JCAR Unanimously Approves Compromise Language on Proposed ICC Rule 412

Mary Hanahan

Associate Editor

Loyola University Chicago School of Law, JD 2018

In a rare ruling on September 12, 2017, the Joint Committee on Administrative Rules (JCAR) unanimously approved revisions to the Illinois Commerce Commission’s (ICC) proposed Part 412 Order. The ICC and members of the Alternative Retail Electric Suppliers (ARES) community negotiated the adopted compromise language. Part 412 of the Illinois Administrative Code, Title 83, Chapter 1, outlines the obligations of retail electric suppliers. Lobbyists for Retail Energy Supply Association (RESA) estimate that this compromise has been up to five years in the making.

RESA suppliers provide competitive sources for the energy commodity. While the transportation and distribution of energy is still controlled by monopoly utility companies, such as ComEd here in Illinois, the energy itself may come from different suppliers. This serves to increase competition and innovation in the electric market. More information about RESA and alternative retail electric suppliers can be found here.

Part 412 regulates permissible marketing practices, contracts (including renewal and termination), dispute resolution, and customer complaints. The ICC proposed 44 new amendments to the marketing rules of Part 412. RESA agreed with all but four of these proposed rules. In a press release, the ICC explained it proposed these rules in response to “aggressive marketing practices of retail electric suppliers” following the 2013-2014 polar vortex. RESA objected to four of these rules on the grounds that they were overbroad and the ICC lacked the statutory authority to impose them. As a result, lobbyists retained by RESA and the Illinois Competitive Energy Association (ICEA) teamed up in search of a solution. In the end, the ICC agreed to remove all of the rules objected to by RESA and ICEA.

The Proposed Rules at Issue

The first proposed rule in contention required retail electric suppliers wishing to engage in any in-person solicitation to obtain both a Letter of Agency and Third-Party Verification. Lobbyists for RESA quickly pointed out that this proposal conflicted with Illinois’s Consumer Fraud Act. The language of the Consumer Fraud Act directly contradicts the proposed rule, requiring retail electric suppliers to obtain either the Letter of Agency or the Third Party Verification.

The ICC also proposed a rule that would require Third-Party Verification for enrollment and service calls made to retail electric suppliers by customers. This proposed rule would also require retail electric suppliers to record and store customer-initiated calls for an indefinite period. The current standard requires that these recordings be kept for a two year period. In addition to conflicting with the Consumer Fraud Act, these requirements would have imposed significant compliance costs on RESA members.

A third proposed rule required retail electric suppliers to make two telephone calls to notify customers that their contracts were up for renewal. However, RESA and ICEA argued that this rule prevents customers from selecting the manner in which they prefer to be notified of contract expiration. Furthermore, it would conflict with Illinois’s Automatic Contract Renewal Act, which requires written notice to be provided.

Finally, the ICC proposed a rule imposing limits on which Renewable Energy Certificates (RECs) could be used in eco-friendly product offers. These standards, however, would be much more stringent than is required by other Renewable Portfolio Standard Mandates in Illinois.

Lobbying Efforts

Lobbyists from RESA and ICEA successfully demonstrated to the ICC and JCAR how these proposed rules would exceed the ICC’s rule-making authority. Illinois case law limits the ICC’s authority over retail electric suppliers. See, e.g. Zahn v. North American Power & Gas, LLC, 2016 IL 120526, 72 N.E.3d 333.  The four proposals mentioned above would significantly interfere with the Illinois General Assembly’s legislative control of retail electric suppliers.

To prevent promulgation of these proposed rules, lobbyists met with ten of the 12 JCAR members to discuss the issues surrounding each proposed rule. Lobbyists for RESA and ICEA also spoke with the Governor’s Office, the Attorney General’s Office, the ICC staff, and the Citizens Utility Board to gain support in their opposition to these changes to Part 412. On Tuesday, September 12th, after the ICC agreed to changes in the rules pursuant to a Certificate of No Objection with Conditions, Representative André Thapedi (D – 32nd District) applauded their efforts after accomplishing this “Herculean task.”