rule. The CFDBPA establishes three procedures for Illinois RESs to verify that a customer would like to enroll with the RES: (1) TPV; (2) LOA; or (3) a customer-initiated call to the RES. The statute requires that the RES complete one of these three procedures to complete a customer enrollment. It does not require that a RES utilize a combination of the three procedures. The CFDBPA then sets forth detailed requirements for each method. Accordingly, Illinois has a comprehensive statutory scheme for enrollment verification options, and the new regulatory requirement that in-person solicitations require both an LOA and a TPV runs contrary to that scheme. CES FN Initial at 4-7.

CES supports Staff’s position which opposes standardization of RES agent badges and uniforms. While CES believes that the Commission is well-intentioned in its desire

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to protect and educate customers, it strongly believes that the Commission’s proposed requirements could exacerbate, rather than alleviate, customer confusion. CES FN Reply at 6.

I. NEMA

NEMA opposes the expansion of the current door-to-door solicitation provisions to include in-person solicitations because the proposed definition of “in-person solicitation” is framed very broadly. Not only would it encompass door-to-door sales for which there is a legitimate need for strong consumer protections. It would also include sales in which it is the consumer that is initiating the contact in public venues and from where the consumer can readily terminate the discussion by walking away. This would include consumer interactions with RESs at fairs, mall kiosks, and public events. These types of consumer-initiated and publicly conducted solicitations are not as susceptible to high pressure sales tactics because of the consumer’s ability to readily extricate themselves from the discussion, the consumer’s decision in the first place to initiate the contact, and the public nature of the venues. NEMA argues that the extensive requirements currently in place and proposed to be applied to door-to-door sales are unnecessarily burdensome and costly in the context of these other forms of sales and simply do not implicate the same level of consumer protection concerns. NEMA recommends that the proposed references in Section 412.120 to “in-person solicitation” be deleted and that such references instead be reverted to the language as utilized in the current regulation for “door-to-door solicitation.” NEMA FN Initial at 2-3

NEMA states that the FNO would revise Section 412.120(g) such that, “in-person solicitations that lead to an enrollment require a LOA and a third-party verification.” The proposal to require both a LOA and a TPV expands the requirement set forth both in the CFDBPA and the Commission’s current regulations in Section 412.120(g) that a customer’s authorization to change electric suppliers be obtained through either a LOA or a TPV. NEMA recommends that the Commission reject this duplicative and unjustified requirement because such a mandate will unnecessarily impose an additional expense in the choice process that will ultimately increase the cost of rendering energy service to consumers. Consistent with their individual business models, some RESs may want to utilize a LOA to obtain customer authorization of the sale while other RESs may want to utilize a TPV to perform this function. NEMA argues that either methodology is adequate and appropriate in and of itself to obtain informed customer authorization. NEMA FN Initial at 3-4.

J. Commission Analysis and Conclusion

The Commission will not repeat its analysis about why in-person solicitation has been expanded from door-to-door marketing. The topic was heavily briefed and thoroughly discussed in the FNO. Again, the Commission sees a benefit to regulating all in-person interactions and disagrees with ICEA, CES, NEMA and RESA that interactions where the customer approaches the RES are fundamentally different than interactions where the RES agent approaches the customer. The Commission disagrees with arguments that mall kiosks and other types of consumer-initiated and publicly-conducted solicitations are not as susceptible to high pressure sales tactics as door-to-door sales because of the consumer’s ability to readily extricate themselves from the discussion, the

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consumer’s decision to initiate the contact, and the public nature of the venues. Certainly the customer can leave a public area, just as a customer can shut his front door if he is not interested in a solicitation. The Commission seeks to regulate all forms of in-person solicitation to ensure that the customer understands what he or she is purchasing, hence the requirement for a LOA and TPV. The Commission also agrees with the AG that one Section addressing all forms of in-person solicitation provides clarity and simplifies the Proposed Rule. It does not matter whether a customer approached the agent or not; this affirmative action by the customer does not guarantee that the RES agent will give the customer all of the information he or she needs to make a decision to purchase supply, or that he or she fully understood the purchase. The Commission continues to reject the request to retain Section 412.120 as door-to-door only, or add separate Sections which address different forms of in-person marketing.

ICEA requests a clarification that in-person does not cover sales where an enrollment does not occur, either by adding a scope description to this Section or adding an Applicability description. The Commission has been very clear that “dinner table” discussions or conversations between friends and family about RES offers that cannot result in an enrollment simply are not applicable to this Section. The Commission does not find that including what seems to be a fairly obvious distinction between an in-person solicitation and any casual discussion about RES offers that cannot result in an enrollment, adds anything to this Section of the Proposed Rule. Additionally, the language proposed by CES and others which “clarifies” that Section 412.120 does not cover “communications where an enrollment does not occur” goes too far. Many communications which do not ultimately result in an enrollment should be covered by this Section of the Proposed Rule.

In response to ICEA’s and CES’s claim that subsection (g)’s requirement of LOA and TPV conflicts with the CFDBPA, the Commission points to Staff’s explanation that the Proposed Rule effectuates the CFDBPA because it attempts to “curb a variety of fraudulent abuses and to provide a remedy to individuals injured by them” and “protect Illinois consumers … against fraud, unfair methods of competition, and other unfair and deceptive business practices.” Scott, 88 Ill. 2d at 288. The Commission declines to remove or modify this subsection.

The Commission declines to modify the Proposed Rule subsection (c) as to RES badging and uniforms. It appears all parties, including the consumer advocates, agree that requiring too much standardization among RES employees will make it less clear to consumers that the transaction is a solicitation by a variety of competitive companies. The current Proposed Rule requires the appropriate amount of information on the badge to identify the RES agent: ID number, photograph, and trade name and logo of the RES. ICEA points out that requiring a RES agent’s last name could present a safety issue. The Commission finds stalking and harassing RES agents to be a remote risk, and is more concerned that if a customer has a complaint about an agent named “Mike” or “John” with no last name, it will be too difficult to identify the RES agent.

ICEA states that subsection (d) which restricts residential solicitations to 7 PM or sunset, whichever is earlier, may result in RESs being unable to solicit residences when people return home from work because in the winter, “sunset” can be as early as 4 or 5 PM. Further, ICEA on the one hand agrees that the term “sunset” has a dictionary

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definition, yet argues that there is ambiguity of when “sunset” occurs, and claims it is hard for a RES to instruct its agents in how to comply and monitor compliance. The Commission reiterates its concern for the safety of all involved and declines to modify subsection (d) in the Proposed Rule. The Commission does not agree that “sunset” is ambiguous, and ICEA admits “sunset” has a dictionary definition. However, the Commission finds that changing the word “sunset” to “civil dusk,” which is later than sunset, strikes the appropriate balance between the RESs’ ability to solicit residences when people return home from work and ensuring the safety of all involved. “Civil dusk” refers to the end of civil twilight, and the daily corresponding time for any location is readily available, from such public sources as the United States Navy Observatory Data Services. The Commission makes no comment on regulations by municipalities involving door-to-door solicitation; the onus is always on the RES to ensure it complies with those laws.

The Commission also agrees with several parties’ concerns with subsection (i). First of all, the Commission agrees with Staff that “consent” is self-explanatory. As Staff succinctly notes, consent is a simple pass/fail standard on its face. Either the customer agreed and allowed access to his or her door within the building or did not. The Commission is not attempting to substitute its own judgment for that of a building owner or the local municipal code on trespass, as NAE suggests. The Commission is simply including in its Proposed Rule the requirement that a customer consent to being solicited before a RES agent is permitted to enter his or her building and solicit the RES agent’s products. The Commission agrees that a RES agent should not be permitted to go door-to-door in an apartment complex and solicit if the agent has not received consent from each resident. However, nothing should prohibit a building owner or manager to allow a RES to set up in a common area or lobby of a residence. Furthermore, a RES that is in a shopping mall or another consolidated area of small commercial vendors need not receive permission from each shop owner or manager to approach every store to solicit, nor need the RES contact the mall owner to solicit on the property, insofar as it is public. Subsection (i) should therefore be modified to pertain to only multi-unit “residential dwellings.” “Dwelling” is defined as a house, apartment or other residence, and is also used in subsection (d).

RESA argues that requiring a background check by an independent contractor that is a licensed private detective or similarly qualified entity is overreach and unduly costly. In the alternative, RESA requests subsection (k) be revised to allow a large commercial entity to do the background checks. The Commission agrees and removes the second sentence in that subsection which specifies the type of entity which can perform the background check.

CUB again urges the Commission to require all RESs to audio and video record all in-person sales transactions. In the alternative, CUB encourages the Commission to at least require audio recording, as mandated in Section 412.130 (Telemarketing). In the FNO, the Commission encourages RESs to pursue the practice of recording in-person solicitations. No party has provided the Commission with evidence about how much this practice could cost. Therefore, the Commission declines to require audio or video recording of in-person solicitation at this time. The Commission agrees with ICEA that requiring recording during telemarketing is a standard practice, but requiring an audio or

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video recording during an in-person solicitation would require significantly more effort. While no party has provided any evidence as to the costs, the Commission disagrees with CUB that requiring RES agents to use tablets is “not unduly burdensome.” While some RESs may do so, and find that their agents have the capability to record transactions, the Commission will not seek to insert itself into that business decision.

XI. SECTION 412.130 TELEMARKETING

A. ICEA

ICEA strongly urges the Commission to remove the requirement that recordings of calls that did not result in enrollments, but that lasted over two minutes, be retained by RESs for six months. ICEA notes that this rule could require a RES to make and keep records that are prohibited under Proposed Section 412.170(d). Even if this conflict were to be resolved, the proposed record retention requirement would waste disproportionate RES resources and require challenging compliance decisions. ICEA FN Initial at 22.

In previous comments, ICEA presented some evidence of the potential costs of this rule for RESs that engage in telemarketing—especially those who do so on a broad scale. See ICEA Reply at 22-23. ICEA notes that Staff’s estimate of the cost of server space from CMS does not capture actual costs. See Staff Surreply at 14-15. Because the recorded call may need to be provided to the Commission or to others on short notice, RESs cannot simply warehouse digital recordings of calls. Instead, the calls must be catalogued and tagged by several different factors (customer name, address, account number, or other information), and placed somewhere where they are retrievable quickly. As well, there must be a system that deletes the recordings no earlier than six months after collected (or later if a hold is placed) but consistent with the particular RES’s document retention policies. All of these functions cost money, whether from internal information technology upgrades to human time transcribing and tagging to hiring an outside vendor. ICEA FN Initial at 22-23. ICEA points the Commission to ComEd’s technology cost estimates in Docket No. 13-0635 as being illustrative. ICEA FN Initial at 23-24.

In addition to (and potentially exacerbating) the cost issues, ICEA states there is likely to be significant confusion as to what calls must be preserved under Proposed Section 412.130(d). If a current customer calls the RES to ask about their current product, but then decides to ask for more information about a different product, it is not clear whether that call must be preserved if over two minutes. If a potential customer calls and asks about several products but only enrolls in one, it is not clear whether the enrollment with the RES is sufficient or enrollment with a particular product is required. To err on the side of caution on behalf of RES agents who may have to make quick individual decisions whether to preserve or not, RESs will likely record many more calls than the Commission intended in order to make sure they are capturing the potential universe of calls the Commission intended. ICEA FN Initial at 24.

With both the expanded universe of documents and the potential costs to comply, RESs are faced with the prospect of recording a massive volume of calls at great expense. It is still unclear to ICEA what the value is or would be of these recordings—no enrollment resulted (and recording requirements would attach for inbound enrollment calls or TPV anyway) so it is not an issue of proving that a customer was properly enrolled.

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If the goal is to test whether RESs that are subject to Commission scrutiny are adequately monitoring their RES agent compliance with pre-written call scripts (which the Commission may request at any time), ICEA recommends restricting call recording requirements to RESs subject to discipline pursuant to Section 16-115B of the Act. Limiting compelled recording to RESs that have demonstrated difficulty complying would narrowly tailor a burdensome requirement to the RESs that need monitoring in the Commission’s judgement. ICEA FN Initial at 24-25.

ICEA notes that CUB argues that “RES objections about the cost of telemarketing recordings have been shown to be overblown,” citing to Staff’s estimate of the costs of storing mp3 files on a hard drive. See CUB FN Initial at 9. ICEA addresses this issue by explaining the factors that Staff failed to account for in Staff’s assessment of potential costs. See ICEA FN Initial at 22-23. CUB offers no additional analysis to bolster Staff’s incorrect conclusion. ICEA FN Reply at 32.

Because neither CUB nor any other party except ICEA offered new evidence, and ICEA’s evidence demonstrates the significant costs of recording telemarketing calls that last over two minutes and do not result in enrollments, ICEA strongly urges the Commission to remove this requirement from Section 412.130(d). ICEA FN Reply at 32.

B. CUB

CUB argues that the retention of all telemarketing calls is critical for the Commission to have the opportunity to review the marketing practices of RESs. Many of the provisions in Part 412 relate to marketing and not specifically to enrollment of the customer, most notably verbal disclosures. A RES would be in violation of these regulations whether a customer ultimately enrolled after that interaction or not. The Commission would not be able to analyze whether the RES engages in a pattern of misleading marketing or failure to make the required disclosures without access to all marketing recordings, whether resulting in a sale or not. CUB FN Reply at 11-12.

Furthermore, CUB argues the “cost” at issue is not the implementation cost for RESs, but rather the societal cost of consumers being misled into signing up with a RES under false marketing, and the financial consequences that follow. The fact is that many consumers who are signed up with a RES do not realize they were signed up until months – or indeed sometimes years – later, and the record retention requirement protects both customers and the RESs from allegations of a tainted sale. Furthermore, the FNO adopted a compromise to limit the retention requirement to a call of two minutes or longer, which should significantly reduce the number of calls included in the requirement, while preserving the records of those calls in which the marketing pitch is made. CUB asserts that ICEA’s exception to these record retention requirements should therefore be rejected. CUB FN Reply at 12.

C. Commission Analysis and Conclusion

The Commission sees the potential conflict between the requirements that sales solicitations be recorded and kept for six months and the requirement in Section 412.170 that records of customer account numbers not be kept. Although the Commission does not necessarily agree that there is a conflict, to completely remove any possibility of

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conflict, Section 412.170 now explicitly states that the prohibition on recording account numbers does not apply to recordings required by this Section.

The Commission recognizes that recording calls that do not result in an enrollment is a newly-created burden on RESs. The Commission finds that the benefits to consumers greatly outweigh the unspecified costs complained of by RESs. The Commission believes that this requirement will lead to greater compliance and better behavior by RES agents if all calls over two minutes are subject to being inspected by Commission personnel at any time. ICEA has not brought any information to our attention that would lead the Commission to alter the Proposed Rules.

XII. SECTION 412.140 INBOUND ENROLLMENT CALLS

A. ICEA

ICEA reaffirms its position that the Commission lacks statutory authority to require TPV for inbound enrollment calls. ICEA reiterates that the record lacks any evidence that such a change is necessary, or what additional protections consumers would receive from TPV that are not already present. ICEA urges the Commission to follow Staff’s recommendation and remove the TPV requirement from this section. ICEA FN Initial at 25.

B. RESA

RESA opposes the retention periods set forth in Section 412.140(c). They are unnecessary because Section 2EE of the CFDBPA already establishes a retention period for successful sales calls of a minimum of two years. Section 2EE does not establish a retention period for unsuccessful sales calls; such a retention period is unnecessary. RESA FN Initial at 14.

According to RESA, the primary problem with Section 412.140 is its requirement of a TPV for inbound enrollment calls, which conflicts with Section 2EE of the CFDBPA. Section 2EE treats in-bound calls and other types of marketing, such as telemarketing, differently. For inbound enrollment calls, Section 2EE requires that the RES retain a recording of the call; it does not require a TPV. This makes sense because, in the case of in-bound calls, the customer has chosen to switch to the RES. In this situation, subjecting a customer who wants to sign up for service to a lengthy sales call which will be recorded as required by a pertinent statute and then a redundant, lengthy TPV is hardly customer friendly. RESA claims that the Proposed Rule should also recognize the difference.

RESA argues that the TPV requirement is also a disservice to customers. Today’s customers are used to speed in their business transactions. When a customer calls to request a service or product, he or she is not expecting to be subjected to a lengthy telephone call, let alone a second TPV call which is completely redundant. RESA FN Initial at 14-15.

RESA states that requiring a TPV for inbound calls can prevent suppliers from accommodating requests from customers. TPV scripts need to be approved by internal legal and regulatory channels and sent to vendors sometimes weeks ahead of time to ensure they are loaded properly for external vendors. This prevents retailer customer service representatives from offering products to current customers that are not pre-

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approved. For instance, if a current customer asks a supplier to beat an advertised rate for a certain term, the retailer would be unable to accommodate the customer because the TPV vendor who is reading a pre-approved script would not have this rate/term/condition information prior to the caller’s request.

RESA points out that if somehow the supplier was able to work out some automated communication with external TPV vendors (at significant cost), the process would still be cumbersome for the customer. Assuming a customer were to call into customer service and the representative worked out with the customer new terms or conditions, if there were any issues with the TPV (for instance, customer accidentally presses the wrong number) the customer would have his or her call terminated and would have to call back to the call center to start the process all over again with a representative who would most likely not be aware of the customer’s previous terms or rates. Although there may be solutions to accomplish this goal, RESA asserts this would significantly increase costs for suppliers and create a very frustrating experience for customers. RESA FN Initial at 15-16.

C. CUB

CUB disagrees with RESA that in the case of inbound enrollment calls, the customer has chosen to switch to the RES. In fact, CUB argues this may rarely be the case because telemarketing or direct mail campaigns could be pitched to lure customers into calling for a contest, or a survey or some other marketing ploy that would prompt a consumer to call a toll-free number. The consumer may not even realize he or she is calling a RES, and even if he or she did, it may not be to enroll as a customer, but rather to find out more information. CUB argues that it is for this reason a TPV would be very valuable to ensure that the consumer understood what was being marketed. As the Commission aptly states, “[t]here is no reason that, for inbound calls, the RES agent should not ensure the customer understands he or she has contacted an independent seller of power and energy and the additional disclosures.” FNO at 76; CUB FN Initial at 12-13.

CUB states that NAE is wrong that the Commission lacks legal authority to enhance the bare requirement under the CFDBPA. As the FNO rightly points out, while the CFDBPA “discusses three ways in which an enrollment can be verified, the Commission may impose further requirements in this Rule.” FNO at 78. NAE cited to no legal authority to support its allegation that the Commission cannot require two of the listed forms of enrollment verification instead of one. NAE’s claim that “[c]ontrary to the [CFDBPA], the proposed revision to Section 412.140 would completely prevent RES from utilizing the recorded call verification method as an independent means to verify an enrollment for a customer initiated call” is nonsense. CUB states that a RES would not be “prevented” from utilizing the recorded call as a verification procedure. A RES need only add a TPV. Thus, there is no prohibition on the Commission adopting this provision and no conflict between the requirements in the CFDBPA and Part 412.140.

CUB also disagrees with RESA’s claims that “requiring a second, redundant form of verification…provides no additional customer benefit.” RESA FN Initial at 15. Requiring a TPV for inbound calls would provide all customers with a consistent level of disclosures, and acts as another safeguard (as with the consistent format of the UDS) to

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notify customers of the material terms of the contract. It is the form of the TPV that adds the value; that is, the separate and distinct recitation of each material term, requiring an affirmative response from the customer for each term. A TPV may alert a customer to material terms that were not previously stated with particularity, and the TPV process allows the customer to focus on the specifics of the contract. The purpose of the TPV is to provide customers with a clear, accurate recitation and explanation of each term of the contract. CUB maintains that there has been no demonstration that customers that call the RES to initiate a conversation about a RES product actually possess more knowledge, experience or understanding of RES service than any other customer. These customers are as susceptible to misleading marketing as any other customer and are entitled to the same protections as any other customer, including the TPV. CUB agrees with the FNO that “[t]here is no reason to assume that a customer has necessarily reviewed a variety of RES companies and offers and fully understands the switch to retail supply.” FNO at 75. Furthermore, considering inbound calls likely make up a small fraction of the enrollment calls RES get, this is hardly an onerous requirement. For all these reasons, CUB asserts that the Commission should retain the requirement that a TPV is conducted for inbound calls that lead to an enrollment. CUB FN Initial at 12-14.

D. NAE

NAE argues that inbound enrollment calls should not require a TPV. Subsection (d) of the Proposed Rule is beyond the Commission’s authority, illogical, unreasonable, would add extensively to the time a customer must be on the phone to enroll with a RES, and would impose substantial additional costs on RESs and their customers with no corresponding benefit. The proposed revisions maintain the long and extensive requirements for verification of enrollment via a recording allowed for inbound enrollment calls, while adding a new requirement that inbound call enrollments also meet a TPV requirement covering the same information and confirmations obtained in the recorded call. This proposed requirement is unreasonable and would result in many customers abandoning the enrollment process due to no other reason than frustration with the time consuming duplicative enrollment verification processes. NAE also submits that this requirement does not add to the reliability of the enrollment as the recorded call verification method provides confirmable and reliable proof of enrollment. The record is devoid of any evidence or proof that a double verification requirement adds anything to the enrollment process, is more reliable, or enhances the consumer’s experience. Rather, it burdens the customers and RESs with a time consuming and repetitive enrollment process.

NAE states that its experience with the recorded inbound call method through the licensing of the Nicor ElectricSM trademark and use of that same method on the gas side has shown that audio recordings constitute a very reliable means to confirm compliant enrollments. The record does not contain any evidence suggesting that a recorded inbound enrollment call is somehow not a reliable confirmation of the customers’ consent to enrollment. NAE FN Initial at 22-24.

NAE finds that this requirement is also inconsistent with paragraph (c) of Section 2EE of the CFDBPA, which specifically identifies a recorded inbound enrollment call as an allowed method to confirm an enrollment. Contrary to the CFDBPA, the proposed revision to Section 412.140 would completely prevent RESs from utilizing the recorded

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call verification method as an independent means to verify an enrollment for a customer initiated call. As such, proposed subsection (d) exceeds the Commission’s authority and should be eliminated from the Proposed Rule.

NAE argues that the requirement that a RES must retain recordings of all inbound enrollment calls that lead to an enrollment for two years or the length of the customer’s service with the RES, whichever is longer, is unreasonable as well as contrary to the Commission’s rulemaking authority. First, there is no basis or reason for a RES to be required to maintain an enrollment recording in perpetuity. Most service contracts are for one year or less, and the original enrollment contract will have expired and renewed if the customer is still taking service from the RES after two years. Further, the statute of limitations for complaints before the Commission is two years. See 220 ILCS 5/9-252.1. The requirement to keep such recordings beyond two years will serve no useful purpose, while adding the cost of retaining such recordings in perpetuity. Further, NAE explains that the applicable statute already establishes a two year minimum retention period (815 ILCS 505/2EE(c)), and the Act provides that a RES “shall obtain verifiable authorization from a customer, in a form or manner approved by the Commission consistent with Section 2EE of the [CFDBPA], before the customer is switched from another supplier.” 220 ILCS 5/16-115A(b). The Commission was not delegated specific rulemaking authority under Section 16-115A and the proposed revisions exceed the Commission’s rulemaking authority. NAE FN Initial at 24-26.

