SB 1269

Legislative Transition Task Force of the Virginia Electric Utility Restructuring Act

December 8, 1999, Richmond

The task force met for a sixth time to hear the State Corporation Commission's (SCC) presentation of its consumer education plan. The commission also gave the task force an update on its implementation of the Restructuring Act, and stakeholders presented additional proposals for amendments to the act.

SCC Implementation of the Restructuring Act

The solicitor general of the SCC updated the task force on the commission's implementation of the act. Commission staff has prepared a draft set of rules for net energy metering. The commission is still awaiting comments on its proposed procedures for rate cases prior to the commencement of restructuring, which were due December 21, 1999. The hearing examiner in the hearing on Virginia Power's pilot program issued a report on November 30, and the parties have 21 days from that date to comment. After the AEP pilot hearing, which included a staff recommendation for negative wires charges, the SCC and AEP have been negotiating a compromise to address the issue.

The commission recognizes the legislative intent regarding negative wires charges but is trying to reconcile that with the portion of the Restructuring Act preventing the capped rates and wires charges from exceeding the capped unbundled rates. AEP and the SCC are working together to develop the appropriate amendments to address the issue. Finally, the commission completed the consumer education plan and circulated it to members of the task force on December 1.

SCC Consumer Education Report

The director of the Division of Information Resources presented the SCC's consumer education report. The objective of the "Virginia Energy Choice" plan is to provide Virginians with relevant and easy-to-understand information without creating an advantage for one competitive supplier over another. The commission will provide objective, credible information on how a deregulated market will operate to give residential and small business consumers a greater opportunity to become full participants in that market.

The commission has tried to determine, through review of similar efforts in a dozen other states, the most efficient means of educating the public about deregulation of the electricity market. The plan is based on the basic principle that consumers have not had to assess competing energy service offers and weigh their costs, risks and benefits. The program will work with the commission's rules for retail access to ensure that the market develops in a manner that facilitates competition while ensuring service reliability and consumer protection. Although this plan is specific to a retail electric market as directed by the act, it has been designed to be energy neutral and could easily emphasize customer choice and the mechanics of choice for both electric and natural gas supply, offering "one-stop educating." The commission will create an education advisory committee to receive input and suggestions from those with a direct interest in the education effort.

The education program will be coordinated with the commission's rules governing the marketing practices of public service companies, licensed suppliers, and other providers. Enlisting the involvement of community-based organizations, with which consumers already have established relationships, will be an important means of educating consumers.

The "Virginia Energy Choice" consumer education plan covers five years from 2001 through 2005. The timing of plan elements is keyed to dates connected with the development of retail access throughout Virginia. A toll-free number and a web site for Virginia Energy Choice will be operational shortly after the commission issues final orders on the pilot programs, and the commission has created a position for a full-time employee to help administer the plan. The education plan will be continually evaluated during its five-year run, and adjustments will occur as necessary to ensure that funds are being spent in the most cost-effective manner.

The total estimated cost of the five-year Virginia Energy Choice education plan is just over $30 million, with an average estimated annual cost around $6 million. The annual cost to each Virginian is 89 cents. The figures are subject to change as the effectiveness of the plan is determined through continuous program monitoring. Education programs being implemented in other states that are introducing retail competition for energy services have ranged from 55 cents to $1.45 per resident.

Mass media marketing and advertising comprise nearly 70 percent of the projected cost. The plan proposes to involve a variety of consumer groups and community-based organizations to achieve direct contact with as many people as possible.

The report recommends that the educational program be funded through the Special Revenue Tax assessed on public service companies. The commission believes that the Special Revenue Tax is a funding option that is equitable to utilities; it is one that the commission has existing authority to administer; and it will allow the commission to direct the consumer education program and monitor consumer education cost recovery versus actual expenditures.

Proposed Amendments to the Restructuring Act

The task force continued to hear from stakeholders on proposals for legislative change regarding restructuring. The following recommendations were presented:

Future Task Force Activities

The task force has concluded hearing reports from stakeholders on the issues set forth in the Restructuring Act. Proposed legislative changes have been posted to the task force web site. The next meeting of the task force is tentatively scheduled for January 6, 2000, at 10:00 a.m. That meeting will be a work session addressing the legislative proposals submitted by December 17, 1999.

The Honorable Thomas K. Norment, Jr., Chairman
Legislative Services contact: C. Maureen Stinger