Virginia Pilot Program for Washington Gas Customers

• Two one-year programs to begin in January;
  
• Rolling Enrollment, 10% in first year;
  
• 29,000 Residential and 2,000 Commercial;
  
• Year two to grow to 20%.

Interest in Washington Gas' Maryland Program
Residential

• November 1996 - 6,200 participants;
  
• November 1997 - 18,100 participants;
  
• September 1998 - Targeted for 100,000.

Commercial

• June 1996 - 1,700 participants;
  
• June 1997 - 5,100 participants;
  
• June 1998 - Targeted - All 25,000.

Elements of Successful Maryland Collaborative Process

• Maryland PSC Staff;
  
• Consumer Advocate;
  
• Customers;
  
• Marketers;
  
• Washington Gas:
  • Somewhat different process/experience than in Virginia;
    
  • Maryland: Washington Gas' first time in Choice;
    
  • Attempt to ferret out all problems;
    
  • But not that different - we are now collaborating in Virginia with Marketers, offering community forums and have worked with the SCC for pilot approval.

Communications

• Customer Newsletters;
  
• Bill Inserts;
  
• Informational Letters;
  
• Call Center Representatives;
  
• Local Media;
  
• Community Meetings;
  
• Marketers.

Several Communications Issues

• Content of Message has included:
  • Benefits to consumers:
    • For first time, able to compare alternative providers;
      
    • Able to choose what's best;
      
    • Customers can and have saved money;
      
    • In future, an array of services will be able to be offered.
  • Important concepts:
    • You would be buying the commodity;
      
    • Distribution would continue to be made available at a regulated rate;
      
    • Both would be listed as separate items on your bill.
  • Technical program requirements:
    • How do I sign up?
      
    • Must sign consent forms;
      
    • Limited number of customers during pilot.
  • Frequently asked questions
    • Questions about the bill;
      
    • Breakout of charges;
      
    • Commodity charge;
      
    • Distribution charge;
      
    • Balancing charge.

Billing Questions

• Single Billing:
  • Preferred by customers;
    
  • In Virginia pilot, providing one bill by the Utility or separate bills by the Distribution company and marketer:
    • Agreeable to letting marketer also bill - presently working on the complexities in Maryland;
      
    • How does the marketer bill for services/products financed through the utility (such as gas appliances);
      
    • IT compatibility - smooth transition;
      
    • Presently, Y2K issue consuming resources to solve "other" issues.

Customer Expectations & Other Questions

• Savings:
  
  • Savings have been achieved;
    
  • Gas Commodity (savings) vs. Distribution (regulated);
    
  • Guaranteed savings -- $$ up front:
    • Competition provided opportunity for some marketers to provide up front savings with $50-$100 checks in the mail.

• Changes in Service:
  • Quality of marketer's gas (no change);
    
  • Marketer reliability (Maryland experience very good);
    
  • Safety-related services (continue to be provided by the Distribution side).

Customer Enrollment

• Must Streamline Process:
  • Started with something more complicated/complex;
    
  • Current consent forms are working;
    
  • Customers are provided with needed protections;
    
  • No slamming.

Marketer Relationships

• Change Perception of Marketer From Competitor to Partner
  • Competition is not between Distribution utility and marketer - competition is between marketers.

Customer Survey Results

• Large Majority Satisfied with Program;
  
• Liked Guaranteed Savings (better price or check up front) and Price Cap;
  
• Majority Would Continue in Program and Remain with Current Marketer;
  
• Some Problems:
  • Difficulty Understanding Bills;
    
  • Expected Greater Savings (Mild Winter).

Benefits of Pilot Programs

• Orderly Transition to Competition;
  
• Serves as a Data Gathering Mechanism on the Pros & Cons of Unbundled Services;
  
• Provides an Opportunity for Customers to Experience Choice on Trial Basis;
  
• Innovative Methods of Payment for Customers, Flexibility and Cost Savings:
  • Guaranteed Rate;
    
  • Fixed Savings over Utility Rate;
    
  • Price Caps;
    
  • Up front Payment;

Conclusion for Maryland Experience

• Open markets and Competition have resulted in Cost Savings and New Valued Products and Services for Customers:
  • Opportunities include:
    • HVAC sales and services;
      
    • Design-build services;
      
    • Non-utility natural gas sales;
      
    • Telecommunications joint ventures.
• Opening the Electricity market Will Provide Greater Opportunities for Innovative and Valued Packaging of Products and Services.

The next two months in Virginia

• Community Meetings at the 5 NoVA Community College Campuses;
  
• Notification in bills inserts;
  
• Researching other options like newspaper ads;
  
• Met with 15 interested marketers yesterday in Springfield.

Key Questions

• How will the customer education effort be paid for?
  
• Who will oversee what the literature says and how it looks?
  • Gas experience: gas company prepares and provides information which works fine so long as marketers are happy.