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A Consumer’s Guide to Third Party Suppliers OPC Advocates, Educates and Protects Utility Consumers


Dear District of Columbia Utility Consumers: As People’s Counsel for the District of Columbia, I invite you to read the valuable information in A Consumer’s Guide to Third Party Suppliers, developed by the Office of the People’s Counsel.

Sandra Mattavous-Frye People’s Counsel

The modern renewable energy marketplace has opened a wide range of options and sparked growing consumer interest in managing their energy costs and personal impact on the environment. In the District, those options include many Third Party Supplier (TPS) companies authorized to provide energy services to DC residents.

The process of selecting the best option for your family can be difficult. Therefore, OPC has developed this guide to provide you with important information to make informed decisions when choosing energy services. I am confident it will be very useful for navigating the complex energy marketplace. I encourage you to contact OPC for help with any questions about Third Party Suppliers, or any other utility issue, at (202) 727-3071, visit us on the web at www.opc-dc.gov and follow us on Facebook @DCPeoplesCounsel, Twitter @DCOPC, and Instagram @dcopc.

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Table of Contents Title

Page

About OPC

4

About Third Party Energy Suppliers

5

Understanding Your Utility Bills

5

Who Do I Pay for Generation, Transmission, and Distribution?

6

Knowing Your Rate Class Could Save You Money

7

If I Switch to a Third Party Supplier Can I Keep My Energy Assistance?

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You Have a Choice!

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Cost Savings

8

Renewable Energy Options

9

Predictable Monthly Bills

9

Consumer Protections: Know Your Rights

10

Safeguard Your personal information

10

Rules Are in Place

10

General Tips on Solicitations and TPS Companies

11

Types of Solicitations

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Direct Mail

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Telemarketing

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Internet

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In-person

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In Public Places

15

Questions to Ask a Supplier

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A Word about Variable Rates

17

How to Switch

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What If I Want to Cancel?

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About OPC The Office of the People’s Counsel for the District of Columbia (OPC), an independent agency of the DC Government, is the public advocate for consumers of natural gas, electricity and local landline telephone services. OPC represents your interests in matters affecting utility services, conducts a wide variety of outreach and educational programs and resolves thousands of consumer utility complaints each year.

The Office of the People’s Counsel: Empowering Consumers to a Brighter Utility Future

One of the most complex changes in utility markets has been the entrance of Third Party Suppliers (TPS) of energy services. The sales and marketing practices of some of these companies have caused concern among consumers. In this guide, you will learn how to better understand the issues surrounding TPS companies. If you need further assistance with this, or any utility issue, contact OPC at (202) 727-3071 or visit www.opc-dc.gov.

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About Third Party Energy Suppliers Pepco and Washington Gas are local utilities regulated by the DC Public Service Commission (PSC). Third Party Suppliers (TPS) are companies authorized by the PSC to sell electricity and natural gas to consumers. However, the price you pay for energy to a TPS is not regulated by the PSC and may be higher than Pepco or Washington Gas rates. The electricity or natural gas is still delivered to your home through the local utilities, and you would still contact Pepco or Washington Gas if you have a problem with service.

Understanding Your Utility Bills An important step in deciding whether to switch to a TPS company is understanding what costs are associated with these companies. All consumers pay for three components of energy service: generation, transmission and distribution. These charges are based on the amount of kilowatt hours (kWh) for electricity, or therms for natural gas that you use each month. Each utility includes a “price to compare� for either kWh or therm on their bills to assist you in shopping for third party suppliers.

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Who Do I Pay for Generation, Transmission, and Distribution? GENERATION Generation Charges cover the costs of producing the electricity or gas. You pay charges for gas, solar, ethanol, nuclear, wind, coal, or oil, for example, to Pepco, WGL or a TPS company. Generation charges are the only fees you pay to a TPS.

TRANSMISSION Transmission Charges cover the costs of moving energy to the District from wherever it is generated. Pepco and WGL do not produce electricity or gas in the District. However, you pay Transmission Charges to either Pepco or WGL, not to a TPS company.

DISTRIBUTION Distribution Charges are fees paid to Pepco and WGL to maintain the wires, poles, gas-lines and other equipment, and deliver energy to your community. You pay Transmission Charges to either Pepco or WGL, not to a TPS company.

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Knowing Your Rate Class Could Save You Money Both Pepco and Washington Gas have a standard rate class that customers are automatically assigned upon enrollment. For Pepco, the standard class is “R-Residential.” For Washington Gas, it is “Residential Heating.” However, if the primary source of your home heating is electric, you are eligible for Pepco’s “AE-All Electric” rate class, which is less costly than the standard “R” service. Most TPS solicitations expressly state that they cannot guarantee savings over the standard utility rate; this is especially true for “AE-All Electric” consumers.

For a more detailed explanation on how to read your utility bills, see www.opc-dc.gov

If I Switch to a Third Party Supplier Can I Keep My Energy Assistance? Yes. Both Pepco’s Residential Aid Credit (RAC) and Washington Gas’s Residential Essential Service programs are administered by the DC Department of Energy & Environment (DOEE) and assist eligible low-income consumers with their utility bills. Since the discount is on the distribution, and not the supply portion of your bill, having a Third Party Supplier does not affect this benefit. However, your savings over the standard utility rate may be limited. Take this into consideration if you are currently enrolled in either program. Contact OPC for questions about these and other energy discount programs.

