The working group attempted to translate the broad policies of
D.95-12-063 and the overarching goal of societal economic efficiency
into more tangible operational principles so as to provide practical
guidance to the restructuring proceedings. Although some parties
have referred to these as a "Consumer Bill of Rights,"
some parties do not agree that these are "rights" and
therefore believe the term is misleading. Because all parties
agree with the term "principles," that term is used
here without prejudice as to whether these are consumer rights.
DAWG participants developed eleven principles which could be supported
by most parties. Each of the principles was agreed upon in general
terms, but efforts to interpret them by defining terms and elaborating
the details led to controversies that could not be resolved. This
chapter therefore provides a simple statement of the generally
accepted principle in all its vagueness, then offers additional
interpretative language sponsored by one or more parties and states
pros and cons that reflect the differences of opinion about the
interpretive language.
Despite lack of unanimity concerning the interpretation of these
principles, they were forwarded to the various DAWG technical
committees and were used in developing and assessing specific
proposals and options. The reader will see these principles reflected
throughout the chapters of this report, particularly in the pro
and con arguments following the various alternatives
The remainder of this chapter presents each of the eleven principles,
plus interpretative language that has been suggested followed
by pros and cons that convey the reasons why an interpretation
is supported or opposed.
2.1. Right to Know
Customers must be assured of access to affordable, accurate, and
multilingual informational and educational materials which enable
comparison of price, quality, provider service record and terms
of service offered.
2.1.1. ALTERNATIVE: Suggested Interpretation
Such materials must be readily available to all customers, at
no cost for residential customers, and must be disseminated in
various languages through multiple media intended to reach different
customer groups. The materials must contain all basic information
necessary for customers to make informed decisions about electricity
suppliers, including suppliers' previous experiences and track
records in the market. The market offerings of all market participants
should be included in these materials.
Alternative 2.1.1. PRO
In order for a competitive market to function, customers must
have adequate information upon which to make choices. The information
must be readily accessible, understandable and adaptable for comparison
purposes. This Commission embraced this concept in its "Universal
[Telephone] Service Report to the Legislature" (December,
1995), and has ordered a matrix format by which the information
must be provided. A similar information offering is contemplated
here. But, because of differences among the parties, a specific
proposal for such a matrix was developed.
This concept requires no new bureaucratic structure, as the Commission's
Customer Service Division and existing community-based organizations
can monitor and oversee dissemination of such information.
Alternative 2.1.1 CON
1. Requiring that every customer have access to materials at no
cost creates a potentially large burden on those responsible for
funding informational and educational activities. Creating that
burden at this time is unreasonable, without first understanding
who will be burdened, and the extent of the Commission's informational
and educational policy decisions. Instead, the Commission should
recognize that the intent of the term affordable means that for
those who cannot afford to pay for information and education,
and where the Commission determines it to be necessary for all,
"no cost" materials should be made available.
2. Materials developed to help customers (e.g. large industrials)
make direct access decisions should be provided at affordable
prices.
3. It will not be possible, nor should it be desired, to create
a bureaucracy to collect, interpret, and then in a timely fashion
disseminate the constantly changing set of market offerings available
from market participants. The burden placed on market participants
to provide information about all new offerings will be too costly;
the bureaucracy that could handle such a data collection and dissemination
process does not exist, and because of cost exceeding value, should
not exist; and finally, the confusion created by the myriad of
materials generated will be greater than the benefits for customers.
Instead, consumers should be educated on how to evaluate options
by themselves, or with the assistance of organizations that have
been established to help those with special needs. As product
offerings are presented to consumers, those educated consumers
will then be able to effectively compare them with other product
offerings.
2.2. Right to Choice
Customers should have choices involving real tradeoffs of quality
or quantity versus cost.
2.2.1. ALTERNATIVE: Suggested Interpretation
All customers should have the ability to aggregate efficiently
on a non-discriminatory basis. Customers should have choices which
offer substantial savings and identifiable value.
Alternative 2.2.1. PRO
Choice must be meaningful, i.e., it should offer true differentiation
and sufficient value for which making a choice is deemed desirable.
For small customers, market choices will be limited unless they
can exercise some market leverage, which will come only through
aggregation. This is a threshold point of philosophical difference
among the parties and one that requires Commission clarification.