For all the foregoing reasons, NAE suggests that subsection (c) of Section 412.140 of the Proposed Rule should be revised as follows:

All inbound enrollment calls that lead to an enrollment shall be recorded, and the recordings shall be retained for a minimum of two years or the length of the customer’s service with the RES, whichever is longer. An inbound enrollment call that does not lead to an enrollment but lasts at least two minutes shall be retained for a minimum of six months. The recordings shall be provided to Commission Staff or a customer who has completed a telephone enrollment upon request;

NAE states that the proposed uniform disclosure requirements are duplicative in certain scenarios and proposed Section 412.140(e) should be revised to address this issue by adding: “provided, however, that a uniform disclosure statement does not need to be resent to the customer if one was already included in the marketing material resulting in the inbound enrollment call and the customer acknowledges receipt of the uniform disclosure statement as part of the enrollment verification.” NAE FN Initial at 24-26.

E. Commission Analysis and Conclusion

The Commission notes at the outset that NAE, RESA and ICEA bring up legal arguments in opposition to this Section of the Proposed Rule that the Commission disagreed with in the FNO. The Commission will not repeat its analysis in full here. However, the Commission disagrees with RESA that a person initiating a call to a RES has “chosen” to sign up for RES service. A person who contacts a RES could be interested in RES service, but may have questions about the products offered and pricing.

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The customer may not ultimately decide to enroll. Furthermore, the Commission does not understand why an enrollment procured via an inbound enrollment call should mean that the customer need not be informed of the product they are purchasing through the use of TPV. The Commission agrees with CUB that the purpose of the TPV is to provide customers with a clear, accurate recitation and explanation of each material term of the contract. There has been no demonstration that customers that call RESs to initiate a conversation about a RES product actually possess more knowledge, experience or understanding of RES service than any other customer.

The Commission disagrees with RESA, NAE and ICEA that subsection (d) conflicts with the CFDBPA. As stated in the FNO, Section 2EE of the CFDBPA discussed what must be relayed to inbound enrollment callers at a minimum. 815 ILCS 505/2EE(c). There is no prohibition on requiring additional information from the RES, such as a TPV. The Commission also points out that it may not always be clear to the RES by the call that the customer initiated the call with a definite intention to enroll in RES service. Again, the Commission believes customers should hear the important terms of sale twice, first from the RES agent, who must disclose the Minimum Contract Terms and Conditions to the customer, and then from an independent third party, who will confirm the customer understood what he or she agreed to purchase through the TPV process.

RESA and NAE object to the retention periods addressed in subsection (c). However, one of NAE’s arguments against the TPV requirement is that the RES’s own recordings are sufficient to act as a reliable means to confirm sales. The Commission declines to modify this subsection for the reasons stated in the FNO: (1) recording calls benefits the customer and the RES; (2) recording calls has not been shown to be costly or burdensome by the RES; and (3) recording calls over two minutes ensures that individuals who stay on the telephone line past the general greeting, but may not ultimately enroll, are retained. FNO at 75.

NAE opposes subsection (e) because it is duplicative. The Commission declines to modify this subsection. If the customer has already received a UDS in marketing materials which resulted in the customer’s inbound enrollment call, there is no reason to not send a UDS to the customer once he or she ultimately enrolls. This confirms to the customer that the terms disclosed in the UDS are the terms he or she understood were purchased.

XIII. SECTION 412.150 DIRECT MAIL

A. ICEA

ICEA states that it has no objection to the FN Proposed Rule version of this Section. However, if the Commission accepts ICEA’s primary recommendation described in Section 412.120 (In-Person Solicitation) to create a new section explicitly defining solicitation and the application of Sections 412.120 through 412.160, Proposed Section 412.150(c) would be redundant. If (but only if) the Commission adopts ICEA’s primary recommendation to create a new solicitation section, ICEA would recommend deleting Proposed Section 412.150(c). ICEA FN Initial at 26.

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B. NAE

The proposed revisions to Section 412.150(b) impose a new requirement that "[i]f the direct mail solicitation includes a written LOA, the direct mail solicitation shall include the UDS according to Section 412.115 of this Part." NAE FN Initial at 23-24.

NAE objects to needlessly duplicating information suppliers are required to provide. The UDS information in proposed Section 412.115 and the Minimum Contract Terms and Conditions in Section 412.110 are substantially the same, yet the 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 LOA. NAE asserts that this is inefficient, costly and wasteful - and no reason or basis for this proposal exists. This and other requirements proposed in the Proposed Rule impose cumbersome and duplicative requirements in order for a customer to take service from a RES, and will necessarily lead to a significant number of potential customers deciding they do not want to do business with RESs they perceive to be difficult to do business with. When combined with the duplicative UDS requirement, this means customers would be forced to receive the very same information three times. NAE FN Initial at 24.

NAE appreciates the potential usefulness of a UDS for certain sales channels - such as door-to-door solicitations - where the solicitation is not typically conducted through written documents and the potential customer is generally not in possession of a written document containing the material terms and conditions of the offer and other required disclosures. But this is not the case with direct mail solicitations where the requirement to provide the Minimum Contract Terms and Conditions already provides sufficient written notice. See 815 ILCS 505/2EE ("An electric service provider shall not submit or execute a change in a subscriber's selection of a provider of electric service unless and until (i) the provider first discloses all material terms and conditions of the offer to the subscriber; (ii) the provider has obtained the subscriber's express agreement to accept the offer after the disclosure of all material terms and conditions of the offer; and (iii) the provider has confirmed the request for a change in accordance with one of the [statutorily required] procedures …."). NAE FN Initial at 24-25.

NAE opines that the additional duplicative requirement to provide that same information via a UDS for direct mail solicitations should be rejected. The proposed revisions could also address this issue by specifying that the requirement to provide a separate UDS shall not apply to a supplier that includes the same information in its direct mail solicitation material. NAE FN Initial at 25.

C. CleanChoice

CleanChoice notes that direct mail, which includes a LOA (referenced in Section 412.150 (b)), also requires that the UDS be provided on a separate page from other marketing materials. Two components of the UDS are a statement of the date the customer was solicited and an agent ID. While a RES could certainly include the date the mail was sent on the UDS, it cannot indicate the date the customer was “solicited.” Similarly, the customer does not have interaction with an agent during receipt of direct mail, therefore there is no “agent ID” to be provided. CleanChoice respectfully requests

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that the applicable requirements of the UDS be modified when used with direct mail such that the date of solicitation and an agent ID may be omitted. Clean Choice FN Initial at 1-2.

D. Commission Analysis and Conclusion

The Commission does not adopt ICEA’s recommendation to create a new section explicitly defining solicitation and the application of Sections 412.120 through 412.160 and, therefore, the Commission understands that ICEA has no issue with this Section.

CleanChoice is concerned that if a UDS is required for direct mailings, it will not be able to provide the name of the agent doing the solicitation or the date of the solicitation. The Commission understands that mass mailings may very well not have a specific agent that is responsible for them. As noted in the Commission’s discussion regarding Section 412.115, if a RES is unable to provide information required in the UDS, then it can leave it blank or write “not applicable.”

With respect to NAE’s complaint that including the UDS as well as a contract is duplicative, the Commission does not agree. The UDS provides an easily accessible tool for comparing offers from different companies; this requirement will not be modified.

XIV. SECTION 412.160 ONLINE MARKETING

A. ICEA

ICEA is concerned that the FN Proposed Rule modifications to Section 412.160(a) and (b) could make it difficult for RESs to offer products that rely on customer-specific information for pricing. Proposed Section 412.160(a) states in part:

Each RES offering electric service to customers online shall clearly and conspicuously make all disclosures required by Section 412.110 for any services offered through online enrollment before requiring the customer to enter personal information other than zip code, electric utility service territory, and/or type of service sought.

Proposed Section 412.160(a). Because account number and service class are not listed, presumably the RES is prohibited from requesting that information before making the disclosures pursuant to Section 412.110. However, as many as four disclosures under both existing 83 Ill. Adm. Code 412.110 and proposed Section 412.110 (Minimum Contract Terms and Conditions) appear to require the RES to have an exact price determined for the customer. See, e.g. 83 Ill. Adm. Code 412.110(d) (“the charges for the service”), (i) (savings guarantees, if any), (p) (if portion of supply bill is fixed, amount of fixed charge and effective rate for 500, 1,000 and 1,500 kWh of usage); see also Proposed Sections 412.110(c)-(e), (j). ICEA FN Initial at 26.

As ICEA understands it, one way to address this timing issue under current law is that a RES can request the customer electronically sign a LOA to allow the RES to access the customer-specific information such as historic usage, capacity allocation, and the like. Under the FN Proposed Rule language above, one reading is that the RES would be prohibited even from requesting access to that information through separate authorization (LOA). Prohibiting a RES that prices products according to customer-specific information

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from requesting that information before it discloses a price would effectively eliminate products other than one-size-fits-all from the market. ICEA recommends that the Commission clarify that RESs may not request customer-specific information except through separate authorization such as a LOA. ICEA FN Initial at 27.

In its BOE, ICEA further explained its position regarding custom pricing and proposed language to address issues it identified. In its RBOE, ICEA stated that it accepted Staff’s language.

B. Staff

In its BOE, Staff agrees with ICEA that Section 412.160(a), if unchanged, is likely to result in problems. Staff explains that in order to quote a customer an individual price, a RES needs to obtain the customer’s account number to retrieve the customer’s historical usage information and peak load contribution. Staff agrees that suppliers should be allowed to seek separate customer authorization if they need a customer’s account number in order to provide a customer quote.

C. Commission Analysis and Conclusion

ICEA is concerned that subsection (a) will prohibit RESs from making customer specific offers. The Commission agrees and modifies Section 412.160(a) to clarify that RESs may not request customer-specific information except through separate authorization such as an LOA.

ICEA also claims that it could not elicit a potential customer’s service class before making the disclosures. The Commission disagrees; this is clearly contemplated by the phrase “type of service sought.” In other words, questions regarding whether the customer is seeking residential or commercial service as well as load size would be appropriate.

XV. SECTION 412.165 RATE NOTICE TO CUSTOMERS

A. ICEA

ICEA notes that the Proposed Rule applies all of subsections 412.165(a) - (d) to all variable products. The effect is applying impossible or vexing regulatory requirements to both Index Variable (by requiring disclosure of price before it necessarily becomes available) and Non-Index Variable (by requiring disclosure of confidential and proprietary information). ICEA is concerned that if the Proposed Rule is not changed, it will severely restrict, if not eliminate, mass market access to all variable rates by imposing the requirements of Proposed Subsections 412.165(a) - (d) across the board. ICEA FN Initial at 29.

As noted in ICEA’s comments on Section 412.10 (Definitions), ICEA’s concern in defining Index Variable and Non-Index Variable is primarily about applicability of Proposed Subsections 412.165(a) - (d). Whether or not the Commission codifies ICEA’s proposed definitions, ICEA urges the Commission to restrict the applicability of proposed subsections 412.165(a) - (c) to Non-Index Variable products and proposed subsection 412.165(d) to Index Variable products. ICEA FN Initial at 29-30. ICEA argues that because the differences in products require different regulatory treatments, the Commission should use the applicability limitations of the FN Proposed Order.

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ICEA also notes that RESA and CleanChoice disagree with advance notice requirements even for Non-Index Variable products. CleanChoice opposes advance notice requirements because they force a RES to lock in pricing earlier, leading to a risk premium. See CleanChoice FN Initial at 2-3. ICEA agrees that this is likely the case, but in this limited instance ICEA believes that the costs would be justified by the consumer benefits. Specifically, ICEA believes that the benefits of customers being fully informed about their next month’s pricing with sufficient time to take action (i.e. decide to stay or switch) are greater than the value destroyed by the marginal risk premiums. Thus, ICEA continues to support Proposed Section 412.165(a) as applied only to Non-Index Variable products. ICEA FN Reply at 33.

RESA argues that disclosures are complicated because, unlike utilities, RESs may (and often do) have multiple variable prices even within the same product family. See RESA FN Initial at 16-17. ICEA agrees with RESA that RESs frequently offer different pricing even within the same product. However, ICEA believes this is a better argument against historic price disclosure—which, like RESA, ICEA opposes. A RES must be able to keep track of the pricing for each individual customer, and while ICEA agrees that locking in a price earlier will introduce a risk premium, the cost in this limited example is less than the benefit. If RESA believes that a web portal is too expensive, ICEA recommends that the Commission consider allowing for an alternative to website disclosure. ICEA FN Reply at 33-34.

RESA also raised concerns that Section 412.165 is a backdoor attempt at rate regulation. See RESA FN Initial at 19. ICEA agrees with RESA that the Commission cannot and should not regulate RES prices. Also, ICEA shares RESA’s concerns that applying Proposed Section 412.165(a) - (d) to both Index and Non-Index Variable products would have the effect of banning most if not all variable products—including potentially dynamic or time-of-use products. See ICEA FN Initial at 27-31; ICEA FN Reply at 34.

ICEA contrasts the reality of the Proposed Rule as identified by ICEA and RESA with Staff’s initial proposal in this proceeding, where Staff opposed a “virtual ban” on variable products as seen in other states. See Staff Initial at 36-37. ICEA notes that Staff’s initial proposal specifically differentiated between Index and Non-Index Variable products, even though Staff did not use that exact terminology. Id. at 37-38. ICEA recommends that the Commission use Staff’s initial recommendation to find the balance between the status quo and a “virtual ban,” rather than enacting the de facto ban on variable products found in the FNO. ICEA FN Reply at 34.

ICEA asserts that proposed subsections 412.165(a) - (d) are all inappropriate or potentially impossible for dynamic and time-of-use products. If a dynamic or time-of-use product takes any inputs from day-ahead or current day hourly markets, it is impossible to provide 30-day advance notice. While there may be very narrow special cases where 30 day advance notice is possible for a time-of-use product—for instance, a simple on-peak/off-peak product where the on-peak and off-peak pricing changes monthly, seasonally, or annually—30-day advance notice is inappropriate for the category. In addition, it is unclear how a RES would put a current rate on a bill message, or determine what it means to have a customer’s rate increase by more than 20% from one billing cycle to the next. Many dynamic or time-of-use products also rely on proprietary formulas or

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inputs similar to Non-Index Variable products, and thus a RES could be required to disclose proprietary or confidential information just to offer a dynamic or time-of-use product. ICEA FN Initial at 30.

ICEA notes that it opposed the then-current equivalents to proposed subsections 412.165(c), (e), and (f) in pre-First Notice Order proceedings. See generally ICEA Reply at 29-36; ICEA Initial at 35-38. Nothing has changed ICEA’s positions on these subsections and ICEA remains opposed.

B. RESA

RESA avers that proposed Section 412.165 is an example of an inappropriate attempt to over-regulate competitively priced services. Moreover, this proposed section demonstrates the futility of attempting to micro-manage a business without an understanding of how it works. RESA states that proposed Section 412.165 assumes that there is a single variable rate that generally begins on the first day of every month and that it applies to all customers. According to RESA, this assumption has no basis in reality. A RES’s variable rate may change due to a variety of factors at any time during the month so long as it is submitted to the electric utility during its prescribed window for billing. For this reason, there may be hundreds of rates provided to customers depending upon the meter read date, when they entered the contract, the term of the contract, the sales channel used to enroll them, etc. According to RESA, RESs would have to develop individual customer portals to access their information, in addition to requiring RESs to provide individual rates on those portals. The result would be significant additional costs for RESs which would be passed on to the customers, assuming the ability to pass on such costs. If RESs were unable to pass along such costs to their customers, they might very well be unable to offer variable rates to their customers. RESA FN Initial at 16-17.

RESA notes that subsection (a) requires RESs to publish variable rates on their websites at least one month in advance of the start of a calendar month (use of the term “calendar month” is confusing because billing months are rarely the same as calendar months). RESs are not able to predict prices in future months and price indices are not available that far in advance. RESA opines that the result would be the end of products that are tied to an index. Moreover, there would be greater month-to-month uncertainty for customers as RESs attempt to avoid increasing rates more than 20% from month to month. RESA FN Initial at 17.

RESA states that there is no explanation as to why a 30-day requirement is appropriate, and while a 30-day requirement may be reasonable for some RESs, it may not be for others. RESA asserts that, if Section 412.165 is not deleted in its entirety, it should be stated in terms of a “reasonable” time period. In addition, the longer the period of advance notice required for a RES to publish its variable rates, the greater the risk that the RES must hedge, which would result in higher prices for customers. RESA FN Initial at 17. RESA suggests that if the Commission is concerned with RESA’s proposal for a “reasonable” period of time for the disclosure of variable rates, the Commission should consider the rules that the Maryland Public Service Commission has regarding the disclosure of variable rates. RESA explains that those rules require disclosure at least 12 days prior to the close of the customer’s billing period and allow the supplier to provide

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an estimated rate; where the supplier utilizes an estimated rate, the supplier may not use a rate for billing purposes higher than the estimated rate. RESA FN Reply at 8-9.

RESA notes that subsection (b) would dictate how RESs use their limited bill message space on a utility’s bill. However, RESA states that a RES has other messages that are equally as important or more important than this information. RESA maintains that RESs should be able to decide which messages should be placed on the utility’s bill. RESA FN Initial at 17-18.

Subsection (c) of the FN Proposed Order’s rules would have required a separate written notice of a variable rate increase of more than 30% from one billing period to the next. RESA states that this is information that is obvious on the face of the bills. However, in RESA’s opinion the Proposed Rules adopted by the Commission are worse—the Commission accepted a CUB proposal, opposed by Staff and other parties, to require a separate written notice of a variable rate increase of more than 20%. The requirement of a separate written notice, whether at 20% or 30%, is an unnecessary micro-management of RESs’ business and RESA opines that subsection (c) should be deleted. RESA FN Initial at 18.

Subsection (d) of the FN Proposed Order’s rules created an appropriate exception for variable price products that are based on an index. However, the FN Proposed Rules eliminated that exception, accepting an argument by CUB that this exception “incentivizes a RES to make a small component of each rate determined on a publicly available index, thereby avoid[ing] the vital notification provisions outlined in this rule”. FNO at 94. However, the Commission accepted an argument that had no merit because Subsection 412.165(d) of the FN Proposed Order’s rules clearly stated that “Subsections (a) through (c) shall not apply to contracts which determine the variable rate solely on a publicly available index or benchmark.” RESA FN Initial at 18.

RESA notes that subsection 412.165(e) of the FN Proposed Order’s rules required written notice when a fixed rate changed to a variable rate pursuant to the sales contract. RESA argues that this is an unnecessary and redundant requirement-- the sales contract between the RES and its customer sets forth the time at which a fixed rate switches to a variable rate. Moreover, RESA complains, the FN Proposed Rules were modified to make them worse for RESs. Subsection 412.165(e) of the Proposed Rules is no longer limited to when a fixed rate changes to a variable rate pursuant to the sales contract. All changes in rates would be the subject of separate written notices. RESA argues that subsection (e) should be deleted. RESA FN Initial at 18-19.

Subsection 412.165(f) of the Proposed Rules mandates RESs to post on their websites and provide through toll-free numbers up to a year of historical price data, data which, as pointed out by RESA and other parties in the NOI proceeding and in the instant proceeding, provides no value to customers as to future rates. There is nothing in historical information that would help a customer to predict future prices nor predict which supplier would provide him or her with the lowest costs in the future. RESA FN Initial at 19.

RESA opines that the Commission appears to be attempting in Section 412.165 to accomplish indirectly what it does not have the authority to accomplish directly—regulate RESs’ rates. It is clear that the Commission does not have the authority to regulate RESs’

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rates. For example, no one would dispute that the Commission cannot prohibit RESs from offering variable rates. However, the numerous onerous and burdensome additional requirements set forth in Proposed Section 412.165 would effectively prohibit RESs from offering variable rates that are tied in any way to an index. This would remove transparency for customers who were able to accurately find out their month’s rate as it was tied to a publicly available index. RESA argues that this end result is one that the Commission does not have the authority to achieve and results in less transparency for customers. RESA FN Initial at 19. Given all of the problems identified by RESA with Section 412.165, RESA avers that it should be deleted in its entirety. In the alternative, RESA proposes a more limited Section 412.165. RESA FN Initial at 20.

C. Staff

Staff notes RESs’ concerns regarding the requirement in Section 412.165(d) which would require RESs to publish their variable rate pricing formulas. Reviewing the structure of Section 412.165 and the specific language of 412.165(d), Staff agrees with these concerns. Staff FN Reply at 7.

When proposing the new rate disclosure requirements for this rule, Staff intended to allow for the possibility that there are variable rate offers that allow a customer to discern changes in the variable rate by relying on information in the contract in combination with publicly available information, such as an index or benchmark. Staff clarifies that its proposal was limited to situations where the contract allows a customer to determine the variable rate based on a publicly available index or benchmark. The Proposed Rule, however, would appear to require a RES to publish the formulas for all variable rate offers and not solely the formulas for rate offers that allow a customer to determine the variable with publicly available information. Staff FN Reply at 7-8.

In other words, the Proposed Rule, as written, might well require the publication of competitively sensitive and proprietary information. For this reason, Staff recommends that the Commission amend Section 412.165(d) to read as follows:

Subsections (a) through (c) shall not apply to contracts which disclose the formula that will allow a customer to determine the variable rate, based 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.

Staff FN Reply at 8.

Staff notes that ICEA describes how the variable rate notice requirements of Section 412.165 are inappropriate or potentially impossible for dynamic and time-of-use products. Staff concurs in ICEA's concern. In proposing advance notice to variable rate customers, Staff did not intend customers on dynamic or time-of-use priced products to be included. However, when the Proposed Rule adopted a broader definition of "variable rate," it made Section 412.165 apply to a larger set of RES offers. Staff recommends that

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Section 412.165 be amended to add a Section 412.165(g) that contains the following clarification:

This section does not apply to customers on RES service where the rate for electric service changes, or has the potential to change, more frequently than once a month.

Staff FN Reply at 9.

D. CUB

CUB notes that RESA again takes issue with the provision requiring advanced publication of a variable rate. RESA FN Initial at 17. RESA claims that “RESs are not able to predict prices in future months and price indices are not available that far in advance.” Id. This cannot be true of many RES because the other supplier group, ICEA, does not take issue with advanced notice of variable rates. CUB asserts the record in this proceeding does not reflect why some RES cannot provide the very information that other RES proposed be mandatory. Nonetheless, the purpose of the advanced notification of the variable rate is to allow customers to act on the information by canceling service with the RES and switching back to the utility or to another RES. Because the switch generally takes between 30 and 45 days, 30 day advanced notice is really the minimum time to allow customers to act on the information. CUB submits that for no other major consumer good or service – credit card, student loan, mortgage, etc. – is it acceptable for a variable rate to change without advanced notice to the customer, least of which should be a service that provides life-sustaining heating and cooling for the home. CUB FN Reply at 15.