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You Have a Choice! You do not have to switch. If you are happy with your current electricity or natural gas service, you are not required to take any action. Beware of advertisements warning that you are in danger of “missing out” on an offer of service or that there is a deadline for you to switch. Always take the time to research any offers. If you need help, contact OPC. The three most common reasons for considering a switch are:

For more energy efficiency tips, visit the DC Sustainable Energy Utility website at www.dcseu.com.

Cost Savings Often, consumers consider offers from TPS companies to find the cheapest energy rate available. TPS companies purchase their supply on the competitive wholesale market, which enables them to set attractive rates for consumers. While it may be possible for you to find a cheaper rate, it is very important to carefully read and understand all terms in any agreement. Note that some companies may offer variable-rate products with attractive low prices that increase dramatically after the introductory period of service. In some cases, you may be able to save more money by implementing basic energy efficiency practices than by switching to a TPS company. For example, consumers are often surprised to discover how much money they can save by washing laundry with cold versus hot water, and by using the dishwasher during off-peak hours to avoid heavy energyuse periods and at night to reduce daytime heat buildup in the kitchen.

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Renewable Energy Options Some TPS companies offer energy products generated by wind, solar, or other renewable sources. Educating yourself on the available options and comparing rates are important first steps to take if you are interested in renewable energy. All TPS companies must provide consumers with information on where the energy is being produced and by what methods. A company offering 100 percent renewable energy must be able to prove that claim. As an alternative to a TPS energy company, you may want to consider adding a solar power system to your home or joining a community solar program. Learn more about going solar at www.opc-dc.gov. In addition, the DC Department of Energy & Environment has numerous programs that could make the process of going solar both affordable and simple at www. doee.dc.gov/solar.

Predictable Monthly Bills Many TPS companies offer a fixed-rate agreement over an extended time period. This fixed-rate may be lower over time than seasonal variable-rate programs offered through standard utilities, and can offer consumers an easier way to estimate their energy costs each month. While fixed-rate programs can be useful, consumers take the risk that the fixed-rate price will not remain lower than the variable-rate for the full term of service. The price of energy normally fluctuates seasonally, so it is important to know your usage and billing history to determine if you would likely save any money. For consumers interested in a more predictable billing option, both Washington Gas and Pepco offer budget payment plans. These payment options spread out the higher costs of energy used during the winter heating season over the full calendar year and offer consumers a level monthly bill. Contact your utility for more information or to enroll in a budget plan.

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Consumer Protections: Know Your Rights

Safeguard Your Personal Information Never share your bill or utility account number with anyone you do not know. Only the authorized account holder may make decisions about your energy services. Make sure all members of your household know not to speak with a salesperson or give out your account information without your permission. Contact OPC if your energy supplier has been changed without your permission.

Rules Are in Place The District of Columbia Consumer Bill of Rights (CBOR) requires TPS companies to follow strict rules regarding their products and marketing practices. The Public Service Commission does not control the pricing. Nonetheless, energy suppliers may not engage in marketing, advertising, solicitation or trade practices that are unlawful, misleading or deceptive. These important consumer protections can be found at www.opc-dc.gov.

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General Tips on Solicitations and TPS Companies • Energy suppliers may not engage in cramming (adding unauthorized services or

charges to an energy bill) or slamming (unauthorized switching of an energy supplier).

• You have the right to stay with your current supplier. No action is needed and you do not need to “confirm” your choice to stay with your current energy provider.

• TPS marketing materials must clearly list their license number. If the company cannot provide the license number, it may not be authorized to conduct business in the District.

• TPS companies and representatives MUST identify themselves as not being from the local utility.

• All solicitations MUST include all the major terms of the contract, including all variable- and fixed-rate prices, all fees, and cancellation procedures.

• Consumers must be advised of their right to cancel within three days after the

transaction. Cancellation procedures must be clearly visible in all marketing materials and verbally explained to consumers.

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Types of Solicitations TPS companies solicit customers in the District using four methods: direct mail, telemarketing, internet and in-person. Remember, all TPS companies and representatives MUST identify themselves as not being from the local utility. Always ask for the name and employee identification number associated with the salesperson. Keep it for your records.

Don’t fall to high pressure tactics! You are never required to make a decision “right away.” Note that TPS solicitors often work on commission for enrolling new customers. Always take the time to carefully consider your options before making any decisions that may affect your financial well-being.

Direct Mail Many solicitations may appear to be official notices that require your immediate attention, and may appear as if they are from your local utility.

• All written offers must include all of the major terms of the contract (rates, contract term, fees, and policies).

• Look for a “sign, detach & mail” stub to be sent to the TPS company for enrollment. • There may be a phone number listed to call and speak with a customer service representative. Be sure to read all terms before calling.

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Telemarketing Telemarketers are permitted to solicit your business over the phone, however there are rules that they must follow.