If the Commission's policies are not oriented towards promoting
small customer aggregation, then it is not likely that small consumers
will be active participants in the competitive market.
Moreover, vigilant supervision of the nascent market will be necessary
to ensure that barriers to competition have not been intentionally
or inadvertently constructed by any market players or by regulatory
policy.
Alternative 2.2.1. CON
1. Electric industry restructuring will not and should not be
expected to provide substantial savings and identifiable value
to all customers. For some, choices will be limited, with default
service provided by the UDC quite possibly the best choice available.
In fact, as inter- and intra-class subsidies are attacked by retailers,
those who have traditionally received the greatest subsidies may
well find an increase in service costs. The Commission should
therefore not saddle itself with a principle requiring all customers
to receive substantial savings and identifiable value. Instead,
it should make policy decisions to improve the societal economic
efficiency of the electric industry overall.
2. Aggregation is unlikely to result in better prices that those
from the power exchange, and therefore savings beyond those from
the power exchange market should not be anticipated.
3. Requiring that all customers have access to aggregation implies
that default aggregators will need to be designated in such a
way as to cover the entire IOU service territories. If Alternative
2.2.1 can be satisfied by the UDC/PX playing this role, then this
function is already provided for and needs no further action.
If, however, the intent of 2.2.1 is that all customers should
have access to an aggregator other than the UDC/PX,
this will involve substantial and probably contentious regulation
and/or subsidization to require or induce private aggregators
to fulfill this function. This question should be addressed as
part of a general inquiry into the "default provider"
function for the mature market, but need not be addressed for
the opening of direct access on 1/1/98.
2.2.2. ALTERNATIVE: Suggested Interpretation
It is insufficient to provide choice simply to customers at large,
because this excludes communities that are traditionally under-served.
Where competitive services are not available to certain customer
groups, barriers to competition that prevent access by these customers
must be eliminated. This may require affirmative efforts outside
of normal market forces. Monitoring mechanisms, analogous to the
anti-redlining regulations currently in place for large insurance
companies operating in California, should be instituted and analyzed
annually for enforcement purposes. Discrimination by providers
based on race, gender, ethnicity, and other unlawful categories
must be discouraged through appropriate sanctions and penalties.
Alternative 2.2.2. PRO
In contrast to outright discrimination, more subtle exclusions
from a full range of choices may occur for various under-served
communities. An affirmative effort to ensure that a full range
of choices is offered throughout California should be undertaken.
Alternative 2.2.2. CON
1. As discussed at several DAWG meetings, it is unrealistic to
expect all competitive providers to offer services everywhere
in the State. Providers will target the customer groups they desire
to serve.
2. As with any new start-up businesses, the initial market activity
could be quite limited, therefore all customers will not be reached
with new options.
3. Because of the metering and data communication issues, it may
be substantially more expensive to serve customers on a piecemeal
basis than on a geographic area basis.
4. Affirmative efforts suggest funding of programs which may divert
attention from developing the market itself.
2.2.3. ALTERNATIVE: Suggested Interpretation
The Commission should take actions that enable the market to provide
choices to consumers more efficiently. For example, the Commission
should seriously consider the universal metering proposals advance
by some in comments on the August 30, 1996 DAWG report, since
without such metering, consumers have no ability to benefit from
choosing when they use energy.
Alternative 2.2.3. PRO
In a freely functioning market, whether or not there are different
forms of generation services will be dictated by the needs and
expectations of consumers. If consumers are willing to pay more
for a fixed-term, fixed-price contract or if consumers are willing
to pay less for interruptible energy, then presumably electricity
service providers will be willing to offer such services. The
Commission's primary consumer choice role should be to oversee
the UDC's monopoly role to insure that all consumers are provided
fair and reasonable access to the electricity services market.
Alternative 2.2.3. CON
1. Right to choice does not COMPEL real-time metering. As discussed
in the August 30 DAWG Report, properly configured load profiling
permits tradeoffs of quality and cost without requiring interval
metering. Moreover, demand-side services and billing and information
services can enhance value or cost-effectiveness of electric service
without requiring interval metering.
