Restructuring Today
September 12, 2005

NEMA asks NYPSC to avoid complicated referral program

NEMA urged New York regulators to keep simple its statewide plan for marketer referral programs.

          The beauty of O&R's (above) PowerSwitch program and the reason it's been so successful is "the simplicity of the process for all parties concerned," NEMA President Craig Goodman wrote.

          O&R's standardized discount rate and term "makes for an easy explanation by the utility customer service representative and in turn, the consumer has a simple choice to make -- whether or not to participate."

          The proposed statewide plan leaves behind O&R's random assignment of marketers, lets marketers propose their own discount rates and gives utility customer reps a larger role, Goodman pointed out.

          The plan the PSC is weighing would require utility reps to explain a "complicated menu" of marketer offerings that would "needlessly confuse" the process, Goodman wrote.

          If marketer offerings differ, the marketers themselves should explain them, Goodman advised, since it's in their best interest to keep new referral customers after trials end.

          NEMA urged a standard term of two months.

          It favors a uniform discount available to all customers with utility reps authorized to vouch for marketers' compliance with uniform business code.

          Customers should be able to cancel within 30 days without penalty.

          Marketers should be allowed to offer their own terms and conditions when they convert trial customers and choose their own billing method, NEMA urged.

          The pending plan's complexity, NEMA added, "needlessly" raises the cost and complexity of the process.

          "If the cost of utility referrals is a late start to the program itself," warned Goodman, "this cost is prohibitive for many of the most competitive marketers and a windfall for the most anti-competitive monopolies."

          Marketers are investing in New York, Goodman added, attracted by the PSC's "policy, vision and leadership."

          If a policy is adopted that delays market openings, marketers would rather "forego utility referrals," Goodman added.

          Regulators should ignore attempts by some utilities to throw up red herrings about price fixing if the discount is made uniform and not label referral programs as government slamming.

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