SJR 91

Task Force on Consumer, Environment and Education

September 17, 1998, Richmond

The second meeting of the task force was convened to examine customer aggregation and consumer education. Several consumer groups appeared before the task force to address both issues. Additionally, representatives of local government associations promoted municipal aggregation to the task force members. The Office of the Attorney General's Division of Consumer Counsel and other interested groups also addressed the task force.

Consumer Education

How should consumers be prepared for retail competition? The answer from stakeholders and other interested parties is consumer education programs that precede and follow the advent of electric utility restructuring. The task force heard several presentations concerning the form the education should take, the source of regulatory oversight, and proposed funding mechanisms for such programs.

The Virginia Citizens Consumer Council (VCCC) suggested that the Virginia State Corporation Commission (SCC) coordinate an education program designed to (i) prepare consumers for the change and (ii) equip consumers to shop for electricity as a commodity. The VCCC furnished the task force an outline for a consumer education and outreach plan prepared by the National Consumer Law Center. VMH, Inc., also added that any consumer education program in Virginia needs to be effective, recognizing differences in age, education, and locale. A "one size fits all" approach will probably fail.

The Office of Attorney General's Division of Consumer Counsel suggested that an impartial entity—such as the SCC—in conjunction with the Office of Consumer Counsel and other interested parties, be given the jurisdiction and budget to fashion consumer education programs. A deputy attorney general suggested that funding for these programs could come from those participating in the restructured market, (generators, distributors, marketers and aggregators).

Educating lower-income households presents unique challenges, according to a representative of the Virginia Council Against Poverty (VCAP), who urged the task force to recommend a restructuring education outreach program utilizing existing channels familiar to members of this group. For example, she said, if the SCC is responsible for coordinating consumer education, it should do so with the assistance of the Department of Social Services, the Department for the Aging and other state agencies with programs targeting vulnerable populations. These agencies could, in turn, contract with community action agencies, weatherization providers, local departments of social services, and others who currently provide advocacy and outreach to this group of Virginia consumers.

A representative of the Association of Energy Conservation Professionals—a group whose members provide services under the Weatherization Assistance Program (WAP)—concurred with VCAP's assessment, noting that WAP's network, with additional funding and training, could assist low-income consumer in preparing for restructuring.

Customer Aggregation

Customer aggregation is viewed by many as the principal means by which residential and small business electricity customers will benefit from restructuring. Representatives of the Virginia Municipal League and the Virginia Association of Counties asked the task force to consider endorsing a proposal for locality aggregation in which localities would aggregate their residents through an "opt out" plan, often referred to as a "community choice" plan. Under community choice, a locality's residents would be included in the locality's electricity customer aggregation unless residents and businesses individually choose to opt out in favor of shopping for their own generation supplier. The Virginia Citizens Consumer Council also expressed support for the community choice plan.

A Virginia Power representative expressed concern about community choice. According to Virginia Power, such a proposal, if adopted in a Virginia restructuring plan, could prevent electricity suppliers from bringing competition to locality markets. Localities would effectively be contracting for most, if not all, of their residents' electrical load.

However, a Falmouth, Massachusetts selectman (similar to a town council member), whose hometown is aggregating its residents' electrical load under an "opt out" plan, said that such a plan has built-in consumer protections that cannot be found with private entities. Local governments, he told the task force, are existing institutions over which consumers have control, and which traditionally serve in the role of providing services to their citizens over the long term in a cost-effective manner. He also noted that over 50 communities throughout Massachusetts are actively pursuing community choice.

Virginia's electric cooperatives also addressed aggregation, noting the cooperatives' long history of providing aggregation services—traditionally to rural and other hard-to-reach electricity customers. However, with retail restructuring has come new opportunities for cooperative formation, said a representative the National Rural Electric Cooperative Association (NRECA). One of NRECA's newest members is a cooperative formed in New York City by a central organization representing 50,000 families that live in and own housing cooperatives. He also described consumer and industrial cooperatives forming in New England, Texas and in other parts of the country.

Future Task Force Activity

The task force will meet again on October 6 to review consumer protection, environmental concerns and energy efficiency issues. A final meeting is scheduled for October 27 to review a proposed final report to the joint subcommittee.

The Honorable Kenneth R. Plum, Co-Chairman
The Honorable Jerrauld C. Jones, Co-Chairman
Legislative Services contact: Arlen Bolstad