2. The Commission is obligated to promote the will of the legislature.
AB1890 affirms the legislature's intent to make choices and information
available to the consumer; it does not solely rely upon the market
to make those happen.
3. Having interval metering is not sufficient to ensure that customers
receive hourly price signals. Consumers must also be purchasing
energy under contracts that feature hourly-varying prices. At
present, this type of pricing arrangement is only certain to exist
for those customer who purchase PX energy through the UDC under
the virtual direct access option. For direct access customers,
it is likely that retail marketers and aggregators will base their
contracts on a wide variety of pricing schedules. Because there
is so much uncertainty about features of the market that will
affect the very existence of hourly prices, we cannot yet know
whether hourly-interval meters will be of any value to the vast
majority of small customers.
2.3. Fair Dealing
All classes of customers should have access to choices and pricing
options without discrimination.
2.3.1 ALTERNATIVE: Suggested Interpretation
Affordable service options must be responsive to customer needs
and performance must be verifiable. Slamming, excessive rates,
over-billing and other marketing abuses that exist in the telecommunications
area must be prohibited and met with severe sanctions, including
license revocation, penalties, full restitution to the customer,
and a fund for community education. Energy providers must be made
responsible for the actions of their agents or representatives.
Some parties believe that rate de-averaging must be prevented;
that is, that low-income customers should not be charged higher
rates than other customer groups (unless higher rates are knowingly
agreed to in exchange for additional services and/or value). Complete
disclosure of credit terms, including compliance with the Equal
Credit Opportunity Act and Fair Credit Reporting Act, must be
required, and a provider of last resort or default provider should
be mandated at fair and reasonable rates for all customers.
Alternative 2.3.1. PRO
1. Current California statute requires nondiscriminatory pricing
for electric service. There are reasons to suspect that unscrupulous
operators will attempt to abuse some customers as has been the
case in telecommunication deregulation.
2. Electric service, as a necessary commodity, must be available
universally and equitably. Moreover, because electricity is a
prerequisite for participating in the increasingly necessary information
sector, electricity must be affordable so that citizens can remain
part of the nascent information network.
3. Availability of choice means that improved levels of service
quality must be generally available to all customers. Those customers
who wish to pay more (or less) to take advantage of service options
then have that choice. This principle cannot be interpreted, as
some parties do, that all service choices must be available for
no additional charge. Such an interpretation is illogical.
4. This principle goes beyond simply providing basic electric
service. It addresses scenarios where certain electric services,
such as advanced metering, energy management systems, self-generation,
and supply or demand-side management services are available for
all regions, to the extent this is practicable. The objective
is to avoid what has occurred in telecommunications deregulation,
where entire regions or classes of customers have been denied
access to digital, touch-tone and other important services.
Alternative 2.3.1. CON
1. Not all service choices need be affordable to all customers
in a deregulated industry. For example, improved levels of service
quality may be valued more highly by some customers than others.
Those who value it highly should be willing to pay the premiums
to offset costs retailers incur to provide it. Those who value
it less should make purchase decisions not by comparing their
expected value to a regulated, subsidized price created especially
for them, but by comparing the value they will get to the true
cost of service. For them, that cost of service may not be affordable.
Instead, they should choose other alternatives such as basic,
regulated electric service.
2. Protecting against discrimination is sufficient to address
fair-dealing issues. Creating a new regulatory framework to establish
acceptable bounds for competitive market prices will hamper the
creation of new products and services, and limit the success of
deregulation. The Commission should not establish policies that
create barriers to the introduction of new and creative ideas.
Instead, policies should be implemented to monitor market activities
and take strong corrective actions where retailers have acted
against the Commissionís express written conditions of
market participation. The additional suggested language addressing
discriminatory practices is therefore redundant, unnecessary,
or overly burdensome for a competitive market.
3. In an unbundled environment, those who have traditionally been
subsidized by others may lose their subsidies. If low-income groups,
because of their energy usage characteristics, on average experience
a rate increase, the Commission should not arbitrarily constrain
that result without good economic justification, which has yet
to be presented. The same is true if low-income customer usage
patterns cause their rates to be lower on average; they should
not be forced to subsidize all other customers.
