7.1 Implementation Objectives

First and foremost, there is general agreement as to the importance of developing procedures for registering electricity service providers and developing a program to educate consumers, prior to the commencement of direct access on January 1, 1998. Failure to achieve these objectives risks customer confusion, poor market information, inadequate choices for some consumer groups, and political backlash resulting from an undeveloped and poorly performing competitive market.

In addition, AB 1890 has identified some additional tasks that must be incorporated into an implementation plan for consumer protection and education. To be specific, these new tasks are:

[1] design and implementation of the formal notification that providers must furnish to prospective customers (see Sec. 394(b));

[2] design of a mechanism for cancellation of a contract by customers (see Sec. 395);

[3] creation of standards for safety and reliability of distribution systems, including restoration of service after outages (see Sec. 364);

[4] determination of the process for exempting renewable-energy customers from phase-in of direct access (see Sec. 366(b));

[5] creation of operating rules for the entity or entities to perform third-party verification of customer changes of service provider (see Sec. 366 (d,e)); and

[6] education of existing and potential cogeneration consumers about opportunities to benefit from CTC relief (see Sec. 372).

These new tasks affect the implementation of consumer protection and education in a twofold manner. First, they increase the scope of activities that must be conducted during 1997, and second, they affect the content of the consumer education effort by adding new elements about which consumers must be educated.

This chapter proposes implementation timelines and recommends actions that some of the DAWG members believe the CPUC should take now in order to implement an effective program of consumer protection and education. We propose two "critical path" chains of events, one leading to CPUC registration of electricity service providers, the other leading to adoption and implementation of a Consumer Education Plan. Time is clearly of the essence, as a review of our proposed timelines will show. Already, time constraints are acting to limit our opportunity to pursue more deliberative efforts. For instance, Section 11.2 of the August 30, 1996 DAWG Report identified a number of different entities in whom responsibility for Consumer Education Plan development could be vested. Whatever the merits of these different options, AB 1890 made it clear that the state's "electric corporations" ó most notably the existing utilities ó will take the lead to develop and implement, subject to Commission approval, Consumer Education Plans in the time available.

Obviously, the implementation schedules adopted for consumer protection and education issues need to dovetail with the Commissionís other restructuring and direct access implementation efforts.

Many of the DAWG members agree with the importance of developing a Consumer Education Trust, which would serve as a source of funding for community-based and other targeted educational outreach programs. In Chapter 5, various structural and funding approaches are described. In light of more pressing needs, we have not developed specific implementation proposals, and do not plan to make a further submission to the CPUC on this subject on December 6, 1996. Finding a reasonable source of funding for the trust is a problem, due to the rate freeze enacted in recent legislation, and a general concern with high electricity rates. We request the Commissionís guidance with regard to funding sources.

In addition to registration and education efforts, the Direct Access Working Group envisions the CPUC taking an affirmative role in developing redress, oversight and monitoring procedures (Chapter 4 of this report) and becoming a reliable, neutral source for information about electricity service providers (Chapter 5). Because these are internal CPUC functions, we have not provided specific implementation recommendations. Nevertheless, we are concerned that the CPUC move expeditiously in these areas. Our members welcome any opportunity to comment or assist in these CPUC efforts.

7.2 Legislative Issues and AB 1890

This report has been drafted to reflect the beliefs of the DAWG members about the necessary elements of effective programs to insure adequate consumer protection and education. In developing our recommendations, we made no attempt to limit ourselves based on what is permissible under existing law, or what is achievable through legislative changes.

Recently enacted legislation, AB 1890, explicitly imposes on the CPUC a requirement to register electricity service providers and specifies information to be compiled from such providers. The DAWG members are not prepared to express opinions as to whether this legislation restricts the CPUC's ability to impose requirements on electricity service providers, such as bonding, or allows the CPUC to reject or suspend a registrant. In general, most of us believe the CPUC should have such authority. As soon as possible, the CPUC should conduct a review of its statutory responsibilities and authorities in light of AB 1890's registration requirements, and determine whether it will require additional consumer protection legislation to carry out its responsibilities. Such clarity is essential to move forward with the registration timeline presented in the following section.

AB 1890 imposes the implementation of consumer education program on electric companies, subject to approval by the CPUC. The discussion of a utility-initiated Consumer Education Plan contained in Chapter 5 comports with this legislative requirement.

