Good Morning. The Staff appreciates the opportunity to offer comments on consumer protection, education, and environmental issues in the context of electric industry restructuring.

While there are several important consumer protection issues associated with electric industry restructuring, we believe that the most critical consumer issue that must be addressed is the potential for market power abuse by the current large investor owned utilities. These vertically integrated utilities currently control virtually all of the transmission and generation facilities within their service areas. The successful development of a truly independent and effective ISO or Transco may help to alleviate the vertical or transmission market power problem by ensuring that competitive suppliers have fair and open access to transmission facilities. However, we do not believe an ISO can be expected to satisfactorily resolve the horizontal or generation market power problem associated with the concentrated local ownership of generation facilities within a transmission constrained area.

Consequently, we believe two essential consumer protection measures are necessary. The first is the provision of an extended embedded-cost "rate freeze" or "rate cap" for current customers of the IOUs that wish not to choose an alternative supplier. The second is retention of your jurisdiction over generation assets. Both the rate freeze or rate cap mechanism and State jurisdiction of generation assets should be maintained at least until an objective finding can be made that sufficiently robust competition has developed in the market to effectively replace regulatory price protections. It should be noted that these protective measures may need to remain in place much longer than frequently discussed transition periods of three to five years. Competition will develop and evolve at its own pace, not on a predetermined schedule.

In short, "Customer choice" and "deregulation of generation assets" are not the same. The provision of customer choice is a necessary initial restructuring step to stimulate the development of competition. On the other hand, deregulation of generation assets should be a final step. The premature deregulation of generation assets could result in an unregulated monopoly. And, once generation assets are released from State jurisdiction, it may be difficult or impossible to recapture such jurisdiction. But I want to emphasize that customer choice can commence prior to the deregulation of generation.

Electric industry restructuring will require the development of several other consumer protection measures. Some form of licensing or registration process for competitive entities should be developed to ensure financial solvency and technical reliability. Similarly, a Code of Conduct for such entities, including utility affiliates, should be developed to ensure fair marketing and advertising practices, the prevention of unauthorized switching of customers, consumer fraud protection, and compliance with applicable requirements established with respect to customer deposits, metering, billing and collection (including late payment fees and disconnection), non-discrimination, customer information privacy, and consumer complaint procedures. Enforcement mechanisms and processes must be also be developed perhaps including license revocation or suspension and financial penalties. Additionally, provisions and rules must be established for a provider of last resort to ensure universal service. With respect to the provider of last resort, consideration should be given as to how to fairly distribute the burden of a potentially disproportionate share of uncollectible accounts among all electric consumers.

Obviously, one critical and challenging task will be consumer education. Many consumers do not have a basic understanding of electric industry restructuring at this time. In California and Pennsylvania, massive consumer education programs have been undertaken to inform consumers. In fact, in California, approximately $90 million was earmarked for such an effort. These States have employed a combination of focus groups, mass media television and print advertising, direct mail, community-based organization and special interest outreach programs, websites, and telephone hotlines. The California Public Service Commission even established a new consumer services division with an education unit and an independent Electric Education Trust to ensure independent education, advocacy, and research for residential and small business customers. While consumer education efforts alone do not ensure successful restructuring, a failure to educate consumers may very well seriously damage the restructuring process.

Generally, consumers will need to know how to shop for and compare alternative suppliers with respect to bottom line prices, reliability, customer service, and contractual terms and restrictions. A segment of consumers are also interested in the environmental implications of suppliers' resource portfolios.

In addition to funding, a key issue for the General Assembly will be to decide and assign responsibility for such an education effort. This may include the utilities, the Commission, other State agencies, outside professional services, or most likely some combination thereof.

With respect to the environmental impact of electric industry restructuring, some parties claim that the environment will be harmed while others predict a positive impact. There are valid arguments underlying both positions and we believe it is impossible to predict such impacts with certainty. In fact, it very well could be that the short-run and long-run impacts are very different. In any event, since the main environmental issue concerns generating plant air emissions, the Assembly will have to decide whether current Federal and State environmental protections are adequate or if additional measures can and should be taken. Typical actions taken by aggressive States on this front include the incorporation of non-by-passable wires or customer charges, which are used to fund renewable energy projects and conservation and energy efficiency programs that may not be economically viable in a competitive market from a utility perspective. Such charges represent additional mandated costs to consumers and, therefore, involve fundamental public policy that must be addressed by the Assembly.