2.4. Right to Redress
Regulatory oversight must continue to ensure that there is a neutral,
prompt, no-cost or low-cost and effective forum for resolving
customer complaints against electricity providers.
2.4.1. ALTERNATIVE: Suggested Interpretation
The forum must be no-cost, allow for instituting investigations
where warranted, and provide complaint resolution and redress
for all customers, including those from limited and non-English
speaking communities. Regulatory powers must include enforcement,
oversight and levying of penalties. Regulatory agencies must be
able to suspend or revoke a provider's CPCN or license, and to
impose monetary penalties to provide full restitution to consumers,
as well as penalties to be paid into a fund for consumer education.
Consumers must have the right to petition for enforcement actions.
Pending resolution of Commission investigations against providers
charged with slamming or defrauding large numbers of customers,
the Commission may order the provider to post a bond sufficient
to satisfy any likely judgment where the provider's place of incorporation
or association is outside California or where there is evidence
of fiscal instability.
Alternative 2.4.1. PRO
1. The competitive market will not develop equitably or quickly
unless there is a continuing regulatory presence. Regulators must
support their commitment to a robust competitive market with oversight
to ensure that complaints are addressed, abuses are prevented
and barriers to entry are minimized. Without enforcement power
and adequate staff, effective enforcement will not be possible.
2. Rapidly escalating complaints of fraud and slamming in telecommunications
following deregulation have highlighted the necessity for effective
and meaningful mechanisms for prompt, no-cost consumer redress
to be built in to any electric deregulation model. Both Pacific
Bell and the CPUC's Safety and Enforcement report enormous increases
in customer complaints, particularly with small, out-of-state
newcomers to the market. Reputable companies should support consumer
redress and protections that will discourage "quick buck"
artists and fly-by-night scam operations from coming to California
for ill-gotten profits.
3. While the CPUC appears to be the best entity to provide such
consumer protections, augmented staff and resources would be necessary
to provide prompt investigation and resolution for California
customers. Existing statutory language provides for significant
penalties (P.U. Code § 2107), but there may be the need for
specific statutory language analogous to the anti-slamming language
of § 2889.5 for telecommunications carriers.
Alternative 2.4.1. CON
1. Instituting a no-cost forum for redress will over-burden the
system with malicious and mischievous complaints against retailers
and UDCs. The Commission should want to avoid creating that environment
to the detriment of fulfilling the balance of its responsibilities.
Instead, a low-cost forum should be used. Customers who cannot
afford the low-cost forum should be provided with redress at no
cost, once they prove to an assigned Commission representative
both (a) that they have a complaint which is neither mischievous
nor malicious, and (b) that they are not able to afford the normal
forum costs.
2. These implementation suggestions would be very costly, and
would suggest a major increase in the consumer protection activities
of the CPUC and/or other government agencies.
2.5. Customer Participation in Industry Oversight
Customers must be able to participate in regulatory oversight
of the restructured industry, which should continue during the
transition and in the mature market.
2.6. Right to Privacy
Consumers should be able to control release and use of sensitive
personal information and records. Marketing should not be unduly
intrusive.
2.6.1. ALTERNATIVE: Suggested Interpretation
The qualifier "sensitive" should be construed liberally
as a means to ensure protection of privacy. Further, the information
in question should have limited distribution to UDCs, their affiliates,
and qualified energy service retailers for marketing and delivery
of electricity services. It should not be resold to other businesses
for competitive, marketing purposes.
Alternative 2.6.1. PRO
1. California state law places protection of personal information
at a higher level than most other state or the Federal law. The
emergence of competition in the telecommunications market has
imposed significant privacy intrusions upon the California citizenry.
Electric deregulation should guard against similar intrusions
by placing release and use of personal information squarely in
the hands of the customers, not the market competitors.
2. The information that the market will need to promote competition
can be made available to competitors at low cost and in an aggregated
form so that individual consumers cannot be revealed. Also, government
can play a useful role of getting necessary information to the
market so that competition can flourish while still preserving
the privacy rights of Californians.
3. Customer information should be made available only to a limited
set of qualified competitive parties. Perhaps businesses must
be certified to be eligible to receive it. Violations of limited
usage may be grounds to revoke certification.
