Public Benefits Charges

• As part of implementing electric utility restructuring in Virginia, should the General Assembly establish any rate subsidy and/or energy efficiency assistance program for low-income households?

Yes. Electric service is vital for health and safety and therefore electric service must be guaranteed to all residents of Virginia. AARP maintains that the legislature must guarantee that essential electricity services are affordable for all residential customers, regardless of income.

• How should any such program(s) be structured in terms of eligibility?

Eligibility for affordability assistance should be open to any low-income customers who have qualified in the preceding 12 months to any means tested public benefit, including, but not limited to, Transitional Assistance for Needy Families, Supplemental Security Income, food stamps, Medicaid, general assistance, means-tested Veteran's Benefits, and Low-Income Home Energy Assistance. The assistance also should be open to recipients of any other means-tested program for which eligibility does not exceed 175 percent of the federal poverty level and to those whose annualized household income does not exceed 175 percent of the federal poverty level.

• How should any such program(s) be funded?

The funds for the bill reduction are to come from the distribution utility, and be raised by distribution rates set in ordinary rate cases.

• How should any such program be administered?

The SCC should oversee the program. The law should establish an automated enrollment program of matching customer accounts with lists of recipients of the means-tested programs listed above.

• Are there any programs that could or should serve as an alternative or supplement to any such programs? If so, describe.

Energy-efficiency programs for low-income customers should be a supplement to energy assistance.

Consumer Education

• What should be the general purpose of any consumer education program preceding and accompanying Virginia's transition to retail competition?

Almost every state that has passed restructuring legislation has recognized the importance of giving consumers a basis for exercising their rights in the new market structure. Virginia should likewise mandate the development of a consumer education program so that the residents of Virginia can make informed decisions in a restructured electric marketplace.

• When should these programs be conducted?

The programs should be conducted preceding the opening of the electric market to competition and for approximately the first five years of the opening of the market.

• Who, if anyone, should have regulatory oversight over such programs?

There should be a consumer education advisory board to assistance the Corporation Commission in developing the specifics of the education program. The Commission should have ultimate oversight of the program.

• Which state regulatory agencies, if any, should participate in this program, and in what capacity?

The Corporation Commission should oversee the program and the Attorney General's Office should participate in its development.

• How should such programs be funded?

The program could be funded either through the systems benefit charge or by a surcharge on all competitive providers that want to offer service.

• Should any long-term consumer education program be established to continue after the transition to retail competition is completed? If so, describe its scope, oversight and funding.

The Commission, approximately five years after the advent of a competitive marketplace, should open an investigation to determine the level of consumer knowledge and consumer ability to make informed choices in determining their providers and their understanding of restructuring in general. Based on the results of this investigation, the SCC should decide whether to continue or change the consumer education program.

Customer Aggregation

• Should customer aggregation be permitted in Virginia in conjunction with restructuring?

Not only should aggregation be permitted, but the SCC and the regulated distribution utilities should be required to encourage and facilitate the aggregation of residential consumers to ensure that they realize benefits from restructuring.

• Should aggregators be subject to mandatory licensing by any regulatory authority, or be required to furnish evidence of financial soundness?

Most states that have passed restructuring legislation have decided that competitive electricity suppliers must be licensed. That is, they must meet minimum standards in order to do business selling electricity in the state, they must agree to observe requirements set out by the state, and they risk losing their right to sell electricity if they violate these requirements.

The SCC should require applicants to supply the following information:

• evidence of ability to provide reliable service;
• evidence of the applicant's record in other states regarding consumer protection complaints;
• evidence of compliance with specific requirements of the state;
• evidence of the applicant's technical and managerial capacity to provide the services proposed in compliance with all applicable laws and policies of the state;
• a description of the areas where the applicant intends to offer service and the types of services it intends to offer, and if the applicant intends to serve residential or small business customers in an area smaller than the entire service area of an existing electric utility, evidence demonstrating that so doing would not result in unlawful redlining;
• disclosure of the names and corporate addresses of all affiliates of the applicant.
• Should aggregators be subject to any other requirements? If so, describe them.

The SCC should determine the need for requiring all competitive electric providers to post a bond with the SCC as evidence of financial ability to withstand market disturbances or to provide for uninterrupted service to its customers and to compensate consumers harmed by violations of consumer protection rules and laws.

• Should localities (counties, cities or towns) be permitted to aggregate their residential load?

Absolutely. A municipality should be allowed to conduct a bid process and select a competitive electricity supplier for their town or city. The supplier so selected would not only supply the governmental offices, but would be the presumptive supplier for the electricity customers in the municipality. Of course, consumers must have an opt-out right. Municipal aggregation can combine the best of local control and competitive markets, while allowing small customers to band together for better purchasing muscle.

• Should localities be permitted to aggregate their residential load on an opt-out basis?

Yes. An opt-out (or automatic enrollment with open enrollment options or windows) is essential to preserve the right sought by some customers to be able to choose their own supplier.

• Should localities be permitted to form inter-locality aggregates?

Yes.

• Should localities be permitted to aggregate load with private entities outside their territorial jurisdiction?

Yes, so long as they obtain the appropriate license.

• Should localities be permitted to aggregate load with private entities or localities outside of Virginia?

Yes, so long as they obtain the appropriate license.

Consumer Protection

• Should electric service providers and aggregators be required to disclose standard information in their marketing materials, and in their proposals and contracts for service? If so, what basic information should be provided?

Competitive electricity suppliers should be required to provide the SCC with information it needs to publish price data, information on price variability, and customer service information in a format to permit comparisons between price and service offerings of competitive electricity suppliers.

The SCC should determine a number of average bills for typical customer types and then should require the companies to disclose what the bills for these typical customer types would be, given the prevailing distribution rates and the supplier's price.

