Electronic signature law removes roadblocks

Utility.com CEO Chris King says new laws permitting online digital signatures will save his company millions of dollars in customer processing charges. Others say the new laws will also remove some roadblocks that have slowed development of the retail energy market.


Kate Thomas
OGJ Online

Utility.com CEO Chris King says new laws permitting online digital signatures will save his company "millions of dollars" in customer processing charges. Others say the new laws will also remove some roadblocks that have slowed development of the retail energy market.

Retail energy companies have complained that so-called "wet signature" requirements in some states that have begun deregulating the gas and power industries were making it cost prohibitive to sign up new customers. Aggregating customers across multiple utility service territories is particularly difficult.

King estimates US utilities are spending nearly $5 billion/year to present customers with paper bills and collect payments, costing an average of $2-3/bill. He says new e-signature laws will cut costs up to 90%.

Reversing its earlier position, New Jersey Board of Public Utilities (BPU) earlier this month approved an internet enrollment program effective September 1, that will allow consumers to enroll over the internet. Under the New Jersey pilot program, digital signatures will have the same credibility as traditional paper signatures.

In approving the program, the board said it recognizes electric and gas marketers and suppliers are currently only reaching 15-20% of the market via such traditional advertising vehicles as radio, print, and door-to-door sales. Board surveys showed 30-33% of New Jersey consumers wanted to be able to sign up on the internet as an alternative to the existing "wet signature" rule, it said.

With the nation's highest per capita residential use and ownership of personal computers, the e-signature program will allow a significant segment of the market easier access to shop for energy suppliers, the board said. Initially, New Jersey limited the program to 10% of the market or about 350,000 customers for a 6-month trial. But with a similar national law going into effect October 1, the New Jersey BPU said it will reconsider in August whether the numeric limitations should be lifted.

Now all states will be subject to the national Electronic Signatures in Global and National Commerce Act, says King. Once standards are established the same format will be used in all 50 states.

States that have been reluctant to allow internet signup for new energy services can open their markets without fear of compromising consumer protections, says Craig Goodman, president of the National Energy Marketers Association. He predicts the law will have a substantial impact on the pace of energy restructuring.

"Consumers will be more comfortable with it having the stamp of the US government," King says. Utility.com, Albany, Calif., is selling electricity in three states and is licensed to sell power in nine states.

The New Jersey BPU said it will monitor internet signup procedures closely for any potential transfer or "slamming" of customers from one service to another without customers' approval.

And to enroll a customer via the internet, the BPU laid out six conditions that will have to be met, including a copy of the contract and verification procedures.

More in Home