Alternative 2.6.1. CON
1. The Commission's Decision D. 95-12-063 correctly recognizes
that it will be impossible to create a truly competitive market
without enabling legitimate competitors to have the same access
to utility customer data bases that the utilities themselves have
been enjoying. If even the most basic personal customer information
is categorized as "sensitive" and subject to stringent
privacy protection practices, potential competitors will be severely
disadvantaged.
2. Resolution of the information access issue requires balancing
the need to facilitate the competitive market and minimize transactions
costs against the privacy concerns of residential and commercial
customers. The subject is treated at length in Chapter 7 of the
August 30 DAWG Report, to which the reader is referred.
2.6.2. ALTERNATIVE: Suggested Interpretation
The qualifier "sensitive" should be construed narrowly
to cover only such personal information as is not readily available
through existing information markets (albeit at some cost) and
that has the potential to cause harm to customers if released
to registered energy service providers .
Alternative 2.6.2. PRO
1. If we believe that competition is beneficial to consumers,
then we must make it possible for well-intentioned competitors
to enter the market and present their services to those consumers
most likely to need their services. Over-emphasis on privacy concerns
will create a barrier to entry, which may harm customers by preventing
them from being informed about valuable choices more than they
might be harmed by the prudent release of their energy usage data.
2. Over-emphasis on privacy works to the benefit of affiliates
of incumbent utilities. Utility marketing divisions presently
use their customer data bases for customer retention and market
research, and their expertise and knowledge in this area cannot
easily be prevented from flowing to their affiliate competitive
marketers.
3. The best way to balance the information needs of the competitive
market with the need to protect customer privacy is to make basic
customer information easily available to registered marketers
and aggregators and to establish clear, enforceable rules that
penalize any inappropriate use of this information.
Alternative 2.6.2 CON
1. Attempting to balance privacy and information needs is a laudable
endeavor, but must be done recognizing a few realities about customer
information:
2 Once released, it is very difficult to control and enforce.
2 Customers will expect, and must be accorded, the right to choose whether such
information will be released.
2 Affiliate activities will have to be closely regulated, and
probably prohibited within a UDC's service territory because of
the cross-subsidization problem.
2. Initially, the Commission must err on the side of protecting
customer privacy until such time as California statutes are changed
by the legislature and until the market for residential energy
service begins to materialize.
3. There are a number of less intrusive alternative means of distributing
customer information without violating customer privacy expectations.
For example, an independent, non-profit customer data clearinghouse
could be used to distribute non-customer specific data on behalf
of energy providers. This could be done for lower costs than a
UDC or the private market and it could avoid the complication
of customer information from being transferred to the private
marketer.
2.7. Quality of Service
All choices offered to customers must meet minimum safety and
service criteria, and must fulfill advertised terms and conditions.
2.7.1. ALTERNATIVE: Suggested Interpretation
Service must be safe and must accord with specified service criteria.
Service limiters should not be imposed upon any customers.
Alternative 2.7.1. PRO
1. Quality of service must be maintained at current levels to
ensure that the expected price reductions from competition represent
improved value to consumers. Also, the emergent information services
upon which society increasingly relies require high quality and
reliable electric service.
2. The use of service limiters or other technologies that ration
service may not be imposed upon any customers as a precondition
for providing service.
Alternative 2.7.1. CON
The role of service limiters should be addressed in the context
of mechanisms to achieve "Universal Access," and should
not be tied to quality of service.
2.7.2. ALTERNATIVE: Suggested Interpretation
Competitive supply of generation services is the first of a series
of changes in which bundled electricity will be unbundled and
the service components offered to customers in degrees of quality
and quantity from which the customer may choose. To assure that
this consumer choice paradigm operates, service providers must
deliver the quality of service they promise. Holding providers
to their advertised terms and conditions of service is essential
to ensure that a market based on trustworthy information can flourish.
Alternative 2.7.2. PRO
1. Quality of service delivered by providers must closely match
what they advertise. Regulatory agencies should ensure that marketing
information is accurate. Consumers can ultimately learn how to
make choices if they are provided accurate, realistic information.
2. The CPUC is uniquely qualified to assess whether electric service
providers have honored their commitments. The courts do not possess
adequate background in the area to make this assessment as readily
as the regulatory agencies.