Providers should provide information on:

1. rates and charges;
2. applicable terms and conditions;
3. the percentage of each provider's total electric output derived from several categories of energy sources;
4. the rates at which the supplier's facilities emit a number of pollutants;
5. a record of customer complaints and the outcome of each complaint; and
6. any other information the SCC determines will assist customers in making informed decisions when choosing a competitive electric provider.

Suppliers should be required to provide a booklet with such information when service is initiated and annually after that.

• Should any kinds of marketing practices by electric service providers or aggregators be specifically prohibited? If so what practices should be barred?

Slamming and cramming should be prohibited. Suppliers should be required to follow applicable state and federal laws as well as specific restructuring statute requirements designed to prevent customer confusion. In particular, suppliers should be prohibited from leaving customers with the impression that their charges represent the total charges a customer will face. They also should be required to notify customers of all terms and conditions in writing at the time they initiate service. Suppliers should be required to provide a booklet with such information when service is initiated and annually after that. Suppliers also should be required to notify their customers of the availability of low-income discount rates and any standard offer rates. The law also should prohibit the use of misleading supplier names.

• Should Virginia restructuring legislation establish limits on the size of utility service deposits that may be required by electric service providers and aggregators? If so, what limits should be established?

Yes. Deposits should not be greater than the cost of one month's service.

• What kinds of standard information should electric bills contain after restructuring? If so, what information should each bill be required to provide?

To give consumers a basis for understanding the various components of their bills, the law should require that electricity utilities unbundle their bills. The unbundled bills should show the charges for the regulated monopoly components of the bill (e.g., transmission and distribution) separately from the competitive aspects of the service (electric supply).

Bills also should contain information on rates and charges and terms and conditions of the service provided. The bill should be written in understandable terms with type-face large enough for people to easily read.

• Should Virginians be given any statutory rights to cancel utility service contracts with electric service providers or aggregators within a specified number of days following acceptance? If so, what special rights of recission or cancellation should be provided in the statute?

Yes. Consumers should have a cooling off period of at least 1 week in which they can rescind their decision to use a particular supplier without any penalty.

• Should Virginians be given any statutory protection against unauthorized switching of electric service providers or "slamming?" If so, what anti-slamming provisions should be adopted?

Yes. Slamming and cramming should be prohibited. It should be unlawful for competitive providers to provide power or other services without first obtaining an affirmative choice verification. This affirmative choice verification should either be by the customer signing a letter of authorization, by third party verification, or by the completion of a toll-free call made by the customer to an independent third party. Upon the switching of a customer's service provider, the distribution utility must include an acknowledgment of the service switch, along with information on how to file a complaint regarding an unauthorized switch.

• Should Virginians be given any statutory protection against any electric service provider or aggregator telemarketing practices? If so, what?

The law should prohibit the use of misleading supplier names, such as "I don't know." This has been an issue in some states, where there is a telephone competitor getting consumers to switch to its service by having telemarketers ask, "Which telephone company do you prefer?" and when they get the predictable answer from many consumers, "I don't know," they take that as authorization to switch to their service.

• Should consumers be furnished assistance by any state regulatory agencies in resolving complaints against electric service providers or aggregators? If so, which agencies should be involved, and what should their responsibilities include?

The SCC should be empowered to hear consumer complaints against competitive electricity suppliers. If a small consumer has a complaint, it is likely to be too small to make it sensible to pursue in small claims court. Some administrative recourse is needed. The SCC is likely to be the most familiar with the types of issues raised by the dispute, and the integration of the dispute resolution function in the same agency that has licensure powers is likely to produce a more accommodating response from the suppliers.

The SCC also should be empowered to order restitution as well as to commence civil enforcement actions that could lead to monetary penalties, cease and desist orders, or license suspension or revocation.

Consumers also should have a private right of action so that they can seek redress in court for harms by suppliers. The SCC along with the Attorney General's office should have the authority to designate certain practices as unfair and deceptive acts and practices.

Environmental Protection

• Should Virginia restructuring legislation in any way promote or encourage the use of renewable energy in the generation of electricity?

There are two primary ways policymakers can encourage the development of such resources. One is to require power marketers to include a certain amount of such renewable power in their portfolio of power sources. Another is to raise funds to support research and development, or to help renewable power providers to sell their output at market costs (such as by subsidizing customers' purchase of above-market renewable power.)

• Should Virginia restructuring legislation in any way address air quality, directly or indirectly? If so, I what way?

The Commission's quarterly report should include information on the rates at which all suppliers' facilities emit a number of pollutants.

• Should Virginia restructuring legislation require electric service providers or aggregators to disclose generation fuels? If so, how should this requirement be implemented and administered?

The SCC should be required to gather information consumers will want to know and supply it to the public on a quarterly basis. This information should include the percentage of each provider's total electric output derived from several categories of energy sources, including coal, gas, nuclear, renewable energy, hydro-electric power, etc.

Energy Efficiency

• Should Virginia restructuring legislation in any way promote or encourage energy conservation or energy efficiency, e.g., encouraging installation of energy efficient equipment or energy efficiency monitoring equipment? If so, what incentives should the legislation include?

All customers have a stake in making the use of electricity as efficient as possible. The statute should require distribution utilities to provide energy efficiency programs to its customers.

Programs funded through the surcharge described below must be cost effective and should cost-efficiently use ratepayer dollars.

• Should Virginia restructuring legislation establish a public benefits charge for the purpose of encouraging research and development in the areas of energy conservation and efficiency? If so, how should it be assessed and administered?

There should be a per kilowatt charge to raise the funds to pay for these efficiency programs. Based on the Massachusetts restructuring model, the statute should call for a gradual reduction from 3.3 tenths of a cent per kilowatt hour to 2.5 tenths of a cent per kilowatt hour.