CUB notes that the FNO adopted CUB’s proposal to decrease the notification trigger regarding a change in the variable rate from 30% to 20%, correctly recognizing that an upward swing of 20% in the supply charge could significantly affect the affordability of electric service, especially if the rate the customer is paying is already above (or significantly above) the utility price-to-compare. According to CUB, this particular notification is one of the most important customers will receive after signing up with a RES, because not all customers will be sophisticated enough or have the resources to avail themselves of the information regarding the variable rate posted on the RES website. Additionally, the Commission itself recognizes that the cost to provide this information electronically, if the customer consents to such communication, is inconsequential. The corresponding benefit to customers, however, is enough to provide ample justification for changing the proposed threshold. CUB advocates strongly for this additional notification because customers often begin on a fixed rate contract, which automatically renews to a variable rate contract without affirmative consent. The additional rate change notification serves as an additional layer of customer protection against potentially rapidly rising variable rates (increases could repeat for months during the contract term), and alerts the customer to give them the opportunity to cancel the contract before incurring a large jump in supply rates. CUB explains that the 20% threshold is important because the rate could go up in successive months by up to 20% without notification, causing the rate to rise significantly in a compound fashion without the customer noticing, even before the 20% is reached triggering notification. The 20%

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threshold adopted by the FNO is therefore appropriate and reasonable. CUB FN Initial at 9-10.

In response to NAE’s argument that the requirement to provide rate notice if the variable rate changes by 20% or more amounts to an attempt to regulate rates, CUB states this provision does not regulate rates in any way. It simply requires a notification, like most of the other provisions in Part 412, both existing and proposed. CUB FN Reply at 16.

CUB notes that CES takes issue with the FNO’s requirement to publish online RES variable rate pricing formulas because “pricing formulas are highly confidential and proprietary business information.” CES Initial at 5. CES’s concerns are misplaced. CUB asserts that the language in that section of the rules requires only that the inputs to the formula are revealed - not the formula itself. Furthermore, the requirement that rate notice be provided with regard to “the timing and location of the index or benchmark price, if any” clearly pertains only to variable rates explicitly tied to a public index – an indexed rate. CES appears to misconstrue this provision of the rules and CUB argues that its concerns need not interfere with adoption of this provision. CUB FN Reply at 14-15.

RESA also takes issue with providing a one year price history. RESA Initial at 17. The very reason RESA cites as a reason to reject the provision that requires notice of a one year price history of variable rate product justifies adoption of it. RESA claims that “there may be hundreds of rates provided to customers depending upon the meter read date, when they entered the contract, the term of the contract, the sales channel used to enroll them, etc.” Id. at 17. CUB states that this reveals that RESs are charging potentially hundreds of different variable rates at any given time and CUB questions how any customer could know if they were being appropriately charged under these circumstances. CUB opines that, absent any guarantee of savings or upper limit on the price per kWh, if the consumer knew there was no indication of what they would be charged or what variable rate has been in effect at a particular time, a consumer would be at such a tremendous disadvantage and vulnerable to the whims of the RES pricing that it would be nonsensical for any consumer to sign up. CUB FN Reply at 15-16.

If Illinois is to have a successful, well-functioning electric marketplace where consumers realize tangible benefits, more fluidity is required to allow customers to move with the market. CUB maintains that advanced notice of variable rates is one very important step to putting market power in the hands of customers instead of RESs. CUB FN Reply at16.

E. AG

The AG notes that RESA, NEMA, CES, CleanChoice, ICEA, and NAE oppose Section 412.165’s requirements that RESs provide customers certain information regarding variable rates and their criticisms of Section 412.165 are many. None have merit and the AG argues that they should be rejected. AG FN Reply at 19.

The AG notes that variable rates have been a major source of customer frustration and anger with RESs. Customers who receive “teaser” rates for a short period are surprised when their rates suddenly go up – often dramatically – when the rate becomes variable. While, as NEMA suggests, customers should understand this having received

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notice during the marketing and contracting process, but the AG maintains that is not the case. AG FN Reply at 20.

RESA and NAE argue that Section 412.165(f)’s requirement that RESs provide a 12-month history of variable price data is of no real value. While the AG understands that the past is not necessarily a perfect predictor of the future, it is not hard to understand why providing customers additional information – even if it is high-level information – is desirable. Moreover, the opaque way in which RESs determine variable rates warrants giving customers data that could allow them to have some basic understanding of how variable prices can fluctuate. This is especially true, the AG argues, given that variable rates have been a major source of complaints in the past. AG FN Reply at 20.

F. NAE

According to NAE, the main problem with the requirement in Section 412.165(a) that a RES publish all variable rates on its web page 30 days prior to the start of each calendar month is that it fails to accommodate situations where the RES will not know the actual rate "30 days prior to the start of a calendar month." First-of-month price indices are common in the gas industry, and could become more common in the electric industry. A RES basing a variable rate on a real time index will not know that rate 30 days in advance. Similarly, a RES may also offer products tied to the utility default price which may not be known 30 days in advance of each calendar month. NAE maintains that the rule improperly imposes a requirement that will be impossible for RESs to comply with in some circumstances. Also, it is not clear to NAE why the exemption from this provision for variable rates based on a publicly available index was eliminated. Variable rates based on a disclosed formula and a publicly available index (e.g., index price plus a fixed adder) are highly transparent, objectively determined, and immune to subjective manipulation - and for those reasons should be encouraged. NAE FN Initial at 26.

NAE notes that subsection (c) requires a separate written notice to a retail customer "[i]f a residential variable rate customer's rate increases by more than 20% from one monthly billing period to the next." NAE suggests that because this requirement applies after a customer is already in a contract with a RES, it amounts to an attempt to regulate rates, which is beyond the Commission's authority. This proposal will also add significant costs without corresponding benefits. The customer will already receive notice of the variable rates in effect through other provisions. This requirement should be eliminated. In the alternative, NAE suggests that the required percentage change before this requirement is triggered should be changed back to more than 30%. NAE FN Initial at 27.

NAE notes that subsection (f) of Section 412.165 requires a RES to provide a one year price history for a variable rate product on its website and through a toll-free number if it enrolls residential customers on a variable rate for three consecutive months. NAE argues that this proposed requirement will be difficult and costly to comply with and should be rejected. NAE FN Initial at 28. NAE explains that the new requirements that would be imposed by subsection (f) would result in substantial IT costs for a RES subject to its terms. These costs are not counterbalanced by clear and certain benefits. Historical prices are not a good indicator of future prices. Market conditions change constantly. Market developments, such as the 2014/2015 Polar Vortex and the impact of fracking on

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natural gas prices, routinely render historical prices obsolete in terms of predicting future prices. NAE opines that the asserted benefits are questionable and of limited value at best. The proposed requirement improperly implies to customers that historical prices are a good indicator of future prices. NAE recommends that this requirement be deleted. At a minimum, the requirement should be revised to reflect that a RES shall provide such historical price information upon request. The alternative proposal allows RESs to manually gather such data upon request and avoid the significant IT compliance costs. NAE FN Initial at 28-29.

G. CES

The FNO requires RESs to publish online their variable rate pricing formulas. CES has serious concerns regarding this new requirement because pricing formulas are highly confidential and proprietary business information that take into consideration factors other than public index or benchmark prices. The easy availability of such information to competitors or potential competitors would be prejudicial to the members of CES. CES FN Initial at 5.

CES notes that the retail electric industry is highly competitive and the retail electric market in Illinois is a robust competitive landscape with multiple market participants serving all sizes of customers. This, of course, is consistent with the Act, which contains specific provisions for a competitive electricity market involving RESs such as the members of CES. See 220 ILCS 5/16-101, et seq. The mandated release of variable pricing formulas that have historically been treated by RESs as non-public information would be detrimental to the CES members’ ability to compete in the Illinois markets to the benefit of Illinois customers. Making such information public would potentially allow CES’s competitors to gain insight into their business strategies. CES FN Initial at 5-6.

CES argues that the disclosure of complex pricing information disadvantages otherwise intense competitors and will likely result in less market innovation. It may also result in increased prices for customers as a result of adding new regulatory and competitive risks associated with the Illinois market. Further, CES states that it is unclear how the easy availability of pricing formulas will help customers. This type of information is relatively complex and the RESs’ online postings will likely appear similar to utility tariffs, which are difficult for even energy professionals to understand. Third, the current Part 412 Rules already require a contract for a variable rate product to include “an explanation of how the variable charges are determined.” 83 Ill. Adm. Code 412.2110(d). Accordingly, the current Part 412 strikes a balance between requiring RESs to provide appropriate disclosures to their customers and preventing RESs’ competitors from gaining unfair insights into their pricing and business decisions. The new proposed requirement will disrupt that balance. CES FN Reply at 6-7.

For these reasons, CES respectfully requests that the Commission eliminate the proposed requirement that RESs post online their variable rate pricing formulas. CES FN Reply at 7.

H. NEMA

NEMA states that it bears noting, as an initial matter, that by enrolling with a supplier for a variable rate plan, a customer is on notice that their rates are subject to

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change due to market forces. NEMA notes that products with a variable rate component need to be adequately disclosed to the customer upfront at the time of contracting. However, subsequent notice requirements must be tailored to the actual variable nature of the product. NEMA continues that if notice requirements are designed such that compliance is overly burdensome and difficult to achieve, it can effectively eliminate variable rate offers to consumers. It is foreseeable to NEMA that at some point consumers will be dissatisfied by fixed rates that lock them into a price when market conditions cycle downward. In other words, to best protect Illinois consumers, NEMA suggests that the Commission focus its rules on the adequacy of consumer disclosures at the initial time of contracting about the nature of the product and the terms and conditions. In NEMA’s view, the use of a UDS should appropriately address these concerns. Conversely, imposing new disclosure requirements that apply on an on-going basis after the point of sale will not address the perceived problem. It will however impose a costly burden on competitive suppliers that will likely result in the elimination of the availability of variable rate products to consumers. NEMA FN Initial at 4-5.

Overly burdensome on-going notice requirements that are not appropriately tailored to the nature of the product, variable or fixed or otherwise, will not serve consumers well, NEMA argues, because it will distort and diminish the competitive offerings that are available to them. This is because burdensome notice requirements impose upward pricing pressure on suppliers to anticipate future market price increases and increase the need for supplier hedging to avoid unanticipated price increases. Moreover, NEMA asserts that suppliers will factor these increased unnecessary costs into their pricing in order to avoid costly notice requirements. NEMA FN Initial at 5-6.

Supplier price posting rules should be focused on the posting of current, generally available offers. NEMA explains that the purpose of online posting and transparency should be to inform the public of actual purchase prices that are reasonably recent and updated. With respect to the provision of historical RES rates, NEMA submits that this information is highly sensitive and confidential information that suppliers should not be required to post on a public website. Additionally, historical rates are not an indicator of future performance and could be a source of consumer confusion. Moreover, if the Commission is concerned about the ability to verify supplier offers, NEMA opines that the Commission has other tools within its authority and under its regulations to remedy perceived unfair marketing practices. NEMA FN Initial at 6.

For the foregoing reasons, NEMA recommends that proposed Section 412.165 not be adopted into the Commission’s regulations. NEMA FN Initial at 6.

I. CleanChoice

CleanChoice opines that the requirements of subsection (a) are both unclear and untenable. CleanChoice notes that the Proposed Rule seems to note the likelihood that a billing cycle does not match a calendar month – in fact each utility has multiple billing cycles in a given calendar month, therefore it would be very difficult (if not impossible) for a RES to provide accurate information under this proposed rule. Further, even if compliance with this proposed requirement is operationally possible, CleanChoice asserts that it still does not implement good policy. Forcing a RES to set and hold a price up to 60 days in advance could lead to significantly increased pricing to cover a RES’s

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risk premium. Attempted compliance with this rule could thus result in artificially increased variable pricing and, according to CleanChoice, this type of distorted market pricing does not benefit customers. A customer who prefers to minimize her exposure to market prices has the option to choose a fixed rate; similarly, a customer who prefers pricing that follows the market should not be forced to compare artificially high pricing that has been sent in an attempt to forecast pricing in the future. A RES cannot always know what hedges it may have in place two months in advance, particularly when hedges are layered. The latter part of this subsection simply requires RESs to provide such information upon request. CleanChoice suggests that the Proposed Rule be modified to require that variable rate information be provided to customers only upon request. CleanChoice FN Initial at 2-3.

CleanChoice strongly objects to the requirement in subsection (d) to “provide sufficient information on their website to identify the inputs to the formula used to calculate the variable rate, including the timing and location of the index or benchmark price, if any, any other information necessary to calculate the rate.” According to CleanChoice, this requirement would force RESs to disclose proprietary information that is very unlikely to be used by customers and would also make such information easily accessible to competitors. Customers certainly have a right to information about their rate, but there is no justifiable reason to require RESs to share the “inputs to the formula” a competitive business uses to price its products. CleanChoice recommends that the Commission reject this Proposed Rule. Clean Choice FN Initial at 3.

J. ELPC

ELPC states that several of the rate notice requirements included in Section 412.165 would be impossible for many dynamic pricing models. Dynamic pricing can have multiple benefits, including decreased energy costs for consumers and less reliance on the dirtiest generation sources. The Commission rules should not foreclose dynamic pricing, but the Commission should still ensure they adequately protect customers. For electricity products with dynamic pricing, ELPC recommends that the Commission require RESs to thoroughly and clearly explain how rates will be determined ahead of time, and some notices regarding rate changes would still be appropriate - for example, to let customers know about drastic and unusual increases in rates. Because of how quickly new rates may go into effect, ELPC suggests that notification by email or text message may be permissible and more useful than notice by mail or telephone call. ELPC FN Reply at 6.

K. Commission Analysis and Conclusion

Subsection 412.165(a) requires advanced notice of variable rates. The Commission acknowledges that RESA complains of the difficulty in providing customers with advanced notification of variable rates. The Commission, however, finds CUB’s argument compelling that the purpose of the advanced notification of the variable rate is to allow customers time to act on the rate information by canceling service with the RES and switching back to the utility or to another RES. Moreover, the cost of the advanced notice requirements on RESs are outweighed by the benefits to consumers of knowing the price of electricity that they will be charged in the upcoming billing period. The Commission notes that NEMA argues that the Commission’s concerns can be addressed

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through adequate disclosures at the time of customer enrollment, but the Commission disagrees. The problem here is not inadequate up-front disclosure, but rather on-going notice to customers regarding the price that will be charged to them in the next billing period.

CleanChoice complains that subsection (a) requires RESs to always publish variable rates 30 days before the first of the month. The Commission did not intend for the Proposed Rules to require the rates to be published 30 days before the first of the month, but rather that the rates be published 30 days before the start of the billing cycle during which the rates will be in effect. Subsection (a) in the attached Proposed Rule is amended to correct this.

The Commission notes RESs’ concerns regarding the requirement in Section 412.165(d) which would require RESs to publish their variable rate pricing formulas. Reviewing the structure of Section 412.165 and the specific language of Section 412.165(d), the Commission agrees with these concerns. Thus, the Commission adopts Staff’s recommendation for Section 412.165(d), as modified by ICEA in its RBOE.

Part 412.165(e) of the Proposed Rule is amended to add the word “plan.” This clarification is necessary to distinguish the requirement in subsection (e) for rate plan changes from the requirement in subsection (a) for rate changes.

The Commission notes that RESs continue to complain about the subsection 412.165(f) requirement that historical prices be provided to customers. The parties do not raise any new arguments and the Commission thoroughly considered this issue in the FNO. This provision remains unchanged.

The Commission notes that ICEA describes how the variable rate notice requirements of Section 412.165 are inappropriate or potentially impossible for dynamic and time-of-use products. The Commission recognizes these concerns. However, any modifications to the notice requirements should not permit an ARES to avoid disclosure under Section 412.165 with a rate plan that merely changes twice within a billing cycle. Such an outcome defeats the purpose of timely notifications to customers to enable the customers to know in advance the cost of electric power and energy before it is consumed, and to potentially modify consumption behavior in response to such information. Accordingly, the Commission declines to adopt Staff’s proposed Section 412.165(g).

To the extent that any dynamic or time-of-use rate is derived from a publically available index, such as day ahead or real-time wholesale market prices, Section 412.165(d) allows an ARES to disclose the formula for determining rates and forgo requirements in Section 412.165(a)–(c). The Commission notes that this information must be clear, easily understood, and easily available to customers taking such service. The Commission also notes the high price notifications suggested by ELPC in their BOE concerning index based time–of-use rates, whereby a customer would choose a price threshold at which the customer would receive a notification (e.g. $0.14 per kWh), and method of notification. ELPC BOE at 5–6. This notification requirement is consistent with subsection (c)’s notice requirements on a timeline fitting time-of-use rates. High price notifications would continue to ensure that regardless of the type of rate, customers receive, in advance, cost of electric power and energy before it is consumed, and to

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potentially modify consumption behavior in response to such information. Accordingly, the Commission adds Section 412.165(g) and modifies Section 412.165(d) as detailed in Appendix A.

For all other time-of-use rates not derived from a publically available index or benchmark, which are most commonly rates based on blocks of time (e.g. peak, shoulder, and off peak), the Commission retains most of the requirements of Section 412.165 as modified by the addition of Section 412.165(g). This is consistent with the Rule’s purpose to ensure customers receive, with sufficient notice, the cost of electric power and energy before it is consumed, and to choose to assume the risk and potentially modify consumption behavior in response to such information.

In addition, the Commission recognizes that in a block time-of-use rate structure, though the price per kWh changes more than once a month, the rates, timing, and all other relevant characteristics for customers to understand the blocks of the rate plan are usually set for the duration of the contract and do not change, and provides the customer with adequate notice of the cost of electric power and energy. Accordingly, the Commission adds subsection (h) which exempts such a plan from the requirements of Subsections 412.165(a)–(g) that would otherwise apply to a time-of-use rate.

XVI. SECTION 412.170 CONDUCT, TRAINING AND COMPLIANCE OF RES AGENTS

A. ICEA

In response to proposed Section 412.120, ICEA requested clarification to the definition of “solicitation” that also would affect the definition of RES agent. However, in the event that the Commission does not adopt ICEA’s recommendation regarding in-person solicitation, ICEA is concerned with the broad applicability of proposed Section 412.170(f). If this provision is tied to “solicitation”—and thus potential enrollment—and direct customer interaction, ICEA understands and supports this proposal. However, if this provision applies to all entities involved in “marketing or sales activities,” it could be read to apply to individuals who have no input or control over the substance of the RES-customer interaction. Such individuals include graphic designers and website programmers who provide contractual services in support of direct mail and electronic marketing. ICEA doubts the Commission’s intention was to create such a broad sweep with the scope (and resulting training and monitoring requirements) of this section. ICEA FN Initial at 31-32.

ICEA recommends that the Commission eliminate subsection (f) in response to adopting ICEA’s recommended new section. In the alternative, ICEA recommends that the Commission narrow subsection (f) to RES agents who can enroll customers or are ultimately responsible for the content of communications sent to customers.

ICEA states that proposed Section 412.170(d), when operated in conjunction with proposed Section 412.130(d) and the FNO, creates multiple situations where a RES will necessarily violate Part 412. Section 412.130(d), addressing telemarketing, states in part: “All telemarketing calls that do not lead to a telephone enrollment, but last at least two minutes, shall be recorded and retained for a minimum of six months.” (emphasis added). Addressing in-person solicitation, the FNO states: “The Commission notes that

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Staff encourages RESs that do not already use recording for in-person sales, specifically door-to-door, to pursue this practice, and the Commission agrees.” FNO at 63 (emphasis added). In short, the Commission required and strongly recommended recording customer interactions in situations where the customer did not enroll (telemarketing) or may not have enrolled (in-person solicitation). However, the Commission also has a competing requirement in proposed Section 412.170(d):

No RES agent shall make a record of a customer’s account number unless the customer has agreed to enroll with the RES or otherwise provided his or her consent to the release of that information in accordance with Commission orders and rules.

As an initial matter, ICEA is unsure what “otherwise provided his or her consent to the release of that information in accordance with Commission orders and rules” means. From ICEA’s perspective, there are two primary meanings. The first potential meaning is that if the account number is voluntarily provided to the RES agent, the RES agent may still make the recording in the event no enrollment takes place. The second potential meaning is that the RES agent must secure some additional form of consent to record an otherwise voluntarily given account number. Admittedly, if there is a Commission Order or existing Commission Rule governing such consent, ICEA is unaware of what it would be. ICEA FN Initial at 33-34.

Unless the Commission agrees that a RES agent may make a recording of a freely-given account number to satisfy the second phrase in proposed Section 412.170(d), ICEA believes that the RES agent must choose to either violate a record-keeping requirement (or admonition) or violate the prohibition on recording an account number when a customer does not enroll. Special cases such as when a customer rescinds a contract (and the agreement to enroll is nullified), or when an individual not authorized to do so provides an account number to a RES agent (such as a child over 18 in their parents’ home) make the phrase “agreed to enroll” even less clear and more difficult to apply.

On the other hand, ICEA agrees that RES agents should not collect account numbers by fraud, misrepresentation, or other deceitful tactics. ICEA further agrees that account numbers should not be used except for the limited purposes of effectuating the request under which they were initially provided. ICEA recommends that the Commission specifically allow a RES agent to record an account number when the RES agent is required or authorized by law to record it or the account number is voluntarily given by the customer. ICEA FN Initial at 34.

ICEA states that the Commission should clarify the RES agent training requirement. Although not explicitly recommended by any party during the pre-First Notice proceedings, the FNO set out a broad vision for standardized training of RES agents:

To further the goal that all RES agents be subject to uniform training on implementing Parts 412 and 435 [sic], amongst other relevant laws, the Commission orders RES trade groups, CUB, Staff, and the AG to participate in a workshop process to create a uniform training program upon

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implementation of these rules. Staff is so ordered to lead and organize the workshop process. At the conclusion of the workshop process, the Commission will vote to approve or disapprove the substance of the training. The form of the program will be electronic to ensure that training does not become cost prohibitive. RES companies will be responsible for costs associated with creating and implementing the program, as well as certification fees, if applicable. Upon application of the uniform training program requirement, RESs must provide a certification to the Commission showing that an agent successfully completed the training program prior to an agent being eligible to market or sell electricity service in Illinois.

FNO at 98. As a threshold matter, ICEA is not opposed to RES agent certification and training as a policy matter. ICEA could imagine a standardized training and testing system similar to the Illinois lobbyist registration program or Illinois state employee ethics training, which could be administered by individual RESs or by not-for-profits (such as trade associations). As a general matter, ICEA believes that improving the quality of RES agents will allow more potential customers to feel comfortable shopping in the competitive retail market and choosing their highest value product. ICEA FN Initial at 34-35.

ICEA notes that it is an active participant in many Commission workshop processes, and it would appreciate the opportunity to participate in any collaborate stakeholder process on this issue. ICEA urges the Commission to address two issues before any such process commences: (1) the costs the Commission envisions charging to RESs “associated with creating and implementing the program,” and (2) how those costs would be allocated amongst RESs. ICEA believes that these issues are better suited for the Commission to resolve than through the stakeholder process itself.