3. The CPUC's need to monitor market conduct compels it to play
a role in determining whether market abuses are occurring. To
defer to the courts is inefficient in light of the Commission's
market conduct obligations.
Alternative 2.7.2. CON
Enforcement of this interpretation suggests substantial resources.
Many truth in advertising problems exist in other markets, and
these negative aspects of competitive markets can never be fully
avoided.
2.8. Required Codes of Conduct and Oversight
All providers must meet minimum standards for certification or
registration as a condition of entry.
2.8.1. ALTERNATIVE: Suggested Interpretation
As a condition of registration and continued service rights, and/or
as a basis for how the Commission will handle complaints received
by a provider, all providers must either accept an industry standard
code of conduct or offer a comparable alternative code specifying
standards upon which their customer service policies and business
practices will be based. Those providers who do not adopt the
standard code, or develop a comparable code and comply with a
bonding requirement, will have their complaints handled more aggressively
and will be subject to greater fines or penalties if they are
found to be wrong.
Alternative 2.8.1. PRO
In the emerging energy services market, the expectations and responsibilities
of providers and retail customers will be poorly defined absent
some establishment of market rules by policy makers. Rather than
establishing specific rules for all possible transaction scenarios
and potential problems, the Commission should require adoption
of a minimum code of conduct as a precondition for registration.
Such a code can serve as a basis for service design, for customer
service practices and for regulatory oversight of those practices.
AB1890 does not authorize the Commission to refuse registration
if a code of conduct is not adopted. However, it does give the
Commission discretion to resolve complaints and provide market
oversight. This oversight power can be applied differentially
based upon a company's willingness to demonstrate a commitment
to quality customer service. Adoption and adherence to codes of
conduct is a very tangible way of a determining a company's commitment
to quality customer service.
Alternative 2.8.1. CON
An industry standard code of conduct is likely to be weak and
difficult to enforce. Stronger controls over businesses are likely
to be required, as can be seen from slamming practices in the
telecommunications industry.
2.8.2. ALTERNATIVE: Suggested Interpretation
All market providers must meet minimum fiscal responsibility standards or provide a bond. Their top management and officers must disclose to the CPUC and keep updated at all times: (1) their legal name(s); (2) business address; (3) state where incorporated or associated, including the date of organization; (4) articles of incorporation or association; (5) the name, title and address of each officer and director; (6) name, title, and telephone number of customer contact personnel; (7) name, title, and telephone number of the regulatory contact person; (8) brief description of the nature of the business being conducted in California; and (9) disclosure of any civil or criminal actions taken against the company or any officer or director of the company for illegal acts related to the operation of the business in the past ten years in any state or federal jurisdiction.
Alternative 2.8.2. PRO
These details are necessary to pursue actions against companies
and to provide an awareness on the part of companies that the
CPUC is prepared to take action against the company or its officers
if warranted. Moreover, some of these items are outlined in AB1890
as necessary information for registration.
Alternative 2.8.2. CON
1. These details provide a basis for taking regulatory or legal
action should they become necessary, but they do not instill in
the company a positive incentive to do right.
2. Industry codes of conduct can be used in conjunction with "Better
Business Bureau" methods of providing information to customers
about whether companies adhere to such codes of conduct, whether
actions have been taken against them, and the nature of dispute
resolution available.
2.9. Right to Universal Electric Service
Electricity is a universal service which government must ensure
is accessible to all residential property in California.
2.9.1. ALTERNATIVE: Suggested Interpretation
Because electricity is a necessary service, electric restructuring
must result in no significant cost increases for any identifiable
group of customers. To the extent that savings result from the
restructured market, customer classes with relatively fewer options
should still realize savings comparable to the savings realized
by customers with more options.
Alternative 2.9.1. PRO
As a necessary commodity, the price and availability of electricity
will prove to be primary focal points for policy makers. The premise
of restructuring is to bring lower prices through market-based
efficiencies. However, customer classes with fewer options (which
represent the majority of electricity users) will lose the market
leverage that they enjoyed as monopoly-aggregated customers. Thus,
a goal of restructuring must be to bring market efficiencies to
those customers who are likely to be overlooked by the competitive
market. Otherwise, restructuring will result simply in windfall
price reductions for a select number of large electric consumers
at the expense of the majority of Californians.
