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In addition to supporting proposals expected from the Virginia State Corporation Commission designed to stimulate retail choice for electricity customers, Old Mill Power Company proposes the following change to §56-587.J of the Code of Virginia for the 2003 Legislative Session:
§56-587.
J. Municipal electric utilities shall not be required to provide consolidated
billing services to licensed suppliers, aggregators or retail customers. Municipal
electric utilities and utility consumer services cooperatives shall not be required
to undertake coordination of the provision of consolidated or
direct billing services by suppliers and aggregators; however,
the exemptions set forth in this subsection shall not apply if any such municipal
electric utility or utility consumer services cooperative, or its affiliate,
offers competitive electric energy supply to retail customers in the service
territory of any other Virginia incumbent electric utility. The Commission may
permit any municipal electric utility or utility consumer services cooperative
that pursues such competitive activity to maintain such exemption upon application
to the Commission demonstrating good cause for relief. In addition, upon petition
by a utility consumer services cooperative, the Commission may approve the provision
of competitive metering services by licensed providers for large industrial
and large commercial customers of such cooperative on or after January 1, 2002,
and for residential and small business customers of such cooperative on or after
January 1, 2003, as determined to be in the public interest by the Commission
consistent with the criteria set forth in subsection E.
Rationale:
The proposed change removes two words from the existing Code that currently allow municipal electric utilities and electric cooperatives to decide whether their customers should have the right to be billed separately by competitive energy service providers for the energy services that such suppliers provide.
Under direct billing, competitive suppliers provide customers who choose this option with a bill for the supplier’s portion of each customer’s electric service rather than having the cost of that service included as a separate line item on each customer’s local distribution company bill. Participating customers receive such bills directly from their chosen suppliers, hence the name "direct billing". In such cases, the willing customer-participants--and willing customer-participants only--receive separate bills from their municipal electric utilities or electric cooperatives for electricity distribution service. Because such willing customer-participants receive two bills—one from their local distribution company and one from their competitive energy supplier, each for just the services provided by each entity--direct billing is sometimes referred to as "dual billing".
Direct billing enables suppliers to be responsible for their own invoicing and bill collection, enables suppliers to establish brand identities with their customers that go beyond being included as nothing more than a single line item on an invoice that prominently carries their competitor’s letterhead and logos, and enables suppliers to include explanatory and supplementary billing information in the same envelope as the invoice itself at the lowest possible cost to the customer without having to seek the approval of, and then paying, the local distribution company for including such explanatory and supplementary billing information in the same envelope with the customer’s invoice.
There is no downside to suppliers associated with the proposed change.
The advantage to customers of direct billing is that their competitive energy suppliers can provide explanatory and supplemental billing information in the same envelope as the customer’s invoice at the lowest possible cost and that their competitive energy supplier’s letterhead, logo, and contact information can appear at the top of the invoice that actually bills them for the competitive energy supplier’s services.
Because direct billing is an option that a customer can willingly choose, there is no downside to customers associated with the proposed change.
The advantage to municipal electric utilities and electric cooperatives of direct billing is that they do not have to burden their "back office" computing systems with receiving billing information from competitive energy service providers that is unrelated to the distribution services that the municipal electric utilities and electric cooperatives provide to their customers, the municipal electric utilities and electric cooperatives do not have to coordinate their proposed billing inserts with those proposed by their competitors, and customer service representatives of the municipal electric utilities and electric cooperatives will not be burdened by phone calls from customers who use the contact information in the letterhead and logos of their utility-consolidated bills to ask questions about competitive energy supplier charges that the municipal electric utilities and electric cooperatives are not responsible for.
The incremental cost to municipal electric utilities and electric cooperatives that allow their customers to choose direct billing is so small as to be immaterial: The only adjustment required to a municipal electric utility’s or electric cooperative’s billing system is to enter blanks where the competitive energy supplier’s charges would otherwise appear or, at most, to enter a code in that field indicating that the customer has chosen to be billed directly by their competitive energy supplier.
The only known downside to municipal electric utilities and electric cooperatives of the proposed change is that they would no longer be able to collect fees from suppliers and customers for unwanted, utility-provided billing services.
The proposed change is desirable for the 2003 legislative session in order to help competitive energy suppliers position themselves for more effective competition and in order to give customers who want to choose the direct billing option another one of the many benefits of electricity deregulation that have so far eluded them because of well-intentioned legislation that needs "fine-tuning".