ICEA cautions the Commission to respect the independent contractor relationship of RES agents. Of course, a principal will remain liable for the actions of its agent according to the well-established law of agency whether or not the RES agent is an employee or an independent contractor of a RES. However, new Commission requirements that could make a RES agent intended to be an independent contractor into an employee or co-employee of the RES would have implications far beyond RES agent training. The question of whether a particular individual is an employee or an independent contractor for many different purposes (labor and employment, occupational health and safety, tax, etc.) is subject to a different multi-factor test with few bright lines. For example, should the Commission’s training and verification requirements require a particular RES to take a highly active role in the training of an independent contractor, the RES agent’s independent contractor status could be jeopardized under IRS, OSHA, ERISA, and other federal rules and regulations. This potential situation is a major business risk for a RES, because an adverse finding that a RES agent is in fact an employee (or co-employee) due in part to the Commission’s new training rules could impose significant costs of insurance, benefits, and tax liability on RESs.

ICEA also recommends that the Commission identify its authority to create and enforce such a RES agent training and certification program (and against whom the

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enforcement would be appropriate). While ICEA takes no position on this topic, ICEA notes that identifying authority up front could prevent a successful challenge by a RES agent or a RES in the future on the basis that the Commission lacks specific statutory authority to impose such a program or enforce actions against that party. ICEA recommends the Commission carefully consider its authority up front to avoid any preventable challenges after the Commission and stakeholders expend time and other resources. ICEA FN Initial at 35-36.

B. NAE

NAE argues that new subsection (d) of Section 412.170 is somewhat vague. NAE states that it is not clear whether a customer directly providing an account number to a RES agent constitutes his or her consent to release that information to the RES agent. If more is required (some form of express consent) and recording a call where such information is provided by the customer constitutes making a record, then this provision conflicts with the requirement to maintain recordings in Sections 412.130(d) and 412.140(c) where the call does not lead to an enrollment. In that case, one of these requirements needs to be revised. NAE FN Initial at 32.

C. Commission Analysis and Conclusion

The FNO adds subsections (d) through (g) to the Proposed Rule, adopting recommendations proposed by the AG and supported by CUB. Both ICEA and NAE point out that subsection (d) may conflict with the recording retention requirements in Sections 412.130 (Telemarketing) and 412.140 (Inbound Enrollment Calls). The Commission revises the subsection to clarify that it should not conflict with Sections 412.130 or 412.140.

ICEA notes that subsection (f) should be modified to only address direct customer contact and enrollment. As it exists now, the subsection uses the phrase “marketing or sales activities.” The Commission certainly did not intend to require independent contractors working on a RES’s website, for example, to be subject to proposed Section 412.170. To clarify this Section, the Commission modifies subsection (f).

The FNO discusses a mandatory workshop lead and organized by Staff, with the end goal to adopt a uniform training program. The RESs are ordered to provide certification of its agents prior to allowing them to market electricity supply in Illinois. ICEA asks the Commission to identify the costs of creating a uniform training program and how those costs would be allocated across RESs.

The Commission continues to believe a workshop will ensure that regulatory compliance for in-person sales and other forms of marketing would be more robust if the rules for RES agent training are strengthened. FNO at 98. However, the Commission finds that developing a uniform training program may be difficult considering the widely differing businesses that are certified as RESs in Illinois. RESs use varying business models, market in different ways, and offer diverse products, which may be too complex to standardize. Furthermore, the Commission does not want to be in a position to “authorize” a RES’s training such that at a later time, the Commission cannot investigate its marketing practices. Therefore, the Commission orders Staff to convene annual workshops among all interested RESs and RES associations, the AG and CUB, to create

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a training for RES agents which addresses compliance with Parts 412 and 453 that could be incorporated into each RES’s individualized training program. The Commission finds that RES agents would benefit from a deeper understanding of the rules that apply to the solicitation of customers under the various marketing scenarios. The Commission revises subsection (e) to clarify the scope of the workshop and the subject of RES agent training.

XVII. SECTION 412.190 RENEWABLE ENERGY PRODUCT DESCRIPTIONS

A. AG

The AG notes that the Commission’s proposed Section 412.190 makes several references to renewable energy credits (“RECs”). It does so because green products are a combination of so-called “null power” and RECs. The AG explains that RECs represent the green portion of green products. AG FN Initial at 7. In the AG’s experience, consumers do not understand what RECs are. Consumers are also unaware that RESs provide renewable electricity by pairing electricity purchases with RECs. The AG has seen marketing materials from at least one RES selling “green” power in Illinois that strongly implied that the power the RES was selling came directly from renewable resources. As a matter of physics, such a claim is demonstrably false. AG FN Initial at 7.

In the FNO, the Commission states that the Proposed Rules are necessary “to provide customers with transparency in the product offerings and a method to verify the claims that induced them to purchase the energy product.” FNO at 113. The AG believes that to provide transparency to customers, RESs should be required to define “REC” in all marketing materials for green offers and on their websites. The AG concedes that RECs are not a simple concept. However, it is better that potential customers be provided information about the “green” component of renewable electricity as opposed to being provided a simplified version that does not reflect reality. AG FN Initial at 7-8.

For these reasons, the AG urges that Section 412.190 be modified to require RESs selling or marketing electricity products made up of, in whole or in part, renewable energy resources that include RECs in the product’s resource mix to include a definition of REC in all product-specific printed, telecommunication, and electronic marketing materials. AG FN Initial at 8.

B. Staff

Staff notes the AG’s proposal regarding a definition of RECs and is not opposed in concept to such a requirement. Staff opines, however, that the last sentence in the AG's proposed language, which uses the phrase "null electricity" appears likely to lead to more, rather than less customer confusion among potential customers. Staff FN Reply at 9-10.

Also, Staff notes that Ameren proposes amending Section 412.190(c) by replacing "power or energy" service with "electric supply" service to "avoid confusion and maintain consistency throughout the rules." Because the Proposed Rules replace the term "power or energy" in several sections of Part 412, including the definition section, Staff sees no reason to object to Ameren’s proposal for Section 412.190(c). Staff FN Reply at 10.

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C. ICEA

ICEA states that the current Section 412.190 provides the simple, commonsense requirement that when a RES advertises an environmentally preferable product the RES must go beyond minimum compliance requirements. See 83 Ill. Adm. Code 412.190. In addition, existing statutory requirements govern how a RES may advertise environmentally preferable products:

An alternative retail electric supplier shall provide documentation to the Commission and to customers that substantiates any claims made by the alternative retail electric supplier regarding the technologies and fuel types used to generate the electricity offered or sold to customers.

220 ILCS 5/16-115A(e)(iii). Also, RESs must disclose to customers the environmental attributes of power and energy actually procured, to the extent possible. See 220 ILCS 5/16-127. In addition, ICEA states that nothing would appear to prohibit a common law or Consumer Fraud Act lawsuit by a customer or the AG against a RES that provides misinformation in advertising about products and services. ICEA FN Initial at 36.

Against this background, ICEA proposes a rule of thumb for environmentally preferable products: a RES must back up any specific claim it makes, but it should not be compelled to make any specific claims. Thus, ICEA's proposal would not require a RES to make disclosures to the extent no specific claims are made. A RES that simply advertises that it will procure RECs for 100% of a customer's power and energy should not be compelled to disclose the fuel type, location, or other information about the RECs to be procured as long as the RECs qualify as renewable resources under Section 1-10 of the Illinois Power Agency Act (“IPA Act”). ICEA FN Initial at 37.

ICEA sees two primary benefits to this approach. First, it eliminates disclosures that may be impossible (disclosures prior to selling and certain customer-specific disclosures) or that are impractical (certain customer-specific disclosures). Second, consumers would have a sense for how a RES approaches procurement when the RES does not make specific claims in advertising. This is a much better alternative than forcing a RES to declare an intent to procure certain RECs in advance. ICEA notes that to the extent a RES has advertised it will procure certain RECs, no further disclosure is necessary. ICEA FN Initial at 45-46.

ICEA is skeptical that many consumers place an emphasis on this issue. However, to the extent that a customer wants to know what types of RECs a RES has recently bought when the RES does not specify, that information would become available under ICEA's proposal. The customer could then decide if the procured RECs reflected their preferences, or another product (either with defined RECs or from a RES with a different procurement pattern) provides better value. ICEA FN Initial at 46.

Instead of simply requiring RESs to back up their advertising claims, ICEA notes that the Proposed Rule sets out a complex set of pre-contract and periodic disclosures. The pre-contract disclosures impose compliance challenges and the annual customer-specific disclosure requirements impose significant compliance challenges and risk exposure for RESs. ICEA believes that these mandated disclosures offer little to no value

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to individual customers. They are, however, of great value to certain stakeholders for their advocacy campaigns and agendas. ICEA also believes that certain requirements in the Proposed Rule are contrary to law (such as Illinois-specific disclosures) or beyond the Commission's authority (restrictions on vintage of RECs). In addition, several of the new requirements are confusing as written and it is unclear how a RES would comply. ICEA FN Initial at 37.

ICEA explains that many RESs do not procure RECs in advance of acquiring customers. A primary reason for that is RESs must acquire their customers, and do not have captive customers. In addition, if a RES procures too many RECs it cannot obtain cost recovery on the basis that the pre-purchase was reasonable. As a result, RESs may not know about the characteristics of the RECs that they will eventually use for a voluntary green product until well after customers have been acquired. ICEA FN Initial at 39.

ICEA further explains that common industry practice is for RESs to acquire and retire RECs based on their contractual obligations and the total annual consumer final load. Unlike billing and collections-which revolve around billing cycles-many RESs do not procure and retire RECs every month on behalf of customers. Thus, asking a RES about their behavior over a set time period (such as the last 12 months) at best provides information about customers whose contract term ended during that time period. ICEA FN Initial at 39-40.

In an apparent response to common RES trade practices of not procuring (or committing to procure) specific RECs in advance, ICEA notes that proposed subsection 412.190(b)(3) allows a set of disclosures in lieu of anticipated RECs to be procured. However, the alternative disclosures still are incompatible with standard industry practice. Although some RESs do offer standard products, some RESs offer more customizable products under the same name. Customizability within a single "product" makes it either impossible for a RES to comply or would offer a composite of different options that does not provide useful information about the product or its various options. In addition, many RESs reporting anything about the last 12 months of the "product" would not necessarily give a view into how that RES will procure on behalf of the potential customers viewing the report. In addition, the RES may not "intend" to procure any particular fuel mix or geographic mix of RECs, instead seeking to procure according to other factors such as cost, volume available, or other terms of potential REC transactions. ICEA FN Initial at 40.

ICEA understands that in some cases the Commission considers mandates that are inconvenient for RESs because of their (perceived) disproportionate benefit to consumers. However, this is not such a case. RECs that qualify under Section 1-10 of the IPA Act may be generated from different fuels and in different locations, but each represents a megawatt-hour of generation that did not require incremental emissions related to fossil fuel burning. A particular customer who has preferences beyond the emissions benefit, such as an affinity for wind or desire to support local facilities, is free to purchase a RES product that affirmatively contracts (or advertises) to procure those more particular and likely more expensive RECs. ICEA FN Initial at 40-41.

ICEA states that several potential mandates are unclear in the Proposed Rule. ICEA recommends that the Commission revise the Proposed Rule to make the desired

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RES actions clearer. For example, with respect to subsection 412.190(b)(4), ICEA is unsure what actions, if any, are required of the RESs by the application of subsections (b)(1) - (b)(3) - which pertain to required disclosures in advertising materials - in the context of a Commission-controlled website. Responding further, ICEA strongly opposes any requirement that RESs posting offers on PlugInIllinois.org submit subsections (b)(1) - (b)(3) disclosures. ICEA argues that this requirement is redundant, as disclosures are available with the click of a button on RESs’ websites, and promotes inadvertent compliance errors as the proliferation of places where documents must be updated creates room for human error, update timing issue, etc. In addition to the reasons explained supra, PlugInIllinois.org is an inappropriate venue for disclosures. Like all other disclosures, such as the UDS, an interested customer can visit the RES website and explore all of the various terms, conditions, claims, limitations, and disclosures related to the product. ICEA FN Initial at 44.

ICEA stresses the difference between the energy or other products procured by RESs to satisfy their obligations and the actual electricity used to supply the customer. RESs do not control the electric grid, in which indistinguishable electrons flow from various generating facilities to end users in Illinois. A RES has no way of knowing the source of the particular electrons that serve any one of its customers. The Commission's existing environmental disclosure requirements acknowledge this, requiring RESs to quarterly disclose only the system average fuel mix-allowing for unknown sources. See 83 Ill. Adm. Code 421.30(a)(1); ICEA FN Initial at 41.

ICEA explains that even setting aside the matter of physics, industry practice is for a RES to procure on behalf of its customers in the aggregate rather than individually. Thus, a RES with 10 MWh of usage for which it agreed to provide 100% green power will buy 10 RECs, rather than 0.012 RECs for customer one, 0.011 RECs for customer two, and so forth. If none of the RES's contracts required specific types of RECs and the RES bought one Illinois wind REC, one Illinois landfill gas REC, and three Iowa wind RECs, it would not be clear which REC was attributable to which customer's "actual use" in what proportion and during what compliance period. ICEA FN Initial at 41-42.

Thus, when proposed subsection 412.190(b)(5) requires customer-specific disclosures related to "actual electricity used to supply the customer," it is unclear to ICEA how to respond. Assuming arguendo that a RES could comply with the Commission's directives, ICEA suggests that there is little value in the additional disclosure. The only additional piece of information this proposal requires is the fuel mix and Illinois/non-Illinois location for RECs. Even if it were practical to provide this on a customer-specific level, ICEA maintains that the "green" nature of the product is demonstrated by the purchase of RECs eligible under Section 1-10 of the IPA Act. Section 1-10 of the IPA Act does not differentiate between the attributes of renewable energy resources from Illinois or other states. Cf. 20 ILCS 3855/1-75(c); 220 ILCS 5/16-115D. If the customer has more specific preferences, such as supporting Illinois wind, it should contract with (or, in the case of municipal aggregation, request its municipality negotiate with) a RES willing to offer a product that guarantees such a REC. ICEA suggests that if the General Assembly believed there was a difference, as it did with fuel type by enumerating specific fuels and excluding certain fuels, it would have said so. ICEA FN Initial at 42-43.

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Although ICEA states that it does not wish to relitigate issues addressed in earlier comments, ICEA notes that it cited a federal case that ICEA believes supports a holding that a labeling requirement identifying in-state components would violate the Commerce Clause of the U.S. Constitution. See ICEA Surreply at 55. Although ICEA concedes it is unable to litigate the constitutionality of a particular requirement in an administrative proceeding, ICEA recommends that the Commission take potential federal constitutional issues under consideration. ICEA FN Initial at 43.

ICEA complains that proposed subsections 412.190(b)(1)(A) - (C) and (b)(5)(A)(i) - (iv), which all require disclosure of percentages, are unclear. ICEA FN Initial at 45. ICEA also notes that Public Act 99-0906 has stripped any RPS compliance from RESs and placed the RPS within the exclusive purview of the utilities and the IPA. It is unlikely that Part 412 will be effective before 2018, meaning that less than 18 months later Section 412.190 may contain outdated references if it does not reflect that utilities will take over the RPS. ICEA recommends removing certain language effective June 1, 2019 to reduce future confusion. ICEA FN Reply at 35.

While ICEA states as well that it does not wish to relitigate the question of whether the Commission has plenary authority over RESs and many of the specific requirements of the Proposed Rules, ICEA is concerned that restrictions on REC vintage are beyond the Commission's authority, as required by Section 412.190(c). Nowhere in Section 1-10 of the IPA Act does the General Assembly discern RECs based on vintage. In addition, the Act does not explicitly provide the Commission with authority to regulate whether a REC that otherwise qualifies under that definition does not have voluntary green product compliance value. ICEA respectfully recommends that the Commission reconsider whether it has the authority to restrict the vintage of RECs used for the purpose of voluntary green products. ICEA FN Initial at 43-44.

ICEA notes that the AG recommends adding a disclosure purporting to explain what a "REC" is, but ICEA states that it does not believe additional disclosures are necessary. In justifying its recommendation, the AG cites to the marketing materials of one RES, which the AG admits was the target of enforcement by the AG. ICEA is concerned that certain parties are using bad acts that were already punishable under existing law to justify more and more regulation of compliance-minded RESs. ICEA FN Reply at 35-36.

Even if the Commission believes that some sort of explanation of RECs is necessary, ICEA opposes the proposed text from the AG. ICEA stresses that none of the statements in the AG's proposed language are necessarily untrue or misleading. In fact, some may be parallel to advertising materials offered by some RES now. However, ICEA strongly believes that individual RESs should be able to make their own determination as to how much risk they wish to take on with claims about RECs. Compelling RESs to make statements that a RES may have difficulty defending essentially amounts to the Commission forcing a liability risk on each RES. ICEA FN Reply at 36-37.

As an alternative, ICEA recommends that the Commission add a new page to PlugInIllinois.org to explain the RPS (as modified by Public Act 99-0906), RECs, and green products that are regulated by Section 412.190. This takes the compliance (and litigation risk) burden off of the RESs, and ensures that customers will have equal access.

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ICEA would be willing to take part in a collaborative process with Staff and other interested stakeholders to draft accurate, useful language for customer education. ICEA FN Reply at 37.

ICEA notes that ELPC recommends requiring all RESs to disclose in advertising materials the current RPS percentage and the percentage of renewable resources above that percentage that the RES will procure. See ELPC FN Initial at 1-2. ICEA recommends that the Commission reject this recommendation. First, ELPC ignores that products could have several green options, which could lead to clunky or nonsensical required disclosures. Second, there is no reason to specifically disclose the current RPS percentage, a publicly available number that could much more easily be posted to the Commission's website. By the same logic, it is silly to disclose the voluntary green procurement amount when that information would be easy for a customer to calculate based on the total percentage. Also, RESs that prioritize compliance will be unnecessarily restricted from advertising in the months leading up to June 1 of each year, for fear of including values that are no longer valid as the RPS percentage changes. For the foregoing reasons, ICEA asserts that the Commission should reject ELPC's proposal. ICEA FN Reply at 38.

D. ELPC

ELPC notes that the Proposed Rule includes disclosure requirements related to marketing electricity as “green,” “renewable,” “environmentally friendly,” etc. that are crucial to protecting the public from misleading advertising and providing the information necessary to allow consumers to make educated choices about what electricity product to purchase. However, ELPC suggests that a few edits are necessary. Most pressingly, ELPC argues that the language of subsection 412.190(b)(3) should be modified to more clearly reflect the Commission’s intent that the alternative disclosure requirements of subsection 412.190(b)(3) only apply to the upfront disclosure of the renewable energy resource type mix and the percentage of renewable energy resources generated in Illinois, and cannot be used to avoid disclosing the percentage of renewable energy resources required under the RPS, the percentage procured beyond the RPS, and the total percentage of renewable energy resources, as required by subsections 412.190(b)(1)(A) through (C). ELPC FN Initial at 1-2.

ELPC maintains that the disclosure requirements of subsection 412.190(b)(1) should not be avoidable by compliance with subsection (b)(3). This is consistent with the intent of the rule, which is to allow alternative disclosures if an RES does not yet know where it will be obtaining renewable energy resources. As noted in the FNO, however, “all RESs must disclose on all marketing materials the total percentage of renewable energy resources for any electricity products advertised as ‘renewable,’ ‘green,’ etc.” FNO at 117. ELPC FN Initial at 2.

To make it clear that a RES that advertises an electricity product as renewable, green, etc. cannot avoid disclosing the percentage of renewable energy resources required under the RPS, the percentage procured beyond the RPS, and the total percentage of renewable energy resources, subsection 412.190(b)(3) should be edited to begin, “if a RES cannot comply with subsection (b)(1)(D) and/or (b)(2) of this Section.” ELPC asserts this would clarify that the alternative disclosure requirements of (b)(3) only

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apply to the upfront disclosure of the renewable energy resource type mix and the percentage of renewable energy resources generated in Illinois. ELPC FN Initial at 2.

ELPC states that ICEA raises a legitimate concern that some of the language in the proposed rule discussing the annual disclosure requirements in subsection 412.190(b)(5) could be understood to suggest that RESs that offer green electricity products must ensure that the actual electrons from renewable energy facilities are delivered to customers who sign up for the product. ELPC proposes edits that it states are consistent with the fact that the electrons from the renewable energy are not directly provided to the customer, while still requiring the RES to provide important information to the consumer. ELPC FN Reply at 2-3.

ELPC adds that ICEA questions the value of requiring RESs to disclose the percentage of renewable energy resources required by the RPS noting that under Public Act 99-0906, RPS requirements will be removed from RESs and will be the exclusive duty of the Illinois Power Agency. ELPC responds that if a RES offers a 30% renewable energy electricity product and 25% of the electricity the RES provides is required by the RPS to be from renewable energy resources anyway, this is of course relevant to how much of a premium a customer might be willing to pay for the product. Additionally, Public Act 99-0906 phases out RESs' RPS requirements over three years, making these disclosures still relevant. ELPC suggests that the provisions could, however, be reframed to only require disclosure of the RPS requirement if it is a non-zero number. ELPC FN Reply at 3.

In response to ICEA’s statement that the some RESs provide customizable electricity products and would have difficulty with up-front marketing disclosures, ELPC notes that if a RES wanted to market a green electricity product for which the customer could choose the percentage of renewable energy, it could either advertise a sample option for the product and note that the product was customizable, or include the possible range of options, e.g., choose 75%, 85%, or 100% renewable energy. ELPC FN Reply at 3-4.

ELPC further notes that ICEA states that some RESs cannot disclose up-front the specific mix of renewable energy resources or location from which they "intend" to purchase RECs - as required under subsection 412.190(b)(3) - because they may not have any specific intentions with regards to what kind of RECs they purchase. If this is the case, ELPC opines that the RES must simply then list all the types of renewable energy resources from which it may purchase RECs (as it intends to purchase RECs from any of these types) so that customers are not mislead. The RES must also disclose that RECs may be purchased from across the country and cannot imply any local environmental benefit. For example, if a RES is planning on purchasing whatever RECs are the cheapest, and this may include RECs from landfill gas or waste biomass, then the RES must disclose this fact. ELPC offers that many customers might assume that "renewable energy" would come from resources like wind and solar, and it would be misleading to not disclose these other types of resources that might be included. ELPC FN Reply at 4.

ELPC notes that the AG proposes that green electricity products that are supported by RECs must include a statement explaining that it is a REC product and very briefly

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explaining what that means. ELPC is concerned that such a statement would create more confusion than clarity. The concept of RECs is not simple, and consumers may decide not to purchase a green electricity product simply because they do not understand the statement (even though they would purchase the product if they fully understood RECs). Because of the way that renewables operate in the marketplace, RECs are the main method of selling and buying renewable energy, and the purchase of RECs is generally understood to entitle the purchaser to make the claim that it is purchasing renewable energy. ELPC notes that the AG's primary concern seems to be that RESs may not suggest or imply that the actual electrons from renewable energy facilities will be delivered to customers, and ELPC agrees that should not be permitted. ELPC FN Reply at 6-7.

E. Ameren

Ameren proposes amending Subsection (c), replacing “power or energy” with “electric supply.” In the alternative, if the Commission does not see fit to include Ameren’s proposed language, Ameren proposes amending Subsection (c) to change “power and energy” to “electric service.” This proposed language would mirror language modifications used throughout the Proposed Rules and its inclusion would help avoid any confusion that might be caused if it were not modified.

F. CleanChoice

CleanChoice is largely supportive of the Proposed Rule found in subsection 412.190(a). However, CleanChoice is concerned that some of the additional disclosure requirements in Subsection 412.190(b)(1)(A) - (D), while ostensibly providing customers with “more information,” may not provide the information that customers seek to inform their energy choices.