• They may not contact consumers whose numbers are on a “Do Not Call Registry.” If you are on a registry, get the name of the supplier, hang up and file a complaint against the company with OPC.

• Telemarketers are required to: • Immediately identify themselves and their company • Explain offer terms and answer any questions • Only call between 9 a.m. and 9 p.m. • You will be asked to speak with a Third Party Verifier (TPV), a company that will record your response to enrollment questions. The recording will serve as verification of your intent to contract with the energy supplier and represents your signature. Do not feel pressured to confirm your enrollment by phone. You can ask for a written contract.

Internet You may receive emails or advertisements from TPS companies online. Some even use Social Media sites to solicit consumers.

• Suppliers must have a website that lists their registered license number. • Never enter your personal or account information into a web domain that you do not trust.

• All contract terms and conditions must be available for review and printing. • Electronic signatures are acceptable to enter into a contract over the internet.

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In-person Solicitors may approach you in your home or at public locations, including malls, movie theaters, farmer’s markets, etc.

At Home • TPS companies are permitted to engage in door-to-door sales. • When soliciting consumers at home, the representatives are required to: • Have photo identification with a visible company logo • State that they are NOT a representative from the local utility company • Visit your home only between 9 a.m. and sunset. • You may be asked to speak with a Third Party Verifier that will record your response to enrollment questions. This will serve to verify your intent to contract with the energy supplier.

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In Public Places • When soliciting consumers at public locations, TPS representatives are required to:

• Have photo identification with a visible company logo • State that they are NOT a representative from the local utility company

• You may be asked to sign an agreement to complete the

sale. Companies are required to give you a copy of the agreement at the time of signing. If you are not offered a written agreement, refuse to complete the sale unless you are absolutely certain you want to switch to a Third Party Supplier.

• You may be asked to speak with a TPV company that will record your response to enrollment questions. This will serve to verify your intent to contract with the energy supplier.

Local utilities will NOT come to your home asking to check your bill or account number to offer you a lower price.

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Questions to Ask a Supplier Now that you know what a solicitation might look like, here are a few essential questions to ask yourself or a solicitor before agreeing to switch to a Third Party Supplier:

• What is the company’s name and PSC license number? All suppliers must be licensed to do business in the District of Columbia with the Public Service Commission. If this information is not clear, end the solicitation.

• What are the terms and conditions of the contract? Can I review a copy before enrolling?

Ask if you are enrolling in a fixed or variable rate, the contract length, and if the contract automatically renews. Ask if there are hidden fees, or whether this is a promotional offer. Get and keep a copy of the signed contract for your records.

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A Word about Variable Rates Variable-rate contracts can be very risky for consumers. While a fixedrate product protects a consumer from wild fluctuations in prices by offering a guaranteed monthly price, variable rates can change dramatically each month. Some variable-rate contracts can be more than double the standard rate of utility companies. Suppliers often offer low-fixed introductory rates that switch to high variable rates later. If you are lured into a variable-rate program, your bill could quickly get to a point beyond your control, and TPS companies are not obligated to offer budget payment options on variable-rate contracts.

OPC strongly urges consumers to avoid variable-rate programs.

• What is the price to compare with the utility company? Find the average price per kilowatt hour or therm for the supplier and compare it to the standard utility rate for Pepco or Washington Gas. A bill calculator is available on the OPC website to help you compare prices. Visit: opc-dc.gov/consumer-assistance/utilitybill-calculators.

• What fuels are used to produce the energy? Some Third Party Suppliers specialize in wind, solar, and other sustainable means of generation. These companies MUST be able to support their claims. In the case of telephone or in-person solicitations, ask for the name and employee identification number associated with the salesperson. Keep it for your records.

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How to Switch After you have done your research and decide on the option that best fits your energy needs, you may choose to switch your energy supplier in a process similar to this:

SOLICITATION PROCESS Consumer researches offers and shops for rates

WRITTEN CONTRACT OR THIRD PARTY VERIFICATION Consumer agrees to switch to a TPS

ENROLLMENT PROCESS

ENROLLMENT

Most contracts begin on the first day of the next full billing cycle

In most cases, consumers receive a single bill from Pepco or Washington Gas with the new supplier charges listed separately

What If I Want to Cancel? After the three-day right to cancel period expires, consumers can still cancel their enrollment by contacting the Third Party Supplier directly, or by contacting Pepco or Washington Gas. There may be fees for cancelling early, so be sure to understand all contract terms before you make a decision. If you have problems with your supplier, or need assistance in cancelling your enrollment, contact the Office of the People’s Counsel for further assistance.

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OPC is Your Utility Lawyer—Contact Us Choosing the right utility for your household’s energy needs can be confusing. That’s why OPC is always ready to advocate, educate and protect utility consumers in the District of Columbia. If you have any questions about Third Party Suppliers or any other utility service issue, contact OPC.

DC Office of the People’s Counsel 1133 15th Street, NW, Suite 500 Washington, DC 20005 202.727.3071 (main) 202.727.1014 (fax) www.opc-dc.gov

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