The Division of Consumer Counsel, Office of the Attorney General ("Consumer Counsel"), presents these comments on behalf of consumers to the Consumer, Environment & Education Task Force (SJR 91) ("Task Force"). Consumer Counsel is charged with representing the interests of the people as consumers; part of this responsibility entails making recommendations to the Governor and General Assembly concerning legislation that is necessary to promote and protect those interests. (See Va. Code § 2.1-133.1.) These limited comments respond to written questions presented by the Task Force as a means of collecting information for the preparation of its final report and matrix. Consumer Counsel also provided written comments to the Task Force on August 18, and September 11, 1998.

Public Benefits Charges.

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

Consumers must be protected by maintaining reliable service at fair rates. The State Corporation Commission ("Commission") and the General Assembly, unlike some other states, historically have minimized rate subsidies, which has facilitated the development of fair rates in the Commonwealth. Consumers benefit from the fact that the price charged for electricity in Virginia is relatively low, when compared against prices charged in some other states. Any restructuring of the electric industry should provide safeguards to ensure that the Commonwealth retains its low cost advantages. Nonetheless, as the transition to a competitive market proceeds - and historical regulatory protections over the price of electric generation are lost - consumer protection issues must be reevaluated to determine what, if any, additional protections and programs are warranted for all customers, including low-income households.

Consumer Education.

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

Consumer education basically falls into two categories. First, consumers must be informed that they have the opportunity to choose a generation supplier. Second, consumers must be given information for comparing rates and services in a form that is easy to understand. Education programs should attempt to ensure that consumers have the information needed to function in a competitive marketplace.

8. When should these programs be conducted?

Consumer education should precede the commencement of solicitations by competing generation suppliers. This education should begin at least six to twelve months prior to the introduction of retail choice.

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

An impartial entity, such as the Commission, should have the jurisdiction and budget to fashion consumer education programs.

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

The Division of Consumer Counsel should participate in education programs and, like the Commission, should have the authority to disseminate information through all forms of media advertising. Other interested parties also should be encouraged to participate in consumer education programs.
11. How should such programs be funded?

The General Assembly should determine who bears the cost of teaching consumers to be knowledgeable electricity purchasers. One payment option is to require funding from those participating in the restructured market, such as generators, distributors, marketers, and aggregators.

12. 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.

It remains an open question as to when the transition to retail competition will be "completed." Consumer education programs should continue "during" the transition in a form determined by the Commission and the other interested parties participating in the same. The need for consumer education programs, after the transition is "completed," should be reevaluated at that time.

13. Please identify any other issue(s) falling under this topic you believe are important, and provide comments on that issue.

Education programs should include information regarding, among other things:

(1) the restructured market for electric services;
(2) choices available to consumers in that market;
(3) specific protections provided to consumers;
(4) how consumers can protect themselves against unlawful, fraudulent, and deceptive practices, and where to turn for assistance if subject 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 (such as price, supply mix, and emissions);
(8) how to read electricity bills after electric restructuring;
(9) the phone number and address of governmental agencies available to help consumers understand choices, and to assist with complaint and dispute resolution;
(10) the name and phone number of the company to call upon loss of power;
(11) aggregation opportunities; and
(12) other issues deemed to be in the public interest by the Commission.

Customer Aggregation.

14. Should customer aggregation be permitted in Virginia in conjunction with restructuring?

In order to bring the benefits of competition to the residential ratepayer, and small business or commercial users of electricity, some forms of aggregation are expected to emerge. Aggregation of small customers, and the combination of their purchasing power, should enable these consumers to develop a larger market presence. This enhanced market presence may result in reduced transaction costs, innovative service offerings, and customized packages for smaller customers. In this manner, small consumers may see the advantages of a competitive market.

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

Yes. This licensing function should be performed by the Commission.

16. Should aggregators be subject to any other requirements? If so, describe them.

The Commission should be permitted to establish appropriate licensing requirements for generation suppliers, including aggregators.

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

Yes.

18. Should localities be permitted to aggregate their residential load on an "opt out" basis?

Aggregation should be available to residential customers on a voluntary basis. Local governments should be encouraged to participate as aggregators with appropriate exemptions from regulatory oversight required of non-governmental aggregators. This will provide small customers one way in which to participate in the competitive market, and the entity providing the aggregation service will be an accountable governmental agency.

Consumer protection.

23. 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?

Flexibility in this regard could be placed with the Commission. For example, electric suppliers could be required to provide customers with information regarding price, service reliability, environmental attributes, customer service records, and contract terms. This information should be available in a consistent manner for each supplier.

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

The Virginia Consumer Protection Act (Va. Code § 59.1-196 et seq.) ("Act") should be amended 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 city, county and town attorneys) and the prohibitions stated therein apply to the sales of, and contracting for, electric generation. Public service corporations regulated by the Commission currently are excluded from coverage under the Act.

25. 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?

These limits could be established by the Commission.

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

Bills should include rate and environmental disclosures that are presented in a uniform manner by all suppliers. Additional information could be established by the Commission.

27. 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 statute?

Yes. The General Assembly should consider a seven-day right of recission.

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

Yes. Statutory protections should be adopted that protect customers from having their generation supplier changed without their informed consent.

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

Consumers should be protected against unfair, deceptive, fraudulent, or otherwise unlawful telemarketing - or other - practices. Amending the Virginia Consumer Protection Act to include generation suppliers will assist in this regard. In addition, the Commission and the Attorney General should have authority to enforce compliance with marketing practices that are in the public interest.

30. 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?

Consumer complaint and resolution procedures should be established. For example, the Commission could provide assistance in resolving complaints regarding service providers over which it has regulatory and/or licensing authority. Consumer safeguards also should include a private cause of action to supplement protections provided by the Commission's licensing and other policies. A private cause of action should provide remedies to consumers injured as a result of abuses and fraudulent conduct. The Virginia Consumer Protection Act should be amended to facilitate this purpose.

31. Please identify any other issue(s) falling under this topic you believe are important, and provide comments on that issue.

The Commission should have the authority to identify, punish, and correct abuses by aggregators, marketers, and other suppliers. It should have the ability to refer criminal conduct to the appropriate law enforcement agency, and to enforce administrative sanctions and penalties. Those penalties should include, but not be limited to, revocation of State licenses to engage in business in the Commonwealth as a generation supplier or broker. In addition, the Office of the Attorney General should have authority to address market abuses.

Environmental Protection.

32. Should Virginia restructuring legislation in any way promote or encourage the use of renewable energy in the generation of electricity? If so, how?

Environmental disclosures should be included in customer bills. In addition, suppliers wishing to sell "green" power should be required to include verifiable environmental disclosures in their marketing materials. In this manner, consumers can become more cognizant of their environmental impact of the electric purchasing decisions - and can choose whether to alter their purchasing decisions accordingly.

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

Consumers should be informed of the type of generation that they are purchasing, and the emissions from such generation. For example, a customer's electric bill could show, among other things, the supply mix (coal, oil, gas, hydro, renewable, etc.) and the air emissions (NOx, SO2, and CO2) compared against a regional average.

October 20, 1998