First, the Commission should clearly state the percentage of electricity with RECs above the RPS that must be procured in order for a RES to substantiate a claim that it sells “100% renewable” energy. CleanChoice opines that it is unclear from the current proposed rule whether the disclosure contemplated in subsection (A) could include a total percentage of electricity above 100%. If so, the assertion that a customer’s total percentage of electricity is a number larger than 100% is likely to confuse customers. CleanChoice suggests that this conflict and confusion could be easily avoided by a disclosure statement regarding the RPS requirement and a separate statement regarding the percentage of additional electricity paired with RECs above the RPS requirement or a statement regarding the total percentage of electricity that is renewable (without requiring the disclosures in both subsections (A) and (C)). CleanChoice supports subsection (D). This same modification should be applied to the requirements in Section 412.190(b)(5). Further, subsection (b)(5) should clarify that such disclosure to customers may be provided electronically via the RES website, email, or any other means by which the customer has agreed to receive information from the RES. CleanChoice FN Initial at 3-4.

G. Commission Analysis and Conclusion

The AG requests that Section 412.190 be amended to require that all RESs’ marketing materials include a definition of RECs. ELPC and others assert that this could

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lead to customer confusion. The Commission agrees that including a definition for RECs could be confusing for customers, in particular the definition proposed by the AG which includes the term “null power.” The AG’s proposal is not adopted. As an alternative, ICEA recommends that the Commission add a new page to PlugInIllinois.org to explain the RPS (as modified by PA 99-0906), RECs, and green products that are regulated by Section 412.190. The Commission finds that this alternative is appropriate and would help to further consumer understanding. The Commission directs Staff to work with interested stakeholders to draft language to be included on the website.

In the Proposed Rule, subsections 412.190(b)(1)(A) - (D) outline four new disclosure requirements: A) the total percentage of electricity represented by subsections (B) and (C); B) the percentage required to satisfy the RPS; C) the percentage of electricity paired with renewable energy resources through RECs in addition to, and over and above, the RPS; and D) the renewable energy resource type mix. CleanChoice suggests that the disclosures required under subsection 412.190(b)(1)(A) - (b)(1)(C) are unclear. The Commission understands CleanChoice’s confusion and the Proposed Rule is modified. The Commission intends subsection (b)(1)(A) to be the total of (b)(1)(B) and (b)(1)(C). Subsection (b)(1)(B) requires a RES to disclose the percentage of the customer’s total electricity required to satisfy the RPS. This is not a fixed percentage and indeed will be phased out under PA 99-0906, but for illustrative purposes let’s assume 20%. Subsection (b)(1)(C) requires a RES to disclose the percentage of electricity paired with renewable energy of the customer’s total electricity that a RES will procure above the RPS required percentage. A RES could procure RECs to cover an additional 30% of a customer’s supply. Therefore, the subsection (b)(1)(A) disclosure would be 50% and the remaining 50% of the offer would not have RECs paired with the supply.

The Proposed Rule has several minor changes. In recognition of the changing role of RESs in the RPS through PA 99-0906, the phrase “if greater than zero” has been added to subsection 412.190(b)(1)(B) and 412.190(b)(5)(A)(ii). Also, several parties point out that the phrase “electricity used to supply the customer” in subsection 412.190(b)(1) is inaccurate because in reality RESs just pair electricity with RECs. The Commission agrees with this concern and notes that the same problem exists in subsection 412.190(b)(5)(A). Therefore, the Commission adopts ELPC’s proposed solution of changing the language to say “electricity paired with RECs” as appropriate throughout Section 412.190. Also, the word “written” has been added to the annual disclosure requirement in Section 412.190(b)(5), which as defined in Section 412.10, means a hard copy unless a customer has agreed to a different method.

With respect to ICEA’s claims regarding the constitutionality of subsection 412.190(b)(2), which requires RESs to disclose whether RECs are generated in Illinois, the Commission notes that the Proposed Rule does not forbid RESs from procuring out-of-state RECs, it is merely a notice requirement. The Commission finds that this is valuable information for customers because a customer may wish to support renewable energy development within the state for both economic and environmental reasons.

ICEA complains that RESs cannot disclose up-front the specific mix of renewable energy resources or location from which they "intend" to purchase RECs, as required under subsection 412.190(b)(3) of the Proposed Rule, because they may not have any specific intentions as to what kind of RECs they may purchase. ICEA FN Initial at 40. If

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this is the case, the Commission finds that the RES must then list all the types of renewable energy resources from which it may purchase RECs (as it intends to purchase RECs from any of these types) so that customers are not mislead. The RES must also disclose that RECs may be purchased from across the country and cannot imply any local environmental benefit. The IPA Act defines renewable energy to include:

wind, solar, thermal energy, photovoltaic cells and panels, biodiesel, anaerobic digestion, crops and untreated and unadulterated organic waste biomass, tree waste, hydropower that does not involve new construction or significant expansion of hydropower dams, and other alternative sources of environmentally preferable energy. For purposes of this Act, landfill gas produced in the State is considered a renewable energy resource. ‘Renewable energy resources’ does not include the incineration or burning of tires, garbage, general household, institutional, and commercial waste, industrial lunchroom or office waste, landscape waste other than tree waste, railroad crossties, utility poles, or construction or demolition debris, other than untreated and unadulterated waste wood.

20 ILCS 3855/1-10. Therefore, if a RES is planning on purchasing whatever RECs are the cheapest, and this may include RECs from landfill gas or waste biomass as allowed by the IPA Act, then the RES must disclose this fact. The Commission notes that many customers might assume that "renewable energy" comes from wind and solar, and it would be misleading to not disclose these other types of resources that might be included. The word “intend” is switched to “may” because it more clearly articulates the disclosure that is expected of RESs.

ELPC further suggests that subsection 412.190(b)(3) should be amended to reflect that if a RES has not committed to a particular resource mix, the RES should still disclose the percentage of green energy. The Commission agrees with ELPC and the Proposed Rule is amended to not allow RESs to avoid the subsection 412.190(b)(1)(A) - (b)(1)(C) disclosures because the disclosures do not require RESs to commit to a particular resource mix, but rather the amount of “green” energy or RECs the RES will procure for a customer if the customer signs up for a particular product.

ICEA continues to complain regarding the requirement in subsection 412.190(b)(4) that RES offers be posted on PlugInIllinois.org. In the FNO, the Commission concluded:

the offers posted on the Commission’s PlugInIllinois.org website need to be consistent with the rules adopted herein. In other words, offers posted on PlugInIllinois.org need to post the percentage of renewable resources as required in subsection (b)(1) and the percentage from Illinois renewable energy resources as required in subsection (b)(2). The actual mechanics of how this should be instituted on the PlugInIllinois.org webpage need not addressed in a Commission Order. The Commission does not adopt ICEA’s

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proposal that RESs should be given a space to explain the “green” attributes of their products. A simple statement of the percentage of renewable energy resources makes for an easy comparison.

FNO at 117. ICEA offers no reason to change this decision. The rule requires the subsection 412.190(b)(1) thru (b)(3) disclosures to be posted on PlugInIllinois.org and compliance with this requirement will be facilitated and monitored by Staff. The Commission finds this sufficient.

Staff, in its BOE, proposed that the subsection 412.190(b)(5)(B) be amended to require that disclosures be made to Commission Staff only upon request. The attached Appendix A reflects this proposal.

Similarly, in the FNO, the Commission thoroughly considered the arguments surrounding the requirement in Section 412.190(c) that RESs procure RECs of a certain vintage. See FNO at 118. The Commission sees that no new argument regarding REC vintage has been raised and the Proposed Rule remains unchanged.

XVIII. SECTION 412.210 RESCISSION OF SALES CONTRACT

A. Staff

The Commission requests comment on “when the utility should notify the RES of rescission under subsection (e)” in the event a residential customer contacts the utility to rescind a pending enrollment with a RES. FNO at 120. Staff assumes that under these circumstances the electric utility would contact the RES immediately or within 24 hours. Staff FN Initial at 10.

Staff points out that Ameren currently notifies a RES of the rescission of an enrollment “within one business day of processing a valid rescission request from a customer” and recommends that one business day be the requirement to be included in Part 412.210. While Staff recommended the use of “24 hours” in its comments, Staff finds Ameren’s proposal to be superior as it accounts for customer rescission requests received immediately before or during non-business days. For this reason, Staff recommends that the Commission adopt Ameren’s proposal. Staff FN Reply at 11.

Staff notes that NAE takes exception to the Proposed Rule’s inclusion of language permitting a customer to rescind a supplier enrollment at any time the RES cannot produce verification or authorization for the transaction. While NAE attacks the Proposed Rule on several bases, and Staff does not agree with all of the assertions made by NAE in this regard, the language cannot actually exist within a rescission clause. Staff explains that this is because rescission can only take place prior to the time a customer starts to receive electric supply from a RES. Rescission occurs only during a pending enrollment by the utility on its system. Cancellation is the correct term for the ending of service with a RES after the customer has already been taking the service. Staff FN Reply at 11.

In Staff’s view, this is a complex matter implicating a large universe of potential misunderstanding, mistake or wrongdoing. Staff states that this issue might properly be addressed in the context of workshops. Staff FN Initial at 10.

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B. Ameren

Ameren recommends that a utility should notify a RES within one business day after processing a valid rescission request from the customer. This provides the utility with the appropriate amount of time to accurately process the customer’s rescission request and prepare a notification to the RES of the rescission. Ameren FN Initial at 5.

Staff proposes language that would require the utility to notify the RES within 24 hours of the customer contacting the electric utility to provide a notice of rescission. Ameren agrees with this general sentiment but has concerns with the implementation of Staff’s proposed language because the time required to process a valid request and contact a RES is impacted by the time of day the customer contacts the utility to rescind a pending enrollment. Ameren maintains its recommendation that an electric utility should notify a RES of a rescission within one business day after processing a valid rescission request from the customer. This provides the utility with the appropriate amount of time to accurately process the customer’s rescission request and prepare a notification to the RES of the rescission in a reasonable period of time. Ameren FN Reply at 3-4.

C. AG

The AG agrees with Staff that utilities should notify RESs of rescission as soon as practicable. The AG supports Staff’s proposed modification of Section 412.210(e). AG FN Reply at 14.

D. RESA

RESA notes that there is nothing in the FNO that suggests that it is difficult for customers to cancel contracts that were enrolled in error or were unauthorized. Similarly, RESA is not aware of any evidence offered in this proceeding that makes such a suggestion. Consequently, RESA does not think the “exploration” contemplated by the FNO is necessary. RESA also does not believe that it would be a burden for electric utilities to provide such notice within one business day. RESA FN Initial at 26-27.

While RESA does not object to the suggestion of workshops to help understand and resolve issues, RESA does not see anything in the FNO that suggests that it is difficult for customers to cancel contracts that were enrolled in error or were unauthorized. Further, RESA submits no evidence offered in this proceeding warrants such a suggestion. RESA FN Reply at 15-16.

E. ICEA

ICEA states that the Commission’s request for comment considers the narrow case in which a customer wishes to drop a product for which they were signed up erroneously or illegally. However, ICEA believes accelerated switching would be just as (if not more) beneficial in the normal course, including allowing customers to change to new products quicker. ICEA requests a Commission NOI into accelerated switching. ICEA FN Initial, Attachment C.

ICEA notes that one of the positive effects of accelerated switching is that it would allow customers to exit an unwanted contract quicker. This applies equally whether “unwanted” means the customer never intended to sign up, or that the customer fully approved initial sign-up but (some time later) prefers a different product. ICEA contends

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that the speed with which a customer may exit a contract is largely dependent on statutory, rule, and tariff requirements involving customer switching. ICEA recommends that such issues should be examined as part of a comprehensive review, with proposals for changes at all levels of authority necessary to achieve faster switching (if the Commission ultimately agrees with the desirability of accelerated switching). ICEA FN Initial at 46-47.

ICEA points out that RESA argues that there was no evidence in the record to support accelerated switching in the event of an unwanted or unauthorized switch. Although ICEA agrees that there is no record evidence to create special accelerated procedures to reverse unwanted or unauthorized switches, ICEA believes there is plenty of evidence in this docket and otherwise within the Commission’s purview that demonstrates the benefits of accelerated switching for any reason. As a result, ICEA recommends that the Commission initiate an appropriate proceeding to sustain a comprehensive review of how accelerated switching in all circumstances can be adopted in Illinois.

ICEA agrees with Staff that a utility should notify a RES of a rescission immediately and within 24 hours. However, if there are practical barriers to doing so, which have not been addressed to date in the record, ICEA is open to Ameren’s outer time limit of one business day after processing provided that the utilities make commercially reasonable efforts (especially toward the end of the period if near non-business days) to process and notify as early as possible. ICEA FN Reply at 38-39.

F. NAE

NAE states that the meaning of the proposed language in subsection (b) is not clear, but it appears to be intended to create an unlimited extension of the right to rescind within 10 days after the utility processes an enrollment request without any termination fee set forth in subsections (a) and (b), when the RES is “unable to provide verifiable proof of authorization of enrollment.” NAE opines that there are several issues with both the existing and proposed language of Section 412.210. NAE FN Initial at 32.

NAE states that both the existing and new language purporting to establish legal rescission rights are not within the Commission’s authority to establish by rule. Nothing in the Act or any other law grants the Commission the authority to establish or proclaim such contract or legal rights. There is nothing in the Act or the CFDBPA establishing a customer right to rescind a contract within 10 days of signing a contract. Rather, Section 16-119 of the Act makes clear that a RES is free to provide in its contracts applicable termination rights. 220 ILCS 5/16-119 (“An electric utility or an alternative retail electric supplier may establish a term of service, notice period for terminating service and provisions governing early termination through a tariff or contract.”). Section 16-119 also provides that “[a]ny notice provisions; or provision for a fee, charge or penalty with early termination of a contract; shall be conspicuously disclosed in any tariff or contract,” adopts caps for any early termination fee or penalty for residential ($50) and small commercial ($150) customers, limits the caps to charges for termination of electric service, and provides that customers remain responsible for any unpaid charges owed to an electric utility or alternative retail electric supplier at the time it switches to another provider. Id. NAE asserts that the provisions of Section 412.210 are not supported by and contravene

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these statutory provisions providing for termination fees and charges to be governed by the contract except for the statutory caps and the liability of the customer for any unpaid charges.

NAE argues that to the extent the revision purports to excuse the customer from any responsibility for services rendered it is contrary to Illinois law recognizing the common law right to quantum meruit recovery. Quantum meruit is a form of implied contract created as a matter of law based on the well-established principle that no one should be permitted to unjustly enrich himself at another's expense. Gary-Wheaton Bank v. Burt, 104 Ill.App.3d 767, 775 (2nd Dist. 1982). Quantum meruit literally means “‘as much as he deserves.’” Rohter v. Passarella, 246 Ill.App.3d 860, 866 (1st Dist. 1993), quoting Black's Law Dictionary 649 (abr. 5th ed.1983).

NAE states that even if the Commission had the authority to adopt this rule, the revision is illogical and inappropriate. Rescission, as opposed to termination, means that the contract is void ab initio (from the beginning). NAE argues even where the legislature has seen fit to establish a right to rescind for competitive suppliers, it has limited that right to 10 days from enrollment. See 220 ILCS 5/19-115(g)(7). An unlimited right to rescind after service has been provided and accepted is not reasonable. Indeed, complaints before the Commission have a two year statute of limitations. 220 ILCS 5/9-252.1. NAE submits that if the intent here was to simply limit termination fees after service starts where proof of enrollment is somehow lost over time, such language should have been placed in Section 412.230 which addresses termination fees. NAE FN Initial at 35.

NAE finds that Staff’s recommendation for prompt notice is reasonable, but operational or technical considerations (e.g., if that time period ends on a weekend or holiday) should also be considered if applicable. NAE FN Reply at 14.

G. ComEd

ComEd agrees with Ameren’s and RESA’s proposal that notice should be provided within one business day after processing a valid rescission request from the customer. As Ameren notes, this reflects the appropriate amount of time to accurately process the customer’s rescission request and prepare a notification to the RES of the rescission. Moreover, the “business day” qualification is important to ensure that the utility has personnel available to process the request should a weekend or holiday intervene. While ComEd believes that Staff’s proposal to provide notification “within 24 hours of the customer contacting the electric utility” is in the same vein, ComEd recommends that the “one business day” provision be adopted rather than “within 24 hours” for the reasons Ameren described. ComEd FN Reply at 7.

ICEA proposes that the Commission separately open a NOI regarding customer switching. ComEd states that this proposal should be rejected. First, switching is not at issue in this docket – indeed, ICEA does not propose any changes to the Rules in this regard, but rather asks the Commission to undertake action outside of this docket. The Commission should reject ICEA’s proposal regarding a topic not at issue in this docket. Second, ComEd underscores that the parties are addressing issues associated with switching under the existing NOI-01-2014 workshop process. As such, ICEA’s request to initiate a second workshop process to address the same issue is duplicative and inefficient, and it should be rejected. ComEd states that the Commission should permit

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the parties to continue addressing this issue in the existing workshop process. ComEd FN Reply at 8.

H. CES

CES agrees with Staff that this is a complex matter that should be addressed in workshops. The Commission’s immediate adoption of a regulation giving customers additional ways to cancel contracts would be premature. Instead, workshops would provide a forum for RESs to educate Staff on the terms and conditions of their contracts and their interactions with customers, and for Staff, in turn, to share with RESs complaints Staff may have received regarding wrongful or inadvertent switching. CES looks forward to collaborating with Staff and stakeholders on this issue, among others, in the workshop setting. CES FN Reply at 7-8.

I. Commission Analysis and Conclusion

NAE argues that both the existing and proposed subsection (b) is contrary to established case law in Illinois and Section 16-119 of the Act. The Commission agrees with Staff that NAE improperly conflates contract rescission with cancellation. The Commission also points out that the majority of subsection (b) is already existing law. The Commission does agree with NAE that if the RES is unable to provide verifiable proof of the authorization of enrollment, the contract never existed to begin with. Therefore, the Commission removes the new language from subsection (b).

All parties appear to agree with, or not object to, Ameren’s proposed modification to subsection (e) which requires the utility to notify the RES within one business day after processing a valid rescission request from the customer. Therefore, the Commission modifies subsection (e).

Staff suggests workshops to discuss this “complex matter.” The Commission agrees with RESA that nothing in the record for this processing suggests that it is difficult for customers to cancel contracts that were enrolled in error or were unauthorized. The Commission declines to order workshops on this topic at this time.

ICEA urges the Commission to open an NOI to address accelerated switching. The Commission agrees that this topic is beyond the scope of this rulemaking, particularly at this stage of the rulemaking, and urges the parties to continue to discuss the topic as part of NOI-01-2014.

XIX. SECTION 412.230 EARLY TERMINATION OF SALES CONTRACTS

A. Staff

Staff proposes new language to this Section as a result of a question posed in the FNO related to Section 412.115(b)(12). Staff FN Initial at 10. This issue is discussed in Section 412.115, above.

B. CUB

CUB states that the FNO rejects the AG’s recommendation to include an additional grace period exempting customers from termination fees if the enrollment originated from an in-person solicitation. The Commission reasons that “[t]here is no evidence that individuals solicited through door-to-door methods, versus other methods, should be

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exempt from early termination fees for six billing cycles.” FNO at 124. This statement contradicts other statements in the FNO that acknowledge the treacherous nature of in-person solicitation. FNO at 57. CUB asserts that doorstep and other in-person sales are most susceptible to misleading marketing because of the social and confrontational nature of the interaction – it is naturally awkward, if not intimidating, for consumers to interact with someone standing on their doorstep. Additionally, many consumers are confused about what is being marketed, do not know what questions to ask or how to evaluate the pros and cons of the product, and/or do not recall signing a RES contract. In some cases, the customer may not discover that they are with a RES until months after service has switched. CUB adds the difficulty of discerning what was said at the door (a problem that could be alleviated if its proposal to video/audio record that doorstep sales pitch was adopted), only further aggravates the difficulties inherent in doorstep sales.

CUB agrees with the AG that the recent Illinois Appellate Court decision upholding the same protection for customers of AGSs, supports the Commission authority to enact this provision. Dominion Retail, Inc. and Interstate Gas Supply of Ill., Inc. vs. Ill. Commerce Comm’n, 2015 IL App (4th) 140173. CUB agrees that RES customers are entitled to no less protection than AGS customers. For all these reasons, CUB argues that the Commission errs in concluding that an extended grace period from termination fees is not warranted by the evidence in this docket. CUB supports the AG’s proposal to extend the cancelation grace period for contracts resulting from in-person solicitations, during which no termination fees are assessed, to six months. CUB FN Initial at 10-11.

C. RESA

RESA states that CUB encourages the Commission to reverse its rejection of the AG’s proposal that customers whose enrollment resulted from an in-person solicitation should receive an additional grace period exempting them from early termination fees. CUB offers rhetoric, rather than rationale, in claiming that there are statements in the FNO that “acknowledge the treacherous nature of in-person solicitation.” However, CUB offers nothing of merit to justify the Commission’s reversal of its rejection of the AG’s unsupported proposal. RESA states that the Commission should continue to reject the proposal. RESA FN Reply at 12-13.

D. ICEA

ICEA believes that the proposed changes, which amount to citing to and borrowing language from the statute, are common sense additions. Without providing any new evidence or substance, CUB continues to recommend that the Commission implement the AG’s recommendation to include an additional grace period exempting customers from termination fees if the enrollment originated in an in-person solicitation. ICEA argues that the Commission should leave proposed Section 412.230 as reflected in the Proposed Rule unaltered. ICEA FN Reply at 39-40.

E. Commission Analysis and Conclusion

The Commission declines to revise this Section. The subject of early termination fees is general, regardless of the manner of solicitation. There is nothing in the record that suggests that customers solicited face-to-face need more or different information

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about early termination fees, if any, and the disclosures required by proposed Sections 412.110 and 412.115 for all solicitations already cover such information.

XX. SECTION 412.240 CONTRACT RENEWAL

A. Staff

Staff finds that aspects of subsection (c) may have certain unintended consequences which might be best avoided. Specifically, to the extent that the rule permits automated calling, it may result in RESs running afoul of Federal Communications Commission (“FCC”) rules promulgated under the authority of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. §227; see also 47 C.F.R. §64.1200. The FCC’s rules prohibit “initiat[ing] any telephone call (other than a call made for emergency purposes or … made with the prior express consent of the called party) using an automatic telephone dialing system or an artificial or prerecorded voice … [t]o any telephone number assigned to a … cellular telephone service … or any service for which the called party is charged for the call.” 47 CFR §64.1200(a)(1)(iii); Staff FN Initial at 15-16.

Staff states that the FCC’s rules further prohibit “[i]nitiat[ing], or caus[ing] to be initiated, any telephone call that includes or introduces an advertisement or constitutes telemarketing, using an automatic telephone dialing system or an artificial or prerecorded voice, to any of the lines or telephone numbers described in paragraph[] (a)(1)… (iii) of this section, other than a call made with the prior express written consent of the called party[.]” 47 CFR §64.1200(a)(2). The FCC’s rules likewise prohibit “[i]nitiat[ing] any telephone call to any residential line using an artificial or prerecorded voice to deliver a message without the prior express written consent of the called party, unless the call … [i]s not made for a commercial purpose … [or] [i]s made for a commercial purpose but does not include or introduce an advertisement or constitute telemarketing[.]” 47 CFR §64.1200(a)(3)(ii-iii). Staff FN Initial at 16.

