The Division of Consumer Counsel, Office of the Attorney General, ("Consumer Counsel") filed comments with this subcommittee on August 28, 1998, which included a section on consumer education and aggregation. These comments supplement our previously filed comments.

"[I]t is a truism that competition requires knowledgeable consumers and that a true market cannot develop without access to information."¹ Basically, consumer education falls into two categories: first, consumers must be informed that they have the opportunity to choose a generation supplier, and second, consumers must be given information for comparing rates and services in a form that is easy to understand.

The question of who should bear the cost for teaching consumers to be knowledgeable electricity purchasers should be determined by the General Assembly. One payment option is to require funding from those participating in the restructured market, e.g. generators, distributors, marketers and aggregators.

An impartial entity such as the State Corporation Commission ("Commission")², in conjunction with the Division of Consumer Counsel and other interested parties, should have the jurisdiction and budget to fashion consumer education programs, including the authority to disseminate that information through all forms of media advertising.

It is likely that many Virginians do not know that they may have the opportunity, in the future, to purchase their electric generation from another supplier.³ As such, consumer education must precede the commencement of solicitations by new generation suppliers. Some sources recommend that this education " . . . should begin at least six to twelve months prior to the introduction of choice."⁴ Consumer Counsel agrees.

Education programs must ensure that consumers have the information they need to function in a competitive marketplace. Educational programs should be tailored to teach the information needed by each of the individual customer classes. This includes information about:

1. the restructured market for electric services;
2. the choices available to consumers in that market;
3. the specific protections afforded them as consumers;
4. how consumers can protect themselves against unlawful, fraudulent and deceptive practices and where they should turn for assistance if they are subjected to such practices;
5. programs that offer assistance to consumers with high energy bills that may be unaffordable;
6. how consumers can reduce their home energy needs and thereby reduce the need for energy assistance;
7. comparison factors that can be used to shop between generation suppliers (e.g. price, supply mix, emissions, etc.);
8. how to read their electricity bills after deregulation;
9. the phone number and address of governmental agencies that can help them understand what choices are available to them, and to also assist with complaint and/or dispute resolution issues;
10. which company to call if they lose their power;
11. aggregation opportunities; and
12. any other issues deemed to be in the public interest by the Commission.

Policymakers should ensure that this information is available to all consumers.

In order to bring competition to the residential ratepayer, and small business or commercial users of electricity, it is envisioned that some forms of aggregation of small usage customers may emerge. The aggregation of small consumers will give the small user a market presence comparable to that of a larger user, by combining their purchasing power. Such enhanced market presence will likely result in "reduced transaction costs and the availability of innovative and/or highly customized packages for small users."⁵ In these ways, small consumers may see the advantages of a competitive market.

To further these goals, the General Assembly should ensure that aggregation is available on a voluntary basis to residential and small business consumers. Local governments should be encouraged to participate as aggregators with appropriate exemptions from regulatory oversight required of non-governmental aggregators. In that way, small consumers will be permitted to participate in the competitive market and the entity providing the service will be an accountable governmental agency.

Aggregators, brokers and resellers of power, however, have the opportunity to take advantage of the customer as the middleman in the sale and purchase of electricity. Accordingly, there needs to be a mechanism established to prevent and correct such abuse. The General Assembly should consider amendments to the Virginia Consumer Protection Act, Code of Virginia § 59.1-196 et seq., to ensure that its fundamental protections, such as, the right of private action and government enforcement by the Office of the Attorney General, the various Commonwealth's Attorneys, and local, city, county and town attorneys, and the prohibitions stated therein, apply to the sales of and contracting for electricity. Public service corporations regulated and supervised by the State Corporation Commission currently are excluded from coverage by the Act.

The General Assembly should develop a flexible mechanism providing for the development and implementation of procedures for consumer education and aggregation consistent with these comments. Both are essential to the development of a competitive generation supply market in Virginia.

Consumer Counsel appreciates the opportunity to present these comments to the members of the Joint Subcommittee Studying Electric Utility Restructuring (SJR 91) and stands ready to provide any further assistance the Subcommittee may desire.

⁵Id. at 4. The Consumer Union and the Consumer Federation of America recently noted that transaction costs could be minimized by policies that "[f]acilitate the aggregation of small customers, especially municipal aggregation, which will reduce overhead." Dr. Mark Cooper, Consumers Union and Consumer Federation of America, The Residential Ratepayer Economics Utility Restructuring: Balancing All of the Costs and Benefits, 41 (July 1998).