Remarks of
Eva S. Teig
Senior Vice President - Virginia Power
To The SJR 91 Subcommittee
Consumer, Environment and Education Task Team
August 18, 1998
Mr. Chairman and members of the Subcommittee, my name is Eva Teig. I am senior vice president of External Affairs and Corporate Communications at Virginia Power.
I want to begin by applauding the Subcommittee for establishing a task team to address consumer and environmental protections -- the most important and far-reaching issues in the debate about electric utility restructuring.
As you know, Virginia Power has roots that run very deep in the Commonwealth's history - back to the days of George Washington, in fact, when the General Assembly authorized the creation of the Appomattox Trustees to improve navigation on the Appomattox River. Our life as an electric utility began some 80 years ago. We are proud of our Virginia roots and the vital service we provide to the homes and businesses of the Commonwealth.
I'm very grateful for the opportunity to participate in today's discussion and to share Virginia Power's position on consumer and environmental protection provisions that will be a vital and necessary part of future state deregulation legislation.
Over the past several months, we have received valuable input from a broad range of civic, consumer and environmental groups. We have met on several occasions with representatives of the Virginia chapters of the NAACP and the National Federation of Independent Businesses; the Virginia Farm Bureau; the Department of Social Services; the Virginia Council Against Poverty; the Office of the Attorney General; the Virginia Citizens Consumer Council; the Southern Environmental Law Center, the Sierra Club and the International Brotherhood of Electrical Workers.
In addition, I have made numerous presentations to many different civic and community groups around the Commonwealth on the topic of electric utility restructuring. In all cases, we have listened carefully to their views and concerns about deregulation, which are reflected in the comments I'm going to make today.
First are what I would group under the general category of UNIVERAL SERVICE ISSUES.
Universal service
Because electricity is so critical to modern life, there must be provisions in law that guarantee access to and availability of safe and reliable electric service at affordable rates to all who desire those services. In this we are in complete agreement with the Virginia Citizens Consumer Council, the AARP and others.
Virginia Power recommends that the company's EnergyShare fuel assistance program become the statewide universal service program to which all electricity suppliers contribute. We think this makes sense because of the program's strong name recognition and its extraordinary success as a heating assistance program.
As you probably know, EnergyShare began in 1983 at the instigation of retired SCC Commissioner Preston Shannon. Contributions to the program come from Virginia Power, its customers, employees and area businesses. The funds are used to help needy individuals and families pay for any type of fuel and are administered by local health and social agencies. Donations to EnergyShare during the 1997-98 heating season exceeded $1.2 million, which were distributed to more than 18,000 Virginians in need.
Supplier of last resort
Virginia Power is already on record as favoring the incumbent utility as the supplier of last resort in order to assure service continuity and reliability to all consumers.
Low income programs
We also support home weatherization and other energy conservation programs designed to assist low-income citizens. These types of initiatives were originally funded by the federal government -- primarily through the Low Income Home Energy Assistance Program, a block grant program that is now targeted for elimination. We believe the costs associated with low-income fuel aid programs also should be recoverable through a wires charge over the life of the program or service.
SUPPLIER CONDUCT ISSUES
Here we're talking about the rules, procedures and standards governing the way electricity suppliers do business and interact with consumers. The fundamental principle is that all suppliers must be held accountable to uniform standards of conduct.
Licensing and Enforcement
As we stated in our June 3 testimony before this Subcommittee, there must be a uniform set of rules that apply to all in-state and out-of-state suppliers. All suppliers who want to operate in the Commonwealth should be required to obtain a license from the State Corporation Commission.
The SCC must be satisfied that all suppliers have demonstrated financial responsibility, operational ability and contingency planning that includes a reserve margin sufficient to serve their customers. Substantial penalties should be imposed on suppliers who fail to comply with these requirements.
The SCC also should have the authority to oversee supplier contract terms, revoke licenses, order customer refunds and maintain existing reliability and safety standards for consumer protection.
Privacy
Customers also have told us that privacy is very important to them. So we favor provisions that require a customer to sign up with a supplier in writing - not over the telephone - and written permission from the customer before any personal, billing or credit information can be released. In addition, customers should have five working days to cancel any contract entered into with a supplier. Safeguards to limit intrusive telemarketing practices and to prevent unfair marketing tactics and fraud by competitive energy suppliers also must be developed.
Discrimination
Finally, there must be strong anti-discrimination language contained in any deregulation legislation that prohibits the refusal of energy services based on race, gender or income.
CONSUMER-RELATED ISSUES
A number of consumer issues will emerge as we move toward the implementation of retail competition, a few of which I will mention today.
Consumer Education
Virginia Power supports consumer education programs whose purpose is to inform consumers about the potential benefits of competitive electricity markets and the rights and protections they would be afforded under such a system. These educational programs should be funded by a public benefits charge and carried out by sources independent of utilities and others supplying electricity. This would eliminate any possible confusion and the potential for conflict that could arise from supplier marketing initiatives.