Under the FCC’s rules, “telemarketing” is defined as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services[.]” 47 CFR §64.1200(f)(7). “Prior express written consent” is defined as “an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.” 47 CFR §64.1200(f)(8). The written agreement pursuant to which “prior express written consent” is given must contain certain disclosures. 47 CFR §64.1200(f)(8)(i)(A-B). The terms “commercial purpose” and “advertisement” are not defined.

Accordingly, Staff notes that if the phone number of record that a RES maintains for a given customer is a wireless number (as is increasingly likely to be the case), a RES that seeks to call customers using an autodialer must first make certain it has “prior express written consent” within the meaning of 47 CFR §64.1200(f)(8). Such consent must take the form of a signed written agreement specifically consenting to such calls. Id. It seems likely to Staff that many, if not most, RES contracts currently do not contain such provisions, even assuming that such consent can take the form of a provision in a contract, rather than a free-standing document, about which the Staff is not certain. Staff

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finds for this reason, it seems likely that many, if not most, RESs will either be required to eschew the use of autodialers (which may not be feasible), or violate the TCPA.

Staff points out that violations of the TCPA are subject to significant penalties. A violator may be subject to actions by state Attorneys General, or private actions, in either case seeking recovery of damages up to $500 per violation (a liquidated amount), as well as injunctions prohibiting further violations. 47 U.S.C. §227(b)(3), (g). Staff details that the Commission has recently had to deal with the consequences of such alleged violations. Commonwealth Edison Co, Docket No. 16-0259, Order at 26-40 (Dec. 6, 2016) (discussing recoverability under formula rate law of costs of settling TCPA class action resulting from utility text-messaging outage alerts). Accordingly, any rule which might require a RES to violate the TCPA should be viewed circumspectly. Staff FN Initial at 16-17.

B. RESA

RESA states that neither Staff’s Proposed Rule nor the ALJ Proposed Order modified Section 412.240 of the existing rules. Staff did not express any concerns regarding the manner in which RESs have handled contract renewals. Notwithstanding this, the Proposed Rule and FNO accept revisions to Section 412.240 proposed by the AG and CUB, revisions which RESA finds are unnecessary, costly to RESs while providing no benefit to customers, and conflict with the requirements of the Automatic Contract Renewal Act (815 ILCS 601/1 et seq.).

RESA notes that the Proposed Rule adds a requirement that if the renewal contract’s terms differ from those of the existing contract, the RES must include a side-by-side comparison of the existing terms and the new terms. Section 412.240 already requires “a clear disclosure of the contract terms.” Requiring a side-by-side comparison is redundant and another example of unnecessary micromanagement of RES operations. RESA FN Initial at 20-21.

RESA points out that the Proposed Rule requires that, in addition to the written notice required by Section 412.170 for changes in rates, the RES must call the customer at least 30 days but not more than 60 days before the end of the initial contract term to notify the customer of the renewal process. Moreover, a second call must be made within 14 days of the first call if the first call does not reach a person or an answering machine. In addition, the Proposed Rule includes a requirement that the RES make a record of the calls and retain the record for two years. Staff’s originally-drafted Proposed Rule included a similar provision for telephonic notice; however, RESA states that Staff dropped this requirement because such calls run afoul of the rules of the FCC under the TCPA. The Proposed Rule related to RESs being required to make phone calls and follow-up phone calls to customers is at odds with the TCPA and could lead to an increase in the risk of lawsuits against RESs for making such calls. The TCPA is designed to protect consumers against unsolicited telemarketing calls, prerecorded messages, text messages, automated dialers and faxes. The TCPA provides for either actual damages or statutory damages ranging from $500.00 to $1,500.00 per violation. 47 U.S.C. § 227. As such, several companies have been subject to multi-million dollar class action law suits for violations of the TCPA. RESA states that RESs should not be put at risk of potentially

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violating, or from even having to defend themselves pursuant to the Federal law under TCPA for such telephone calls under the Proposed Rules.

RESA avers that Section 412.240 of the Proposed Rule includes two requirements which do not make sense. First, the Proposed Rule provides that the phone call requirement is in addition to the written notice required by Section 412.165 for changes in rates during the term of the sales contract. However, Section 412.240 covers contract renewal, whether or not there is a change in rates, and the type of notice required. There is no need to send another written notice. Second, the Proposed Rule provides that telephone calls made pursuant to subsection (b) must comply with the requirements of Section 412.130 (Telemarketing). Again, RESA argues that Section 412.130 does not apply here because it covers marketing to a new customer. That Section includes requirements that make no sense in the context of contract renewal, including making the disclosures contained in Section 412.110 and requiring a TPV of a customer’s decision to switch suppliers. RESA FN Initial at 21-22.

Finally, RESA states that Section 412.240 is inconsistent with the Automatic Contract Renewal Act, which sets forth requirements for the automatic renewal of contracts in Illinois. The Automatic Contract Renewal Act contains the disclosure requirements for every contract, with some exceptions, entered into in Illinois which automatically renews absent cancellation by the customer. Section 412.240 conflicts with that Act by imposing numerous additional requirements. RESA asserts that the FNO does not justify the need for additional requirements beyond those contained in the Automatic Contract Renewal Act. RESA FN Initial at 22.

C. CUB

CUB states that the FNO properly adopts CUB’s and the AG’s proposal to require that the RES provide both written and telephonic notice of non-automatic and automatic contract renewals. FNO at 125. This is a very important provision because CUB receives many complaints each year from customers who sign up with a RES for a one year term, do not realize the original contract term expires and are then automatically switched to a variable rate after the initial contract term. As noted by the FNO, the additional notice will serve as a warning that affirmative action is required to cancel an automatically renewing contract. CUB submits that absent prohibiting automatic renewal provisions in RES contracts, which was CUB’s primary proposal, these additional notifications are necessary to alert customers how to cancel contracts that renew under different terms than the customer originally analyzed and agreed to, terms that may be severely disadvantageous to the customer. CUB FN Initial at 11-12.

CUB recommends the Proposed Rule retain the requirement in the FNO that if the renewal contract’s terms differ from those of the existing contract, the RES must include a side-by-side comparison of the existing terms and the new terms. RESA complains that this requirement is redundant and another example of unnecessary micromanagement of RES operations, but CUB points to the problems with fixed priced contracts automatically renewing as variable rate contracts without the customer’s knowledge or explicit consent support adoption of this requirement. It is simply unfair to subject a customer to a limitless variable rate without effective notification of the change in terms of the contract. CUB FN Reply at 16-17.

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D. ICEA

ICEA states that requiring RESs to call customers subjects RESs to legal liability, results in significant compliance costs, and creates negative customer reactions. Although the rule text is ambiguous as to applicability of the requirement to call the customer, the FNO is unambiguous: “the Commission modifies this Section as recommended by CUB and the AG to include both written and telephonic notice of non-automatic and automatic contract renewals.” FNO at 123.

ICEA urges the Commission to require RESs to notify customers in the manner of the customer’s choosing rather than mandating phone calls for all customers. ICEA notes, for example, that the quarterly environmental disclosure requirement for utilities and RESs in Section 16-127(c) is not limited to one form of communication, but instead allows multiple communication channels either in an electronic medium, such as a website or by electronic mail, or through the U.S. Mail. 220 ILCS 5/16-127(c). Moreover, the Proposed Rule’s approach could open each RES to potential legal liability under federal and State statutory law, including through potential class action lawsuits. In addition, complying is likely to be expensive, especially for RESs who do not have staff to engage in outbound telephone calls because they do not pursue (or do not internally pursue) telemarketing. Furthermore, ICEA is concerned that unwanted phone calls will frustrate and alienate consumers. ICEA FN Initial at 47-49.

ICEA’s primary concern with required phone calls under Proposed Section 412.240(c) is legal liability. As the Commission is aware, potential liability for violating telephone-related law is expansive: ComEd was denied rate recovery for a portion of its costs related to settlement of a class action connected to alleged federal TCPA violations. See Commonwealth Edison Co., Docket No. 16-0259, Final Order at 37-40 (Dec. 6, 2016).

ICEA notes that use of automatic dialers, calling phones (including cell phones) without explicit customer consent, or using recordings appear to significantly increase risk for enforcement or liability. ICEA is unaware of any exemptions — especially under federal law — that would allow any of these methods to be used simply because state regulations do not prohibit them. ICEA recommends that Staff and other parties be given additional time to undertake a more comprehensive legal review of the complex and evolving areas of federal and state telephone contact law. ICEA FN Initial at 49-50.

ICEA is also concerned an Illinois court could interpret proposed subsection (c) to involve the Telephone Solicitations Act. Proposed subsection (c) treats the automatic renewal call as telephone solicitation, because such calls are explicitly governed by Proposed Section 412.130 (Telemarketing). In addition to other mandates, the Telephone Solicitations Act requires that:

if the person called requests to be taken off the contact list of the business or organization, the operator must refrain from calling that person again and take all steps necessary to have that person's name and telephone number removed from the contact records of the business or organization so that the person will not be contacted again by the business or organization.

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815 ILCS 413/15(b)(3). Thus, if a court rules these calls are in fact a “solicitation” covered by the Telephone Solicitations Act, the RES could be prevented from calling the customer ever again, potentially in contravention of this proposed Section. This would also make it potentially impossible to serve the customer by removing their name from the RES’s records. The text of the Telephone Solicitations Act does not contain an exemption for current RES customers. ICEA asserts despite the Commission’s intentions to the contrary, an Illinois or federal court could hold that the Telephone Solicitations Act applies, and this put RESs in an untenable situation. ICEA FN Initial at 50-51.

ICEA states that the requirement may cause a significant shift in RESs’ internal operations. Although all RESs must have a call center by statute, not every RES has enough staff to call every residential customer at the end of every potentially renewing contract. For example, some RESs do not engage in telemarketing, or contract out call center functions, and thus do not have internal capacity to systematically call customers within a 30-day window before contract renewal. RESs will be required to increase staff to make outbound calls, as well as invest in information technology upgrades for a compliance system tied to consumer contract end dates. While ICEA does not doubt that some RESs will have higher compliance costs than others, the personnel and technical upgrades required to comply are expected to be significant.

ICEA also notes the potential for negative customer reactions. Even to the extent that RESs can make calls without incurring legal liability, many RES customers do not have the telephone as their preferred notification method. If the customer does not pick up, the RES must annoy its own customer two times by attempting to reach them by telephone, even though the customer did not request to be notified by telephone.

ICEA states that because of the side-by-side comparison requirement, the telephone call is likely to be quite long in some cases. In the experience of ICEA members, customers who do not wish to be contacted by telephone may hang up during the RES agent presentation. It is not clear whether the RES agent must then attempt to call again later, or if the partial presentation (ended at the customer’s discretion) is sufficient for compliance. ICEA FN Initial at 51-52.

In ICEA’s experience, renewal provisions (whether or not automatic) are standard in RES contracts. The Proposed Rule would cause havoc with RESs’ abilities to manage their own risks and expenses by forcing telephone contacts with essentially all residential customers. Even if a RES can navigate the issues related to legal compliance, ICEA fears that expense and negative customer reaction will significantly damage RESs. ICEA asks the Commission to remove any and all requirements to call the customer. ICEA FN Initial at 52.

ICEA also argues that a side-by-side comparison is overly burdensome to RESs and confusing to customers. For both automatic and non-automatic renewal, the FNO requires a RES to draft a “side-by-side comparison” of the customer’s current and renewal product. Because the Proposed Rule does not define a side-by-side comparison, and the FNO does not provide any additional detail, it is unclear what a RES must do in order to comply. The only guidance provided by the FNO states:

New changed terms in a renewed contract (either automatically renewed or by customer confirmation) should

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not be hidden in a lengthy contract description. Rather, changes in key terms should be prominently and conspicuously disclosed in the renewal notices so that customers may fully understand to what they are agreeing.

FNO at 122-23.

Initially, ICEA notes that the Commission has already included a highly prescriptive format for disclosure of contract terms and UDS in Sections 412.110 and 412.115. ICEA is therefore unclear how contract terms could be “hidden in a lengthy contract” when proposed Section 412.110 requires, and ICEA does not oppose, 14 standard disclosures in 12-point font before any other contract matters. The UDS is even more prescriptive, requiring 17 disclosures to be provided in 12-point font and in the order specified in the rule. ICEA understands that many RESs comply with the “full description” and “clear disclosure” requirements in the existing Section 412.240 by sending the contract terms and/or the UDS. The Commission could easily require that RESs submit one of these two highly standardized documents so the customer receives the same disclosures for renewal offers as they would have for an initial offer. ICEA FN Initial at 52-53.

ICEA states that instead of using these documents that a RES must already generate for each product, the Proposed Rule requires RESs to create an amorphous new “side-by-side comparison” document, which is ambiguous. First, it is not clear what terms must be compared, all terms or just certain material terms (like pricing, renewable component (if any), and contract length before the next renewal). Second, even if the side-by-side comparison is only required for pre-identified material terms, many RESs (unlike utilities) can have many different products with infinite variations in terms and conditions. ICEA submits that it would take significant resources for a RES employee working by hand to create new side-by-side comparisons, because most RESs have terms and conditions that evolve over time, taking into account legal, regulatory, and market changes.

Although ICEA opposes required phone calls to renewal customers, if phone calls are still required ICEA is concerned about how a side-by-side comparison will be accomplished over the phone. Even the most attentive customer could have difficulty if a RES agent is forced to read terms in their entirety from the current and renewal contract, especially if there is not a preset materiality limitation. Residential customer contracts are streamlined by design, but are still not meant for reading by a RES agent over the telephone.

For the reasons set out above, ICEA recommends that instead of requiring a side-by-side comparison, the Commission instead require the RES to send a new contract or UDS for the renewal product. Because the Commission has already determined that these sections provide the most important contract terms, ICEA recommends that those documents would by definition provide sufficient notice to customers about renewal products. ICEA FN Initial at 53.

E. NAE

NAE states that the current Section 412.240 is already effective and that Proposed Section 412.240 suffers from several deficiencies and should be eliminated, or in the

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alternative, revised. Nothing in the Act addresses contract renewal for RESs or authorizes the Commission to adopt rules regarding the same. Section 412.240 goes beyond the focused disclosure requirements for RESs contained in the Act to create new substantive contract renewal rights and obligations. NAE states that this exceeds any reasonable interpretation of the specific and limited authority and jurisdiction provided to the Commission by the legislature in the Act. Section 412.240 is also contrary to and inconsistent with various provisions of the Automatic Contract Renewal Act. Moreover, Section 412.240 mandates RESs to make telephone calls to customers upon renewal in a manner that would place RESs in jeopardy of violating the federal TCPA. NAE asserts that even if the subject matter of Section 412.240 were within the scope of the Commission’s authority and jurisdiction and not contrary to law, its terms and provisions must be rejected because they are burdensome, costly, unreasonable, and illogical. NAE FN Initial at 35.

NAE offers that the legislature has adopted a statute regarding contract renewal, but did not delegate authority to the Commission to enforce it. Rather, a violation of the Automatic Contract Renewal Act is made an unlawful practice under the CFDBPA. Section 7 of the CFDBPA provides that either the "Attorney General or a State's Attorney" may bring a claim under the CFDBPA in the name of the People of the State. 815 ILCS 505/7. The CFDBPA specifically provides to the AG certain investigative, subpoena, and other powers. See 815 ILCS 505/3, 4, and 5. The Commission’s only involvement with the CFDBPA regarding RESs is that a customer contending an electric service supplier has not complied with Section 2EE may file a complaint with the Commission seeking the relief specified in subsection (b) of Section 2EE. 815 ILCS 505/2EE(d). NAE contends that Section 2EE specifies and is limited to three requirements which must be met in order for an electric supplier to “submit or execute a change in a subscriber's selection of a provider of electric service” and does not address renewals at all. 815 ILCS 505/2EE. NAE FN Initial at 35-36.

NAE states that the requirements that an RES must certify it will “comply with all other applicable laws and regulations” (220 ILCS 5/16-115(d)(8)) and “continue to comply with [that and other subsection (d)] requirements for certification” (220 ILCS 16-115A(a)(ii)) does not expand the scope of the Commission to direct and original jurisdiction over such laws. In ruling on virtually identical language applicable to an AGS under Section 19-110(e)(5) and 19-115 of the Act, the Commission recognized that such language does not provide it with direct authority to enforce such other laws and regulations. While agreeing that laws and rules are “applicable” within the meaning of Sections 19-110 and 19-115 when they “concern the AGS” performance as a retail gas supplier,” the Commission rejected the assertion that such Act provisions give it original jurisdiction to assess violations or impose remedies under those laws; rather, the Commission can determine whether to impose remedies specified under the Act if a court of competent jurisdiction first determines there was a violation of such laws or rules. See Citizens Utility Board v. Ill. Energy Savings, Docket No. 08-0175, Order at 4-5 (Apr. 13, 2010) quoting Citizens Utility Board v. Ill. Bell Tel. Co., Docket No. 00-0043, Order at 10 (Jan. 23, 2001); NAE FN Initial at 36-38.

NAE states that not only is the Commission not delegated any specific authority or responsibility regarding contract renewals in the Automatic Contract Renewal Act or the

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CFDBPA, but the contract renewal provisions it adopts are contrary to the Automatic Contract Renewal Act. The Automatic Contract Renewal Act specifies automatic renewal requirements, including: (i) a requirement for a written contract renewal notice limited to contracts with a term of 12 months or more that automatically renew for a term more than one month; and (ii) an exemption from any liability for violations if certain conditions are met including the establishment of compliance procedures that are enforced. 815 ILCS 601/10(b) and (c). NAE argues that Section 412.240 is contrary to these provisions in that it imposes written contract renewal notice requirements on contracts not subject to that requirement under the Automatic Contract Renewal Act (i.e., for contracts with an initial term of 6 months or more) and does not contain any limitation of liability while purporting to subject RESs to fines for violations of the rule. NAE FN Initial at 38-39.

NAE states that the first sentence of subsection (a), including a proposed revision, purports to establish undefined mandatory contract requirements for non-automatic renewal terms and a cancellation procedure. The meaning of this sentence is vague and confusing at best because it is unclear whether the intent is to require RESs to include “non-automatic” renewal terms in their contracts. If so, it is not clear why that would be appropriate or what would constitute a “non-automatic” renewal. Nor is it logical to reference a “cancellation procedure” for a non-automatic renewal. Rather, if a contract renews absent a cancellation by the customer, that contract contains an automatic renewal clause. NAE recommends this sentence be deleted because it does not make sense, its language is unclear in multiple respects, and it is not needed because the use of “non-automatic” renewal clauses is rare or non-existent.

NAE states that if the Commission nevertheless finds “non-automatic” renewals should be addressed in some manner and the intent was to impose a conditional requirement to disclose non-automatic renewal terms clearly and conspicuously if the contract contains such terms, the currently proposed language does not reasonably reflect that intent. While NAE maintains the first sentence of subsection (a) should be deleted, language better reflecting the intent stated above would be as follows: if a RES contract contains terms regarding renewal, where such contract renews only if the customer subsequently provides affirmative consent to accept the renewal offer, the RES shall disclose the non-automatic renewal clause clearly and conspicuously in its contract. NAE FN Initial at 39-40.

NAE also opposes the new “side-by-side comparison” requirement. Other than an added reference to the Automatic Contract Renewal Act, the “renewal term” requirements for “automatic renewals” in subsection (b) of Section 412.240 are identical to the “renewal requirements” for “non-automatic renewals” in subsection (a). While the reference to a cancellation procedure is not misplaced for “automatic renewals” like it was for “non-automatic renewals,” the language used to set forth this requirement continues to be vague and confusing. NAE states that the “[i]n addition to complying with the Illinois Automatic Contract Renewal Act” language is phrased as an aside rather than a directive, does not state that it is incorporating anything by reference, and, as noted previously, the Automatic Contract Renewal Act is not an act which the Commission directly enforces. NAE asserts that language should be deleted. While NAE maintains the balance of the first sentence should also be deleted as beyond the authority or jurisdiction of the Commission, if the Commission nevertheless finds “automatic” renewals should be

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addressed then the language should be more clearly stated to reflect that it is conditional and specify the condition as follows:

In addition to complying with the Illinois Automatic Renewal Act [815 ILCS 601], the If a RES contract contains terms regarding renewal, where such contract automatically renews unless the consumer cancels the contract, the RES shall clearly and conspicuously disclose the automatic any renewal terms in its contracts, including any cancellation procedure.

NAE FN Initial at 40.

NAE states that the second sentence of subsection (b) creates a notice requirement for automatic renewals and that requirement is contrary to the Automatic Contract Renewal Act because it imposes that condition on contracts not subject to that requirement under the Automatic Contract Renewal Act (i.e., for contracts with an initial term of 6 months or more). NAE maintains the second sentence of subsection (b) should be deleted as beyond the authority and jurisdiction of the Commission and contrary to the Automatic Contract Renewal Act. Nevertheless, NAE asserts that if the Commission finds an additional written contract renewal notice requirement for “automatic” renewals should be addressed in Part 412, then the language should be revised to at least be consistent with the Automatic Contract Renewal Act and only apply to contracts with an initial term of 12 months or more.

NAE details that Subsection (b)(2) specifies that separate written notice of contract renewal shall include “[t]he bill cycle in which service under the new term will begin.” While the general meaning of a “bill cycle” is well understood, this term is not defined in the context used here and it is not clear what “bill cycle” means for purposes of incorporation in the notice. On the one hand, it could mean the exact beginning and ending dates of a bill cycle – such as, service under the new term will begin with your February 4, 2017 to March 4, 2017 billing cycle. If so, it would require programming costs to develop IT systems and software to obtain and include those dates in the notice – and such dates may not be known to the RES at the time a notice is issued in advance as the utility controls the actual meter read dates determining the bill cycle. On the other hand, according to NAE, it could mean a descriptive reference such as “service under the new term will start with your bill cycle that begins more than 30 days but no more than 60 days from the date of this notice.” NAE FN Initial at 40-42.

NAE finds that it is not clear why a statement of the “bill cycle in which service under the new term will begin” is needed since the time window at issue is already limited to the 30 day window “at least 30 days but no more than 60 days prior to the end of the initial contract term.” It is also important that these rules help ensure a level and fair playing field for all RESs and not impose unreasonable barriers to competition. In that regard, the rules should contain enough specificity to reasonably inform all RESs what is expected of them and not be so vague as to result in fair yet significantly different interpretations – particularly where those interpretations can result in significant variations in compliance costs to each RES. For this particular requirement, NAE proposes an additional sentence stating “At a minimum, the bill cycle shall be identified by at least the

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30 day window in which such bill cycle will start and, at the discretion of the RES, may be more specific.” NAE FN Initial at 43.

