Introduction of the CECA/RF Report: "Restructuring the Electric Utility Industry: A Consumer Perspective":
The Report is an excellent overview of issues critical to consumers
It has been provided to members
Executive Summary to be posted on SJR 91 website
Additional copies available for stakeholders
CECA/RF participants (representing an extraordinary range of interest sectors) agreed that restructuring - done correctly - can be good for small consumers, and CNG agrees.
There's no easy way to make sure that residential consumers are taken care of. For them to share in the benefits of restructuring, it is necessary for every aspect of the program to be carefully crafted to assure that it really is possible for new competitors to enter the marketplace. Protecting consumers means taking all the steps necessary to allow competition to thrive.
As described in Part Two of the Report, the history of the gas industry since 1984 illustrates that transition issues can be overcome and restructuring can bring lower prices.
The restructuring experience of Pennsylvania illustrates that, where utilities and the State are committed to broad consumer education efforts, residential and other small consumers can be very receptive to the concept of choice in electricity.
The widespread consumer interest in choice illustrates the important role played by Pennsylvania's consumer education program.
Planning for consumer education began in January 1997 when the PUC requested utilities to include education plans in their restructuring filings. The PUC implemented its own comprehensive multimedia "Statewide Consumer Education Program" in February of 1998, well in advance of the July 1 beginning of enrollment.
Of the 5.25 million small electric customers in Pennsylvania, approximately 1 in 5 enrolled during the first week. By the end of the 5th week, ending on August 2, 1.75 million, or one in three, were enrolled.
CNG's own market research supports the findings of the PUC's focus group testing and other feedback - Pennsylvania consumers are interested in, supportive of, and pretty well informed about electric choice.
Get an early start on consumer education. Restructuring should be accompanied by a long-term, comprehensive education effort, using public funds but with strong utility involvement.
Utilities have the information infrastructure, can play an important role in a comprehensive program. Virginia should not rely solely on utilities to provide consumer education, and utilities' consumer education materials should be separate from their marketing efforts (e.g., direct mail instead of utility bill inserts).
The most effective consumer education program will probably be one that is led by the SCC, with assistance from the Attorney General and the Consumer Protection Division of the Department of Agriculture and Consumer Services. This approach would take advantage of Virginia's existing consumer protection resources. This is not a time to reinvent the wheel.
Marketers don't have consumer information infrastructure and it doesn't make sense to look to them to play a role in the education process. However, they certainly should be required to comply with truth-in-advertising standards, particularly to substantiate any special "green power" or other claims.
On the topic of "green power," there are a number of indicators that a significant portion of residential consumers would be willing to pay more for electric power that they regard as relatively clean. The CECA Report recommends that customer electric bills should include information summarizing regional source and emission data, and this could help consumers to make decisions about the claims of marketers that elect to offer green power.
CECA/RF members engaged in much discussion but did not reach broad conclusions about whether restructuring legislation should attempt to address environmental issues. However, the Report did conclude that green marketing combined with consumer disclosure will create an opportunity to encourage renewables, and it also urged that constraints on the transmission of green power should be eliminated.
In particular, the Report called for efforts to standardize interconnection to the grid, so as not to discriminate against the development of distributed energy. CNG agrees that a benefit of restructuring is that it can result in market access for all forms of small-scale dispersed power, including electricity from clean, efficient gas turbines.
For Virginia, it is particularly important that interconnection and other policies be scrutinized to eliminate barriers to the development of distributed generation facilities, because they can serve as part of the solution to problems associated with constrained transmission.
Aggregation represents an opportunity for the free market to assist consumers in obtaining the best package of prices and services. Aggregation is evolving, and restructuring legislation should contain broad flexibility to permit and encourage aggregation. CNG believes aggregation can be good for both consumers and marketers, but the benefits will vary widely, according to the real potential for delivering cost savings.
Marketers will look for opportunities to aggregate, and consumers will as well. We believe that aggregation will be driven from both ends. We believe, for example, that retirement communities, apartment complexes and similar planned developments provide excellent opportunities for aggregation, and we're beginning to see that in some other states. Other initiatives, where customers in a group are spread over a wide geographic area, may be less successful.
Counties and municipalities should be permitted to act as aggregators. As Virginia is a Dillon Rule jurisdiction, the General Assembly may want to provide local governments with specific authority to act as aggregators.
Aggregators who are not also marketers should be required to form alliances with licensed marketers and should be required to meet minimum criteria established by the SCC to ensure that aggregators have access to the grid.
Finally, Consumer benefits programs such low income assistance LIHEAP should be continued, and we believe those should be funded through a non-bypassable wires charge. CECA and CNG also support a universal service program with the goal of ensuring that low-income consumers are no worse off from restructuring.
Of course I'd be happy to answer any questions, either about the views expressed in the Report, or CNG's own experience in the restructuring process.