The SCC should be the principal agency that contracts with other agencies and non-profit organizations to carry out public information campaigns, especially for our most vulnerable citizens. These organizations would include the Area Agency on Aging, community action agencies, social service departments, the Virginia Farm Bureau, the NAACP and others.
Aggregation
We support giving smaller customers the right to aggregate, or join together to increase their "buying power" in the marketplace. This right should not be limited to residential customers but should include community action agencies and other small non-profit organizations that would undoubtedly benefit from aggregation.
Emergency Power
In addition, some kind of emergency power provision must be in place so that the SCC has the ability to ensure that no consumer is left without electric service in the event that a supplier fails to deliver on the service it has promised.
Metering and Billing
In regard to metering, billing and other related distribution services, we believe these activities should continue to be carried out by the incumbent utility - at least at the outset of competition. As the competitive marketplace evolves, these functions could be deregulated. However, the new competitive suppliers should be required to meet the current regulated standards and all applicable consumer protection requirements. Bills should have a standardized format that is customer-friendly.
Now I'd like to discuss some of the key ENVIRONMENTAL PROTECTION ISSUES.
Virginia Power has long supported research and development efforts designed to find innovative ways to improve environmental quality. And we are proud of the initiatives we have undertaken to accelerate the use of renewable energy sources and technologies, such as photovoltaics and electric vehicles, for example.
We fully intend to maintain this commitment in tomorrow's more competitive business climate. As a general principle, we fully support efforts to safeguard environmental quality in a deregulated generation market.
Funding for Renewable Energy Sources and Energy Efficiency
Although we may disagree with some groups on the exact percentage of renewable energy sources, we do support funding for clean energy resources and programs that promote energy efficiency and conservation. Funding for these efforts should be provided by a public benefits charge on all those who use the retail electric energy system.
Environmental Standards
There is some concern that in a competitive electric system, the use of low-cost fossil generation will grow, resulting in higher emissions levels and a deterioration of environmental quality. However, in a competitive world, utilities will continue to comply with all federal and state environmental rules and regulations or face the appropriate penalties. Questions about tighter emissions controls will have to be dealt with at the federal level due to the interstate nature of the issue.
Labeling
Labeling is an important issue, and Virginia Power supports having some mechanism in place that ensures not only uniform disclosure of prices, but also the supplier's fuel mix and the relative environmental impact of power generation. Above all, it is essential that this information be presented on the customer's bill in a manner that is clear and understandable.
Mr. Chairman and members of the Subcommittee, that is a relatively quick overview of the major consumer and environmental concerns our customers have told us should be included in electric utility restructuring legislation.
Workforce Issues
Allow me to point out that in addition to the consumer and environmental issues I have just discussed, Virginia Power has not overlooked the potential impact of competition on our workforce. We are fortunate to have a talented and highly trained group of employees as our company prepares for an entirely new way of doing business.
Should there be a need for retraining, outplacement services and other unemployment benefits as part of the electric power industry's ongoing restructuring, we favor using funds collected from a public benefits charge to accomplish those tasks.
Virginia Power's Community Involvement
I would like to conclude, Mr. Chairman, by simply reaffirming our view that as a public service corporation, Virginia Power has a special responsibility to the communities we serve. That means going beyond the meter on the side of our customers' homes and businesses. It also means working to improve the overall quality of community life.
We are proud of our long tradition of community service. And we intend to maintain that tradition even as our company and industry experience fundamental change.
As a company, we are strong supporters of many diverse community organizations that make Virginia a good place to live and work.
We have one of the nation's most active and successful employee volunteer programs, which reaches into the community in hundreds of different ways.
We annually provide educational grants to Virginia's elementary and secondary schools that help students improve their math and science skills.
And our economic development programs offer valuable marketing assistance to many small communities whose local governing bodies cannot afford their own economic development programs. These collaborative efforts between the public and private sectors are critical to bringing new jobs and businesses to the Commonwealth.
These are just some of the ways we give something back to the communities we serve. We recognize that our civic performance is an integral part of our overall corporate performance; and that the future of our business is closely linked with the future of our communities.
Finally, as part of our retail competition pilot project, Virginia Power will hold a public participation workshop in September to continue the important work of helping educate consumers about the transition to customer choice and to get additional feedback from them. The pilot project could be a useful tool for testing many of the ideas discussed today.
We want very much to avoid the mistakes that were made when the telephone industry was deregulated. We can learn from the experience of others and get this process right the first time. That way, Virginia can enjoy the benefits of competitive electricity markets - without chaos, without disruption and with the same high levels of safety and reliability we all have come to expect.
Thank you again for the opportunity to present Virginia Power's views on these important matters.