Alternative 2.9.1. CON
Electric restructuring may result in cost reductions to some customers,
and perhaps cost increases to others. If UDCs continue to employ
price averaging, those who have traditionally been subsidized
by price averaging will see relative price increases as lower
cost customers drop off the UDC full service system. Any instances
where the CPUC unbundles delivery of a particular service will
inevitably lead to variations in the prices charged to different
classes of customers.
2.9.2. ALTERNATIVE: Suggested Interpretation
The right to Universal Electric Service explicitly includes a
right to generation, transmission, and distribution services.
The Commission should determine whether the right to distribution
services includes a right to universal hourly or time-of-use metering,
since such metering is required for customers to participate fully
in a power market where prices fluctuate hourly.
Alternative 2.9.2. PRO
No PRO statement was provided.
Alternative 2.9.2. CON
As discussed above, the right to electric service does not mandate
interval metering so long as load profiling is available and so
long as demand and supply-side services and unbundled distribution
services are available to small customers.
2.10. Transaction Costs10.
Transaction Costs
Market processes should be designed to avoid unnecessary transaction
costs.
2.10.1. ALTERNATIVE: Suggested Interpretation
Regulatory policy should be focused upon lowering barriers to
market entry. Essential elements of electric service should be
non-proprietary, and customers with no or with only modest market
choice should not be responsible for more than an equitable share
of costs arising from restructuring.
Alternative 2.10.1. PRO
Transaction costs, or the avoidance of them, will prove to be
a determining factor in whether competition develops for the majority
of California consumers. They represent a market barrier that
could undo regulatory efforts to promote competition. Where transaction
costs are incurred for anything other than promoting market information,
protecting customer privacy, or preserving social equity objectives,
then they should be discouraged by the Commission. Discouraging
proprietary systems and guarding against interclass cross-subsidies
are important means of limiting unwarranted transaction costs.
Alternative 2.10.1. CON
No CON statement was provided.
2.10.2. ALTERNATIVE: Suggested Interpretation
The complexities of the restructured electricity industry will
place major burdens on consumers, requiring them to obtain and
assimilate general background information about new products and
services and to make specific decisions. All of this contributes
to transactions costs, and really cannot be avoided. What can
and should be avoided is the further step of evaluating the merits
of the information itself. Is it accurate? Is it complete? Regulatory
policy and enforcement action should be designed to ensure that
consumers have market information that is trustworthy, so that
the transactions cost burden is not expanded unnecessarily. Accuracy
of information should be ensured by a standard of veracity. Marketers
and other market participants that violate accuracy standards
should be punished severely.
Alternative 2.10.2. PRO
1. Trust is difficult to obtain, and mistrust in one perpetrator
can be readily extended to other market participants, even when
unwarranted. The loss of trust will reduce market participation
and reduce benefits of competitive choice.
2. Regulatory agencies should be visible in asserting that market
information is trustworthy.
Alternative 2.10.2 CON
1. Developing complete and accurate information about market offerings
will be difficult and must be repeated frequently. This will cause
it to be expensive.
2. Innate skepticism leads many to a laissez-faire attitude, which
will be hard to overcome.
2.11. Improvement over the Status Quo11.
Improvement over the Status Quo
The ultimate objective of electricity restructuring is to make
all consumers better off. Beyond this, no agreement was reached
on the general principle of improvement over the status quo.
2.11.1. ALTERNATIVE: Suggested Interpretation
Competition must support, rather than jeopardize, existing and
evolving social and environmental policies and programs. Special
lifeline rates and services and safeguards for low-income customers,
the elderly and disabled should be preserved in a restructured
environment.
Alternative 2.11.1. PRO
During this century, California has established certain social
and equitable goals that it deemed as necessary components of
electric restructuring. The move to a competitive electric marketplace
should enable those social goals to be achieved at lower cost
than under the present regulatory paradigm.
Alternative 2.11.1. CON
The Commission has assigned to the Low-Income Working Group the
task of identifying the ways in which restructuring will affect
low-income customers. The Commission, as a result of that process,
may determine that some of the existing social and environmental
policies and programs are due for a change.