Public Benefits Charge

The public policy decision must be made whether it is appropriate for the government to raise funds for the support of low income subsidies, weatherization, energy efficiency, the promotion of renewables, and other suggested programs. If the decision is made that it is appropriate to raise such funds, the next question is how to collect the funds. The funding mechanism may be direct, through the general tax revenues of the Commonwealth, or an indirect tax through a public benefits charge to electric ratepayers.

Consumer Education

A clear distinction must be made between 1) the marketing and advertising done by utilities and energy suppliers to promote their product and 2) the efforts to educate the public on restructuring and consumer choice. The use of public funds must only be used for educating the public.

Effective consumer education may be an expensive undertaking. The SCC, other state agencies, independent board or whomever is selected to oversee the consumer education process will need funding for new staff, consultants or whatever manpower proves necessary. Special skills will be needed to convey clear and understandable messages to all Virginians. It will be necessary to have a group of trained workers available to answer telephone questions related to restructuring. Although the consumer education program may not need to be continued for the long-term, it will probably be necessary for the first 2-3 years.

Aggregation

The Staff believes that aggregation should be permitted in Virginia and that licensing would be appropriate. If municipal aggregation is allowed, will they be allowed to serve customers outside of their jurisdiction and will they be required to offer service to their residents on an "opt-in" basis?

Environment

The most important environmental issue related to restructuring is the effect upon air quality. The Staff believes a cohesive national policy is necessary for effective air quality regulation. We do not recommend the adoption of any new state emission standards or renewable standards as a part of restructuring. The only environmental disclosures we recommend are related to marketers of energy touted to be environmentally friendly, often referred to as "green power". Some entity should be responsible for monitoring and verifying the energy resources used by green power marketers to prevent fraud, although we recognize that it will be very difficult to perform such monitoring effectively.

Energy Efficiency

The Staff does not recommend a systems benefit charge for the promotion of energy efficiency. We believe that new services and products in the energy services industry may develop without government intervention. If the competitive energy markets send improved price signals, that should enhance demand side management opportunities. Special programs such as net metering may not need to be addressed in legislation at this time; rather such proposals may be considered first in pilot programs.

Consumer Protection

The ultimate consumer protection measure is ensuring that consumers will not be made worse off from moving to competition. If competition causes rates to increase or reliability to decrease it cannot be considered successful.

Incumbent utilities must not be allowed to exercise market power. Extended price protection, by the use of price caps or other measures, should remain until an objective finding is made that sufficient competition has developed to effectively replace regulatory protection.

Other consumer protections will be necessary in a restructured industry, including provider of last resort rules and standards of conduct for suppliers. Consumer protection measures must be backed up by adequate enforcement penalties.

It is impossible to make a comprehensive list of consumer protections necessary because potentials for abuse may arise that we have not considered. Staff recommends that flexibility be maintained in developing standards of conduct and other consumer protection measures.