NAE also states that subsection (b)(5) is unclear, illogical, and unreasonable. As written, the requirement to provide “a clear and conspicuous disclosure of the contract terms” is not limited or conditional and applies even if the contract automatically renews with no changes whatsoever. If the contract terms were adequately disclosed in the first instance, there is no reason for a new disclosure. It is also not clear how all contract terms are to be disclosed in a manner that is “conspicuous” – a term generally reserved for situations where a specific provision is to be disclosed in a manner which calls more attention to that provision by using all caps, bold text, underlined text, italicized text, or similar means. NAE adds that the legislature has already decided that a RES shall disclose its contract terms and conditions to the customer at least once per year. 220 ILCS 5/16-115A(e)(iv) (“The [RES] shall provide to the customer … an additional statement, at least annually, that adequately discloses the average monthly prices, and the terms and conditions, of the products and services sold to the customer.”).

NAE continues that as a practical matter, the contract renewal terms (which are already required to be clearly and conspicuously disclosed in the contract per the first sentence of subsection (b)) will identify any automatic renewal process for same including provisions for changes to terms and conditions. If the only change upon renewal is to the price, that term is typically disclosed in an addendum or cover page referenced in the original contract and would be referenced in a renewal addendum or cover page (likely in the form of the renewal notice) for the renewal contract. If other terms and conditions of a contract are being revised upon renewal, the new “terms and conditions” will typically be provided (as a new document) with the renewal notice. If any of the changes to the terms and conditions constitute new or substantively changed material terms and conditions, they are generally summarized or described in the notice. NAE stresses that this is more than adequate disclosure, and there is no reason to require more. NAE FN Initial at 43-44.

NAE maintains that new subparagraph (5) also proposes to require “a side-by-side comparison of the existing terms and the new terms” if the renewal contract’s terms “differ from the existing contract.” This requirement is also unreasonable, will not prove helpful to consumers, and will be unduly burdensome for competitive suppliers. The requirement is not limited to significant or material changes, but instead applies to any difference. Competitive suppliers are continually reviewing contract language and generally strive to “clean up” contract language over time to be as consistent as possible between different products and to be as clear and easily understood as possible. NAE contends that providing side-by-side comparisons (which appears to mean putting the old and new language next to each other in side-by-side fashion) to reflect ministerial or clean-up edits will not be particularly helpful to consumers and will potentially generate many additional pages of material to send to customers upon renewal without a corresponding benefit. Identifying changes in legislative style (e.g., underlining new text and striking through deleted text) would likely require a lower number of additional pages, but would still require many additional pages of material to be sent to a customer upon renewal with no real benefit. The helpfulness of side-by-side text even for substantive changes is questionable. NAE submits that, if subparagraph (5) is retained at all, and it should not

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be, it should be revised to provide for identification of changes to material terms and conditions.

NAE states further that the required calls described in proposed subsection (c) are unnecessary, unreasonable, and call for actions exposing RESs to violations of the TCPA. In addition to being beyond the Commission’s authority and jurisdiction, these new requirements will place the RESs at risk of violating the TCPA and are unnecessary, duplicative, costly, and difficult or impossible to implement. NAE finds that the ALJs correctly declined to adopt this language, and its addition in the Proposed Rule by the FNO should be reversed. NAE FN Initial at 44-46.

NAE explains that the TCPA regulates the use of telemarketing – the marketing of goods or services by telephone. With few exceptions, the TCPA makes it unlawful “to make any call (other than a call made … with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice … to any telephone number assigned to a … cellular telephone service” or “to initiate any telephone call to any residential telephone line using an artificial or prerecorded voice without the prior express consent of the called party” unless the call is exempted by rule or order by the FCC under paragraph 2(B). 47 U.S.C. § 227(b)(1)(A)(3); 47 U.S.C. §227(b)(1)(B); Accord 47 C.F.R. § 64.1200(a)(2) (implementing statutory prohibition). The FCC has exempted from regulation under paragraph 2(B) any artificial or prerecorded call which is made for a commercial purpose but does not include or introduce an advertisement or constitute telemarketing. 47 C.F.R. § 64.1200(a)(3)(iii). According to NAE, the statute also authorizes the FCC to establish a national “do-not-call” registry that consumers can use to notify telemarketers that they object to receiving telephone solicitations. 47 U.S.C. § 227(c)(1)-(4). Under the FCC’s regulations, no person or entity is permitted to “initiate any telephone solicitation … to any residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry.” 47 C.F.R. § 64.1200(c)(2). NAE FN Initial at 47.

NAE states that the telephone calls required by Section 412.240(b) of the Proposed Rule appear to constitute telemarketing because the information required to be included in the calls includes information regarding renewal options available to the customer, which would involve the sale of goods or services to the customer. Such calls would also constitute telephone solicitations for the same reason absent application of an exception. If a telephone call is deemed to be telemarketing in nature, a RES could not make the call to a landline using a prerecorded message without prior express written consent. 47 C.F.R. § 64.1200(a)(3). In all likelihood, calls made by a RES to mobile telephone numbers would also constitute autodialed calls. NAE claims that regardless of whether such calls are made via a prerecorded message, the standard for consent is prior express written consent. 47 C.F.R. § 64.1200(a)(2). This consent is something that a RES would not be able to obtain from every customer, and even if the RES could obtain prior express written consent at some point, each customer has the unrestricted right subsequently to opt-out at any time. 47 C.F.R. § 64.1200(b)(3). NAE argues that the Proposed Rule would present a significant compliance issue to RESs in this regard. NAE complains that the proposed requirements in Section 412.240(b) were made without giving due consideration to the TCPA and its implementing rules, and place RESs in jeopardy of violating the restrictions contained in the TCPA.

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NAE claims that the TCPA issues caused by the Proposed Rule would be eliminated by deleting the calling requirement. The written notice required by the Automated Contract Renewal Act will inform customers of the automatic renewal and already requires disclosure of “where the consumer can obtain details of the automatic renewal provision and cancellation procedure (for example, by contacting the business at a specified telephone number or address or by referring to the contract).” 815 ILCS 601/10(b)(ii). NAE explains while not needed, in the alternative the Commission could add a requirement that an automatic renewal notice shall provide the customer with the toll-free number that the customer may use to contact the RES to discuss the automatic renewal. NAE FN Initial at 47-49.

The last sentence of the telephone call requirement provisions of Section 412.240(b) provides that “[c]alls made pursuant to this Subsection shall also comply with the requirements of Section 412.130.” This proposed incorporation is illogical, unduly burdensome, unreasonable, and beyond the Commission’s authority with respect to contract renewals. NAE repeats that Section 2EE of the CFDBPA specifies and is limited to three requirements which must be met in order for an electric supplier to “submit or execute a change in a subscriber's selection of a provider of electric service” and does not address renewals at all. 815 ILCS 505/2EE. Section 412.130 sets forth telemarketing requirements that only apply to situations where a customer is switching suppliers, and cannot legally apply to other situations. NAE finds the application of “enrollment” requirements to an “automatic contract renewal” is nonsensical. If the reference is meant to require a verification of an election to renew, it amounts to a repeal and prohibition of automatic renewals – a power which the Commission clearly does not have. If it means RESs would purportedly be required to make all of the numerous and long disclosures required to switch a customer from a different supplier for a renewal, the proposal will create an extremely negative customer experience for RESs customers that will not be conducive to a competitive market. For all of these reasons, NAE states the sentence in question should be deleted. NAE FN Initial at 49.

NAE offers that the new directive to call a customer in subsection (b) is preceded by the statement “[i]n addition to the written notice required per Section 412.165(e) ….” According to NAE, this statement does not make sense and should be deleted. Section 412.165 addresses variable rates and subsection (e) is a new notice requirement that provides: “If a contract includes a provision that results in a change to the residential customer’s rate, the RES shall send a separate written notice of the upcoming change at least 30 days but no more than 60 days prior to the switch.” NAE proffers that while not clearly worded, this provision requires a notice when there is a change to a customer’s “rate” during a contract, presumably differentiating it from a change to the monthly variable price during a contract. Whatever the meaning of Section 412.165(e), it would not and should not apply to a renewal of a contract as wrongly implied by the cross reference. Moreover, the notice of a contract renewal is explicitly covered by Section 412.240(a) and (b) – so there would be no need for the duplicate (or triplicate) notice the Proposed Rule implies is required by Section 412.165(e). NAE FN Initial at 50.

NAE asserts that the Proposed Rule simply requires the telephone calls to “provide the information required in Subsections (b)(2)-(5) herein in addition to the impending end of the initial contract term.” The cross reference does not work because the referenced

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requirements were designed as “written notice” requirements and literally contain a number of written attributes. NAE points out the difficulty for RESs to read all changes “side-by-side” or to make a “conspicuous” disclosure during a telephone call. It is also unclear what the requirement to describe “any renewal offers available” means. In the context of automatic renewals, NAE states that there are renewal terms consistent with the contract. NAE FN Initial at 51.

The telephone calls are required to be made in the exact same time frame as the written notice of contract renewal. NAE argues that this is illogical, and conflicts with the Automatic Contract Renewal Act, because the customer should at least have the opportunity to receive the written notice before receiving a telephone call. The Automatic Contract Renewal Act requires a written notice for contracts subject to its terms. 815 ILCS 601/10. A contract is not properly subject to automatic renewal without compliance with the Automatic Contract Renewal Act. Purporting to make that notice initially through a telephone call is contrary to the Automatic Contract Renewal Act. NAE continues that while no calls should be required at all, if calls are required it makes more sense to require that the first such call be made no less than seven days after the required written notice.

Finally, NAE submits that the Proposed Rule fails to consider the fact that many customers, especially in this day and age, simply do not want any extra calls from their energy supplier or any other vendor for that matter. This experience can tarnish an otherwise good relationship between the customer and supplier. Because customers could very well find these calls an unnecessary nuisance and because this practice could potentially cause irreparable harm to a RES’s reputation as to how they serve their customers, the requirement of mandating calls in connection with automatic renewal should be eliminated. NAE FN Initial at 51-52.

NAE notes that the first paragraph of subsection (b) includes the following sentence: “If the customer enters into a new contract prior to the end of the contract expiration notice period, the notice of contract expiration under this Section is not required.” NAE reasons that the references to a “contract expiration notice period” and “notice of contract expiration” were apparently copied from the language of subsection (a) – which has a notice of contract expiration for a contract that does not automatically renew – but makes no sense under subsection (b) for automatic renewal contracts which require a “notice of contract renewal” instead. Thus, this sentence is not applicable and should be deleted from subsection (b) if not otherwise deleted. Alternatively, if not otherwise deleted, the sentence should be revised as follows: “If the customer enters into a new contract prior to the end of the existing contract term expiration notice period, the notice of contract renewal expiration under this Section for the prior contract is not required.” NAE FN Initial at 53.

F. ELPC

ELPC states that the Proposed Rule includes important new protections for consumers related to automatic contract renewals, but a few minor edits are necessary to fully carry out the intent of the amendments. Subsection (c) requires telephonic notification of the end of a contract term and states that “[t]he RES agent shall provide the customer with the toll free number that the customer may use to contact the RES to discuss the automatic renewal.” ELPC believes that the intent here is that the RES

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provide a toll free number that customers may use not only to “discuss” the automatic renewal, but also to cancel an automatic renewal. A toll-free number for automatic renewal cancellation should be provided not only in the telephonic notice, but also in the written notice, since a RES may not be able to reach every customer by telephone. The Proposed Rule clearly acknowledges the importance of ensuring that customers are aware of upcoming automatic contract renewals. ELPC maintains that customers that would like to cancel an automatic renewal should be given a choice to do so in a manner most convenient to them, either in writing or over the phone.

ELPC states that subsection (b)(4) requires written notice of an automatic contract renewal to include “a statement that the customer has until the end of the existing contract term to reject the new contract to avoid termination fees.” ELPC suggests that the rule be modified to explicitly require that the statement include the date that the existing contract term expires. Many customers may not independently track when their existing contract expires, which is why a notice is required in the first place, so it is important that the date of expiration is provided so that they know exactly by when they must cancel to avoid a termination fee. ELPC FN Initial at 3.

ELPC notes that ICEA, RESA, and Staff voice the concern that the requirement that RESs call customers to notify them of automatic contract renewals may conflict with the FCC rules regarding telemarketing calls. If the Commission determines that, in light of the FCC’s regulations, it is not appropriate to require RESs to notify customers of contract renewals by telephone, ELPC believes it is still important that customers are able to cancel automatic contract renewals by telephone. Written notifications, therefore, should include a toll-free telephone number that customers may call to cancel an automatic contract renewal, regardless of whether RESs also must provide telephonic notice.

ELPC states that ICEA, RESA, NAE and CleanChoice object to the requirement that written contract renewals include a “side-by-side” comparison of new versus old contract terms. ELPC would not object to limiting the “side-by-side” comparison to “material” or “major” terms or conditions, which would include at least: rate and/or a thorough explanation of how the rate is calculated and how often it changes, length of contract, renewable attributes, early termination fee, type of contract renewal, and any other charges or fees. ELPC argues that there should be a requirement that the material or major terms and conditions may not be changed in an automatic contract renewal. If this approach is not taken, it is crucial that consumers understand changes in contract terms that will occur when a contract automatically renews, because customers may be bound by new and different contract terms without any affirmative action on their part. ELPC finds that a side-by-side comparison is a natural way to easily help customers to understand any changes. ELPC FN Reply at 4-5.

G. CES

CES asks that subsection (c) be removed from the Proposed Rule. First, the call is duplicative. The current version of Part 412 requires a RES to send a letter to a customer who has agreed to an automatic renewal of his or her contract, and nothing in the FNO removes or reduces that renewal letter requirement. Next, the requirement that the RES read over the telephone the terms of the renewed contract needlessly extends

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the telephone call and may frustrate the customer. Last, because the current Part 412 already requires a renewal letter and, with this mandate, the RES may need to attempt two telephone calls to a customer, this change effectively imposes a triple renewal effort. CES argues that this is the type of compliance cost that may result in higher rates for customers. CES FN Initial at 8.

CES also shares NAE’s concerns regarding potential TCPA violations and liabilities.

Finally, CES supports the points made by RESA and ICEA in regards to the FNO and the requirement that RESs provide side-by-side comparisons of the terms and conditions of customers’ existing and renewal contracts. CES agrees that the side-by-side comparison requirement is a compliance cost which does not guarantee customer protections or advantages and which may result in higher rates. CES FN Reply at 9.

H. CleanChoice

CleanChoice supports the requirement that renewal terms be clearly disclosed in contracts. However, it is unclear how a RES is expected to comply with a “side by side comparison” requirement. Instead, CleanChoice finds that the notice of contract expiration should be required to clearly disclose the material terms of the new contract. CleanChoice FN Initial at 4.

I. NEMA

NEMA states that the proposed language in subsection (c) would require a supplier, in addition to the written notice of contract renewal that is required to be provided to the customer, to contact a customer by telephone to provide an additional renewal notice. The supplier would be required to make two telephone call attempts and retain a record of the telephone calls for two years. NEMA submits that the proposal to require suppliers to call customers, in addition to supplying separate written notice, of contract renewal is excessive and unnecessary. It is important to note that the customer’s original contract will disclose the renewal terms, and the customer will also receive a written notice of renewal between thirty to sixty days prior to the end of the original contract term. Applying another regulatory compliance requirement associated with the contract renewal will be a costly burden that does not yield a commensurate additional measure of consumer protection. NEMA is not aware of any other jurisdiction that has adopted such a requirement. NEMA recommends that subsection (c) pertaining to telephone call notice of contract renewals be stricken. NEMA Initial at 6-7.

J. Commission Analysis and Conclusion

As discussed in the FNO, the Commission has very real concerns about customers whose contracts are automatically renewed and whose contract terms change dramatically, such as where a rate that was fixed becomes variable. Proposed section (c) ensures that customers receive that information both in writing and via a telephone call. The RESs object to this addition, stating that the proposed subsection (c) is illegal, unnecessary and expensive.

The Commission disagrees with several parties and Staff that federal law and the Illinois Telephone Solicitations Act prohibit the contacts required by subsection (c). The Telephone Solicitations Act states “A live operator soliciting the sale of goods or services

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shall” and then enumerates three requirements of the operator. 815 ILCS 413/15. A RES contacting its own customer to give him or her important information about a significant change in his or her contract is not a “solicitation” for “the sale of goods or services.” The Commission finds this concern to be unwarranted. The RES already has a prior business relationship with the customer, and the RES is informing the customer about an important change in his or her contract.

Staff and ICEA claim a violation of the Telephone Solicitations Act or federal law could leave RESs open to class action lawsuits. They point to a recent ComEd docket wherein ComEd was unable to recover its costs for making telephone calls later deemed to violate provisions of federal law. The issue in that docket was whether ComEd could recover the costs it spent to settle that lawsuit from ratepayers under the prudence standard of the Act. The contacts ComEd had with customers involved allegedly unauthorized texts to customers’ cellphones, thus incurring costs and violating the TCPA. The Commission finds that the facts of that case differ greatly from the instant matter and the requirements of subsection (c). However, RESs that are concerned with potential litigation under the Telephone Solicitations Act or federal law can certainly add language to their contracts which disclose to customers that telephone calls will be made pursuant to subsection (c) of Part 412.240 at the end of the contract term. Adding such language to a RES’s contract would provide the prior express written consent required by the TCPA.

The Commission also disagrees with the argument that customers will react negatively to receiving, at most, two telephone calls annually from a company of which it is a customer. It is far more likely that customers will react negatively when they realize their contract was automatically renewed and their rates have increased due to a significant change in contract terms. In fact, Staff witness Muntaner’s Verified Statement filed with Staff’s Initial Comments prior to the FNO states that one of the issues Staff has noticed repeatedly when dealing with RES customers is that customers “allege that RES agents and customer service representative[s] fail to give notice of the fact that the customer’s contract with a RES has or will shortly renew by its terms, often at a different or higher rate.” Verified Statement of Peter A. Muntaner at 7.

The RESs complain that proposed subsection (c) is costly, but have not provided any information to show how much RESs would be affected by the required telephone calls to customers. As ICEA points out, RESs are responsible for having a call center, and are also required to have operators to respond to toll-free numbers.

The Commission agrees with NAE that subsection (c)’s reference to Section 412.130 should be clarified. The subsections of 412.130 (Telemarketing) cannot apply to telephone calls made to customers regarding contracts about to renew. The Commission clarifies that its intention is that RESs record and retain the telephone calls they make to customers pursuant to this subsection. The modified language is taken from Section 412.130(d) which addresses the RES’s requirement to record and retain telephone calls to customers.

The Commission also agrees with NAE that the first clause of subsection (c), which references Section 412.165, does not apply here and should be deleted.

Further, the Commission agrees with ELPC that the customer will be provided with the toll-free telephone number to contact the RES, but not necessarily to “discuss the

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automatic renewal”, as proposed subsection (c) states. ELPC is correct that the customer may want to cancel the contract. Therefore, the Commission modifies this sentence.

The RESs object to the new side by side comparison requirement added to subsections (a)(3) and (b)(5). The Commission agrees that this language could be clarified. The Commission understands that for non-automatic contract renewals, the customer must provide affirmative consent before he or she is re-enrolled. Existing subsection (a)(3) allows the RES to provide a renewal offer. If one is provided with different terms, the RES should include a UDS as well as a side-by-side comparison of the existing and the new terms of the contract. To clarify the provision, the side-by-side comparison should only include material changes, as proposed by CleanChoice, NAE, ELPC, and ICEA. Material changes include, but are not limited to: rate and/or a thorough explanation of how the rate is calculated and how often it changes, length of contract, renewable attributes, early termination fee, type of contract renewal, and any other charges or fees. The UDS would provide the important terms of the new contract and enable customers to make informed comparisons between the existing and new terms of the contract. The customer can therefore determine whether to renew his or her contract based on those terms. For subsection (b)(5), the Commission points out that this subsection addresses automatic contract renewals, and the Commission wishes to ensure that these customers fully understand any change in contract terms, for the reasons described above, and at length in the FNO. The Commission modifies subsection (b)(5) to say that if the new terms differ from the existing contract, the RES shall include a UDS and a side by side comparison of the existing and new terms of the contract. However, the provision should be modified to clarify that the side-by-side comparison is only required for material changes. Material changes include, but are not limited to: rate and/or a thorough explanation of how the rate is calculated and how often it changes, length of contract, renewable attributes, early termination fee, type of contract renewal, and any other charges or fees. .

The RES groups also object to proposed subsection (c)’s requirement that the telephone call provide information required in subsections (b)(2) through (b)(5). Specifically, the RESs find that it would be difficult for RESs to leave an automated message about side by side terms that would be readily understood by customers. The RESs also point out that (b)(3) requires a “statement in bold lettering” which could not be left in message format or verbalized to a customer. The Commission clarifies this requirement and adopts ELPC’s recommendation that an RES should inform the customer of material changes to the contract. To ensure that the customer is directed to the written materials sent by the RES, as described in subsections (a)(1) through (a)(4) and (b)(1) through (b)(5), proposed section (c) will refer to those subsections.

XXI. SECTION 412.250 ASSIGNMENT

A. Staff

The Commission requests comment on whether the information contained in Section 412.250(e) should be provided to the customer before the assignment is effective. FNO at 123. Staff states that the information referred to in Section 412.250(e) is a toll-free telephone number for billing questions, disputes and complaints. Staff states that it seems unlikely that having such a toll-free telephone number in place at the time the

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written notice required by Section 412.250(d) is being sent will be a significant burden on the RES. Staff FN Initial at 10-11.

B. RESA

RESA states that the information required by subsection (e) should not be provided in advance of the assignment because, typically, the assignment is part of a business deal which most likely is confidential prior to execution. Moreover, the existing provision has been in effect since Part 412 was adopted; RESA is unaware of any complaints that the notice currently provided is inadequate. RESA FN Initial at 27.

C. ICEA

ICEA recommends that the RES be required to provide proof of mailing, rather than proof of receipt. RESs should not have to ensure delivery as long as a document was properly sent in accordance with the section.

In addition, ICEA recommends that the Commission explicitly reserve its right to waive this provision on an emergency basis in the case of a distressed asset acquisition. ICEA does not recommend that customer notification be delayed or withheld in the normal course. However, some distressed asset transactions require quicker turnarounds than the requirements above would imply. ICEA explains that because the Commission would likely be involved in other aspects of the transaction (such as the transfer or surrender of Illinois licenses or certificates of the distressed asset seller), such a waiver would likely be part of a larger Commission review of the transaction. ICEA FN Initial at 53.

In addition, ICEA has concerns about the implication in the Commission’s question that the disclosures in subsection (e) are a necessary prerequisite to the assignment. This requirement would greatly raise the stakes in making sure the subsection (e) disclosures are meticulously compliant. Under Section 412.250 as currently written, failure to properly disclose could lead to discipline under Section 16-115B for failure to follow the Commission’s rules. However, ICEA is concerned that the proposed change in the Commission’s inquiry would void the assignment in the event that subsection (e) disclosures were not made or were inadequate. Voiding contracts, especially after some time has passed, is a more severe penalty than most of the options available under Section 16-115B of the Act where a minor or innocent mistake in compliance occurs. ICEA foresees potentially expensive and difficult class action litigation arising from adequacy subsection (e) disclosures if the Commission makes it a necessary prerequisite of an assignment. In light of these risks, ICEA recommends that the Commission not implement a rule that makes an assignment effective only after subsection (e) disclosures. ICEA FN Initial at 53-54.

While ICEA agrees with Staff that it is not a particular burden to include a toll-free telephone number in assignment disclosures to customers, ICEA is more concerned about the timing and the potential for waiver as dictated by real-world acquisition circumstances. ICEA agrees with Staff and does not object to the content of the disclosure, but disagrees to the extent that Staff would support the disclosure being a necessary prerequisite of assignment, which would be a change from the current system that allows RESs to notify customers of an assignment within a specific timeframe.

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ICEA further notes that RESA raised a similar issue to ICEA regarding timing and pre-closing confidentiality of transactions that lead to assignments. Maintaining the present rule as ICEA recommends would appear to address RESA’s concern. ICEA FN Reply at 42.

D. NAE

NAE agrees with Staff’s observation that having a toll-free telephone number for billing questions, disputes, and complaints at the time the written notice is required under subsection (d) should not be a significant burden. However, NAE does not agree if Staff is recommending that the rule incorporate language regarding when an assignment becomes effective.

NAE argues that the legislature has already determined that the relationship between an RES and a customer will be governed primarily by contract. See 220 ILCS 5/16-115B(a). Hence, the effectiveness of an assignment of an RES contract is subject to common law principles applicable to contracts and any applicable statutes. NAE finds that the Commission was not delegated authority to determine contract law or legislate when assignments become effective. NAE FN Reply at 16-17.

NAE notes that Section 412.250 of the Proposed Rule appears to be an attempt to adopt by rule for RESs that which was provided by statute for AGSs. See 220 ILCS 5/19-115(f)(4). The comparable statutory provisions for AGSs require the written notice to include contact information for the new supplier. Id. at (f)(4). Putting aside questions regarding the Commission’s authority to adopt such provisions by rule, it would be otherwise reasonable to include similar language in Section 412.250(e). NAE FN Reply at 16-17.

E. Commission Analysis and Conclusion

The Commission agrees with Staff that providing a toll-free telephone number for billing questions, disputes and complaints is not unduly burdensome on the acquiring RES prior to assignment. Since the acquiring RES is ostensibly already certified as a RES in Illinois, it should have provided contact information to the Commission pursuant to the certification rules provided in Part 451 and the Form Application provided to all RES applicants. Question 16 (b) of the Form Application for RESs requires name, address, telephone, facsimile and email contact information for the person responsible for “issues related to retail customers, including complaint resolution.” Therefore, the acquiring RES should already have established the contract information described in subsection (e).

Staff seems to imply that the information provided to customers in subsection (e) should be provided at the same time that the information in subsection (f) is provided. The Commission notes that the burden is on the current RES in subsection (d) and the new RES in subsection (e). The Commission finds this distinction important. It is imperative that the current RES notifies the customer of the assignment, since the customer is more likely to read correspondence from an entity it uses, versus correspondence from an entity it may never have heard of. The customer should be notified of the change in RES prior to the new contact information. It makes sense that the new RES should provide that information to the customer. ICEA argues that if the Commission puts a requirement on the new RES to provide such information prior to the

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transaction, failure to do so could result in the voiding of that contract. The Commission finds this an extreme outcome, and nowhere in the language of the existing rule or the Proposed Rule are such outcomes described. The Commission finds it reasonable that “prior to the assignment”, the new RES provides the customer with a toll-free telephone number for billing questions, disputes, and complaints. Such modification is shown in proposed subsection (e).

XXII. SECTION 412.310 REQUIRED RES INFORMATION

A. Staff

Staff states that the FNO requests comment on whether Section 412.310(b) should include language requiring that the Commission’s CSD be informed prior to any changes in the documents referenced in Section 412.310(a). FNO at 124. The documents in question are those relating to bill formats, standard contracts, dispute resolution procedures, and name, telephone number, and e-mail address of the company contacts for consumer complaint matters. Staff notes that CSD certainly needs to have up-to-date information regarding each of these matters, so notification should be required. Staff FN Initial at 11.

In its FNO, the Commission also solicits comment on the question of “[w]hat information should be included in the notice referred to in [Section 412.310](c)].” FNO at 124. Section 412.310(c) as amended by the FNO provides that “[i]f [a] RES has declared force majeure within the past 10 years on any contracts to deliver electric services, the RES shall provide notice to the Commission Staff prior to marketing to residential and small commercial retail customers.” Staff FN Initial at 11-12.

Staff points out that the Commission has previously addressed the issue of force majeure. In Docket No. 08-0481, the Commission observed that:

… [A] force majeure is not merely an “event beyond a party’s control.” Force majeure is a legal term of art that has its origin in ancient French. It literally means “major force.” Dictionary.com. A force majeure is, therefore, catastrophic in nature, or, an act of an entity that is beyond the contracting parties’ foreseeable control, like vandalism, or, an act of government. See, e.g., Kahara Bodas Co. v. Perusahaan Pertambangen, 335 F. 3d 357, 360 (5th Cir. 2003). However, many types of occurrences can be beyond a party’s control. Not all of the occurrences that are beyond a party’s control are acts of government or are catastrophic, or, are due to the unforeseeable actions of third-parties. See, .e.g., Wermers Floorcovering, Inc. v. Santanna Natural Gas Corp., 342 Ill. App. 3d 222, 224, 794 N.E.2d 1012 (2nd Dist. 2003), where Santanna illegally declared a force majeure due to the rising price of natural gas; see also [Final Order,] Citizens Utility Board[:] Complaint Requesting the ICC to Order Peoples Energy Services to Cease and Desist Misleading Marketing of Gas Offering, Docket No. 03-0592 (July 21, 2004); Peoples Energy Services Corp v. Illinois Commerce Commission, No.

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1-04-2878, at 12-13 (unpublished appellate order affirming the Commission’s conclusion in Citizens Utility Board that a force majeure clause that contained language similar to “events beyond a party’s control” did not conform with Illinois law.).

Ill. Commerce Comm’n on Its Own Motion: Standards for certain electric interconnection that is not subject to 83 Ill. Adm. Code 466 or other rules, Docket No. 08-0481, Second Notice Order at 11 (Apr. 22, 2009). Consistent with this reasoning, the Commission defined “force majeure” for the purposes of interconnection agreements, as follows:

[A] force majeure event shall mean any act of God, labor disturbance, act of the public enemy, war, acts of terrorism, insurrection, riot, fire, storm or flood, explosion, breakage or accident to machinery or equipment through no direct, indirect, or contributory act of a Party, any order, regulation or restriction imposed by governmental, military or lawfully established civilian authorities, or a similar type of event. A force majeure event does not include an act of gross negligence or intentional wrongdoing by the Party claiming force majeure.

Id. Staff states that it is possible that not all force majeure provisions used by RESs in other states or jurisdictions (or for that matter in Illinois) will necessarily conform to the Commission’s definition above, or the Commission’s view of what a force majeure clause properly contemplates. The Commission has deemed at least one force majeure clause – in that case, employed by an AGS – to be unenforceable, based on the Commission’s determination that the clause in question was significantly overbroad. Citizens Util. Bd., Docket No. 03-0592, Order at 22-23.

Staff notes further that there has been at least one case in Illinois where an AGS declared that “[d]ue to [an] … unanticipated increase in the price of natural gas, [the gas supplier] … determined that a condition of Force Majeure exist[ed], and it [would] no longer able to supply gas at the current contract rate.” Wermers Floorcovering, Inc. v. Santanna Natural Gas Corp., 342 Ill. App. 3d 222, 224 (2nd Dist. 2003) (emphasis added). A customer sued, alleging that the AGS breached its contract to supply gas to the customer at a fixed rate. Id. at 224. The trial court determined that the AGS had indeed breached the contract, a finding that the gas supplier did not contest on appeal. Id. Accordingly, the Commission’s citation with approval to Santanna Natural Gas in its Second Notice Order in Docket No. 08-0481 suggests that the Commission regards force majeure clauses as having the potential to allow overreaching by RES. Staff FN Initial at 12-13.

Thus, Staff considers the following information regarding a RES’s declaration of force majeure to be useful: (1) any and all date(s) upon which, and jurisdiction(s) in which, the RES declared force majeure to exist; (2) the basis or bases upon which the RES declared force majeure to exist; (3) the complete text of the force majeure provision(s) pursuant to which the RES declared force majeure to exist; (4) whether any court, tribunal, agency or other competent authority subsequently determined, found or declared that any

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such declaration of force majeure was improper, wrongful, or contrary to the contract or service agreement declared to be subject to force majeure; and (5) a true and correct copy or copies of any decision, ruling, order, opinion, declaration, or other statement of any description whatever by any court, tribunal, agency or other competent authority determining, finding or declaring that any such declaration of force majeure was improper, wrongful, or contrary to the contract or service agreement declared to be subject to force majeure. Staff FN Initial at 13-14.

B. RESA

RESA would agree that Subsection 412.310(b) be revised to require that CSD be informed prior to any changes in the documents referenced in Subsection 412.310(a) but only if the Subsection 412.310(b) is also revised to require the CSD to inform the RES of any problems or concerns it has with the changed documents within 10 days after receipt. Absent such a revision, the submission appears to be simply informational, and no change would be necessary. RESA FN Initial at 27-28.

The Commission ordered the parties to submit comment on what information should be included in the notice referred to in subsection (c). Subsection (c) currently states: “If the RES has declared force majeure within the past 10 years on any contracts to deliver electric services, the RES shall provide notice to the Commission Staff prior to marketing to residential and small commercial customers.”

In RESA’s opinion, the notice required by Subsection 412.310(c) would be adequate if it explains where, when and why force majeure was declared. RESA FN Initial at 28.

C. ICEA

ICEA agrees with RESA about advance notice of changes to documents listed in 412.310(a). Specifically, ICEA has no objection to Staff’s proposal that changes be provided in advance, but in exchange ICEA believes it is important for Staff to respond with objections or concerns before the document is to be used. ICEA sees this arrangement as beneficial to both Staff and the RES because Staff can view documents in advance, and RESs have the security of knowing that CSD has no objections on initial review by the time the document is scheduled to be in use.

ICEA has no objection to either Staff or RESA’s approach to the Proposed Rule’s force majeure disclosure, agreeing that differing definitions between states should not get in the way of a disclosure consistent with the spirit of the law in Illinois. ICEA sees Staff and RESA’s proposals as similar in concept, though Staff provides more detail than RESA. ICEA FN Reply at 42-43.

D. NAE

NAE states that Staff provided comments on whether Section 412.310(b) should include language requiring that CSD be informed prior to any changes in the documents referenced in Section 412.310(a). Staff indicates that it needs to have up-to-date information so notification should be required, but does not address specific timing requirements. NAE notes that there is some ambiguity in the Proposed Rule because subsection (a) requires RES to provide the documents and information prior to “initiating marketing” and “annually thereafter,” while subsection (b) refers to providing “updated

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information within 10 business days after changes in any of the documents or information.” Staff does not specifically comment on whether the “10 business day requirement” would satisfy Staff’s position that it should be kept “up-to-date” on such items. While RESs may sometimes be able to provide the subject documents and information prior to any changes, NAE recommends that the existing 10 business day language be maintained, perhaps by striking the reference to “and annually thereafter,” in subsection (a) and revising subsection (b) to read “updated documents and information within 10 business days after changes in any of the documents or information ….” NAE FN Reply at 17-18.

NAE understands that standard customer contracts are identified as one of the documents that must be provided to Staff. A RES rolling out a new product may consider the related standard customer contract – prior to the rollout – to contain and represent highly proprietary and competitively sensitive confidential business information. NAE also notes that such documents are provided to Staff for informational purposes rather than for approval. Further, it is possible that contact information could change because of an unexpected or unplanned event or change for the current contact person, effectively preventing “prior” notice. The existing 10-day requirement provides appropriate flexibility, such as to avoid disclosing proprietary and competitively sensitive documents prior to roll out of a new product, while at the same time keeping Staff apprised of changes in such documents no later than 10 business days after any change occurs.

NAE notes that Staff provided comments on what information should be included in the notice referred to in Section 412.310(c) if a RES declares force majeure on any contracts to deliver electric services, and Staff identifies specific information regarding a RES’s declaration of force majeure that it believes would be useful. NAE has no basis to disagree with Staff’s observation and does not have a specific objection to provision of such information if there is a force majeure declaration. NAE FN Reply at 17-18.

E. Commission Analysis and Conclusion

The Commission finds that subsection (b) requires the RES to provide more than simply the items described in subsection (a)(1) - (4). For example, other provisions of the Proposed Rule require the RES to provide information to Commission Staff which are not mentioned in this subsection, specifically RES training materials. The Commission is reluctant to add a provision which requires Commission Staff to review and, in a sense, “authorize and approve” a RES’s materials, especially within a specified timeline, as suggested by some of the parties. For example, Commission Staff would not want to be in a position of identifying an issue with a RES’s marketing scripts, due to consumer complaints, for example, then having the RES use the defense that Staff ‘approved’ the materials. The Commission declines to modify Proposed Rule subsection (b).

In terms of subsection (c), the Commission agrees with Staff, RESA and ICEA that general information about when, where and why force majeure was invoked is sufficient to provide to Staff. If Staff needs additional information, it can ask the RES. The Commission declines to modify Proposed Rule subsection (c).

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XXIII. SECTION 412.320 DISPUTE RESOLUTION

A. Staff

In response to the Commission’s question in the FNO on when the RES must inform the complainant of his or her ability to file an informal complaint with the Commission’s CSD, Staff considers the Proposed Rule’s existing Section 412.310(c) to be suitable. Staff FN Initial at 14.

B. RESA

RESA points out that the current version of subsection (c) already states when the RES must inform the complainant of his or her ability to file an informal complaint with CSD - it is when the complainant expresses dissatisfaction with the results of a RES’s complaint investigation. Deleting this language from Subsection 412.320(c) does not make sense and the language should be restored. RESA describes an example of if a customer complained that his or her bill had the wrong rate, and the RES corrected the rate and issued a refund. If the customer is satisfied with that resolution, the Proposed Rule’s subsection (c) would require the RES to inform the customer of his or her right to file an informal complaint with CSD. RESA argues that a RES should not tell a satisfied customer that he or she can call CSD to file an informal complaint. RESA notes that the Commission would be creating a different informal complaint process for RESs than for public utilities. 83 Ill. Adm. Code 280.220(l) provides that once a final answer is provided to the customer, if the customer indicates non-acceptance of the response, then the utility shall advise the customer of the right to appeal the public utility’s answer to CSD for an informal complaint. RESA states that it makes no more sense to advise RES customers who are satisfied with the RES’s resolution of their complaint of the right to file an informal complaint with CSD, than to advise utility customers who are satisfied with the utility’s resolution of their complaint of that right. RESA FN Initial at 28-29.

RESA disagrees with Staff’s characterization of the Proposed Rule as “suitable” and reiterates that the current version of Section 412.310(c), if left alone, would resolve this matter. RESA FN Reply at 17.

C. ICEA

ICEA states that it supports the current language in the first sentence of Section 412.320(c)(1)(A). ICEA recommends no changes be made to this subsection. ICEA appreciates, however, that competing interests must be balanced in terms of when the customer should be informed of the right to file an informal complaint. On one hand, informing a customer too early will encourage informal complaints in situations where a customer could have achieved a satisfactory outcome with a RES’s internal dispute resolution procedures. Because the Commission tracks and reports on complaint rates and defines complaints liberally, premature encouragement for customers to call the Commission would distort customer satisfaction statistics. On the other hand, ICEA does acknowledge that delaying the provision of this information may discourage some customers from seeking redress from the Commission if the RES’s internal dispute resolution procedures do not produce a satisfactory result. Although customer contracts must currently, and the UDS under the Proposed Rule must also state that customers

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have a right to complain to the Commission, ICEA understands the value of a disclosure to customers during the dispute resolution process. ICEA FN Initial at 54-55.

ICEA supports the current language in Section 412.320(c)(1)(A) because it strikes the proper balance between informing the customer of his or her rights while not encouraging otherwise satisfied (or soon to be satisfied) customers to file informal complaints. ICEA notes that RESA agrees with its position. ICEA FN Reply at 43.

D. NAE

NAE states that the modification to the last sentence of Section 412.230(b) is not reasonable or needed and will encourage informal and formal complaints in situations where the customer was not dissatisfied with the RES’s response. Currently, RESs are required to disclose in their contracts a “toll-free telephone number for billing questions, disputes and complaints, as well as the Commission's toll-free phone number for complaints.” This requirement is moved to subsection (n) as a telephone number disclosure requirement in the Proposed Rule. NAE has no issue with requirements intended to ensure that customers have general knowledge regarding their ability to raise an informal or formal complaint with the Commission. NAE does find that a gratuitous notice requirement when the customer expresses no disagreement or dissatisfaction with the RES’s response to a complaint is not reasonable. NAE FN Initial at 53-54

NAE points out that the Commission was recently faced with a similar issue in the Part 280 rulemaking for utilities and decided against a similar requirement with respect to escalating a complaint to a supervisor. In re: Revision of 83 Ill. Adm. Code 280, Docket No. 06-0703, Order at 239-40 (Nov. 13, 2013). The Proposed Rule continues the existing requirement that RES agents “have the ability to provide the customer with a toll-free number for billing questions, disputes and complaints, as well as the Commission's toll-free phone number for complaints.” The proposal to require RESs to automatically advise a customer of the right to file a complaint with the Commission and the AG, after responding to every customer complaint instead of when the customer expresses dissatisfaction with the response, should be rejected. NAE FN Reply at 19.

E. Commission Analysis and Conclusion

The Commission disagrees with RESA, NAE and ICEA that the language in the Proposed Rule would encourage otherwise satisfied RES customers to contact the Commission’s CSD to file an informal complaint. If a customer is satisfied, it should not matter whether they are informed of the CSD contact information. Presumably, if that customer is satisfied, the information is irrelevant and he or she will not contact CSD. If the customer does ultimately contact CSD, he or she was not satisfied with the RES’s resolution of their issue. The Commission finds NAE’s comparison to Part 280 inapt because in that case, Staff recommended utilities’ consumer representatives inform customers they can speak to a utility supervisor. In this case, RESs are required to notify customers they can file a complaint with the Commission. Part 280 also requires utility representatives to notify customers they can contact the Commission. 83 Ill. Adm. Code 280.220(l)(1)-(3). The Commission declines to modify Section 412.320.

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XXIV. SECTION 412.330 FAILURE TO COMPLY

A. ComEd

ComEd notes that only NAE takes issue with this Section, but the FNO already addresses and correctly rejects NAE’s arguments, noting that Part 470 already contains a nearly identical provision. FNO at 126. Because Part 412 and Part 470 each apply to RESs, ComEd finds that the Commission’s determination that each Part should contain the same Failure to Comply Section clarifying the consequences for violations is a reasonable one. NAE’s arguments should therefore be rejected. ComEd FN Reply at 8-9.

B. NAE

NAE states that Section 16-115B(b)(2) of the Act provides the Commission with authority to impose penalties against a RES, but that authority only allows the Commission “[t]o impose financial penalties for violations of or non-conformances with the provisions of Section 16-115 or 16-115A ….” 220 ILCS 5/16-115B(b)(2)(emphasis added). No power to impose penalties for violations of Commission rules is specified. The proposed addition incorrectly implies the Commission can impose penalties against a RES for violations of its rules. NAE argues that such authority is absent from the legislature’s explicit grant of authority to the Commission, and this provision of the Proposed Rule should be deleted. NAE FN Initial at 54-55.

C. Commission Analysis and Conclusion

The Commission already determined that proposed Section 412.330 was reasonable, and similar language is in place in Part 470. The Commission disagrees with NAE that it has no power to impose penalties for violations of Commission rules. The Commission has general authority to promulgate rules to carry out specific provisions of the Act. Many of its rules include penalties for failure to comply with the requirements. For example, Part 451 details the certification requirements for entities applying to become RESs. While the Act authorizes the Commission to issue certificates of service authority to RESs, it does not detail the specific requirements on the part of applicants; Part 451 does that, and addresses penalties for failure to disclose certain information or for filing defective reports. The Commission declines to delete or modify this Section of the Proposed Rule.

XXV. SECTION 453.20 CRITERIA BY WHICH TO JUDGE THE VALIDITY OF AN ELECTRONIC SIGNATURE

A. CES

CES notes that under the current version of Part 453, an Illinois RES may validate online enrollments with security procedures that include, without limitation: (1) algorithms or codes; (2) identifying words or numbers previously sent to the customer; and (3) credit card verification. See 83 Ill. Admin. Code 453.20. The FNO eliminates that regulatory flexibility by requiring RESs to use: 1) algorithms or codes, 2) identifying words or numbers, or 3) credit card verification; and prohibiting any other type of signature verification procedure. FNO at 134-135. The consequence of this change is that RESs seeking to serve Illinois customers may need to change their verification procedures for customers in each state in which they provide service. Otherwise, those RESs would not

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be able to have a single online platform. CES maintains that this is a compliance cost that may result in higher rates for Illinois customers that seek the benefits of choice. CES FN Initial at 9.

B. Commission Analysis and Conclusion

The Commission sees no reason to alter the Proposed Rule and CES’s proposal is not adopted. The Commission notes that CES does not inform the Commission as to what other types of electronic signatures that it wishes to use. Not having been presented with an alternative, the Commission does not see the Proposed Rules as improperly limiting a RES’s online enrollment methods.

XXVI. FINDINGS AND ORDERING PARAGRAPHS

The Commission, having considered the entire record and being fully advised in the premises, is of the opinion and finds that:

(1) the Commission has jurisdiction over the subject matter herein;

(2) the recitals of fact set forth in prefatory portion of this Order are supported by the record and are hereby adopted as findings of fact;

(3) Part 450.25 should be amended;

(4) RES trade groups, CUB, Staff, and the AG should create a uniform training program for RES agents upon adoption of these rules as discussed herein;

(5) this proceeding is a rulemaking and should be conducted as such; and

(6) the proposed amendments to Rule 412, 83 Ill. Adm. Code 412, as reflected in the attached Appendix A, and the proposed amendment to Rule 453, 83 Ill. Adm. Code 453, as reflected in the attached Appendix B, should be submitted to the Secretary of State to begin the second notice period.

IT IS THEREFORE ORDERED that Staff of the Commission shall initiate a rulemaking on Part 450.25 as described herein.

IT IS FURTHER ORDERED that the Staff of the Commission shall lead and organize a workshop process with RES trade groups, CUB, and the AG to create a uniform training program for RES agents upon adoption of these rules as discussed herein.

IT IS FURTHER ORDERED by the Illinois Commerce Commission that the proposed amendments to Rule 412, 83 Ill. Adm. Code 412, as reflected in the attached Appendix A, and the proposed amendments to Rule 453, 83 Ill. Adm. Code 453, as reflected in the attached Appendix B, be submitted to the Secretary of State pursuant to Section 5-40 of the Illinois Administrative Procedure Act.

IT IS FURTHER ORDERED that this proceeding is a rulemaking and shall be conducted as such and not as a contested case.

IT IS FURTHER ORDERED that this Order is not final and is not subject to the Administrative Review Law.

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By Order of the Commission this 1st day of June, 2017. (SIGNED) BRIEN SHEAHAN

Chairman