Finally, AB 1890 recognizes that restructuring imposes certain implementation costs on utilities, which at the same time imposing a rate freeze (Section 368(a)). Section 376 provides a procedure for utilities to defer recovery of implementation costs until after 2001. The DAWG members recognize the practical necessity of allowing utilities to recover their costs associated with the Consumer Education Plan described in Chapter 5. Thus, the CPUC should allow utilities to make a funding request, and should act expeditiously on this request.

7.3 Implementation Timelines

7.3.1 General Framework

A recent Commissioners' Ruling adopted a schedule for comments on this report. Comments are due on November 26, 1996, and replies are due on December 11, 1996. As a result we do not anticipate further action by the CPUC on Consumer Protection and Education issues until the end of 1996, once comments and replies have been received, so the timelines presented below effectively start at the beginning of 1997.

Technical requirements imposed on metering and communication systems by the ISO settlements process, and Commission decisions regarding the nature and timing in which any phase-in of direct access will take place, will affect when in 1997 customers must begin to make their direct access elections. One outcome could be that the ISO will require a daily flow of metered usage information be communicated "upstream" so that accounts can be settled each day and so that schedule coordinators are aware of the discrepancies between their forecast and actual loads as soon as possible. If this is the case, most existing customer metering, even for the largest customers, would need to be replaced or augmented with communication devices prior to the commencement of direct access. At least 60 days should be allowed to procure, install and test the necessary metering and communication devices. A longer time period for metering and communication device installation may be needed if load profiling is not utilized for residential customers.

If the Commission adopts a phase-in schedule that limits direct access availability during 1998, so that there are more customers seeking direct access eligibility than can be accommodated, there may be a need for some form of open season where customers can choose whether to participate in the initial phase of direct access. The schedule should allow adequate time for this open season, if it occurs. If 30 days are allowed for the open season, and 60 days for metering and communication implementation, then registration and initial consumer education efforts should be completed no later than September 30, 1997. We cannot be certain that this target date is sufficient, or that a later date would be infeasible. However, this date provides a basis for beginning to plan for and schedule needed registration and education implementation activities.

Based on the above, the schedules set forth below show that there are about nine months to complete the registration and education processes, from the end of the comment period on this report until the beginning of an open season on October 1, 1997. The next two subsections present specific timelines for registration and education consistent with this assumption. The final subsection discusses alternatives that take into consideration delays in the schedule.

7.3.2 Registration

At the outset, the Commission must determine whether or not a proceeding is needed to develop registration requirements. Some parties have asserted that AB 1890 is dispositive of many issues regarding registration of electric service providers (ESPs), so that little additional effort by the Commission is required. In this case, the registration process becomes a simple matter of collecting the information required by the statute.

Other parties assert that the Commission should establish a more comprehensive registration program than what is provided by AB 1890. If the Commission chooses to do so, it will need to determine whether AB 1890 constrains its authority in this area, and if so, it will need to seek new legislation that provides for greater Commission authority. In this case, there are a variety of alternative approaches to initiate the process of developing registration requirements and implementing electricity service provider registration. Some options and approaches for electricity service provider registration are described in Chapter 4. This section describes the advantages and disadvantages of three approaches: (1) developing registration requirements in an Order Instituting Rulemaking (OIR) or an Order Instituting Investigation (OII), (2) initiating a proceeding on registration requirements by requiring Southern California Edison, Pacific Gas and Electric, and San Diego Gas and Electric to file proposals, and (3) directing further working group efforts to seek consensus proposals, after the Commission provides further guidance on certain issues.

7.3.2.1 ALTERNATIVE: An OIR/OII to determine registration requirements

Alternative 7.3.2.1 PRO: This is a familiar way to resolve policy issues.

Alternative 7.3.2.1 CON: This process is complicated, expensive and takes a long time.

7.3.2.2 ALTERNATIVE: CPUC requires IOUs to file proposals

Alternative 7.3.2.2 PRO: Shifts responsibility for initial effort to the electric utilities.

Alternative 7.3.2.2 CON

1. Allows little or no stakeholder participation.

2. Expertise of IOUs in this area is not sufficient to outweigh benefits of broad representation of viewpoints.

3. There is no necessary reason why the utilities should be the applicants.

7.3.2.3 ALTERNATIVE: A stakeholder working group to develop proposals

This alternative requires that the CPUC promptly resolve certain key issues identified in the August 30 DAWG Report, the two sets of comments on that report and the October 10 Hearing. Once the working group process begins, the CPUC may need to respond quickly to make any further decisions required to resolve barriers to consensus.

Alternative 7.3.2.3 PRO

1. Can result in solution in which all interested parties are meaningfully represented, leading to greater fairness, fewer incentive or enforcement problems and greater societal efficiency.

2. The DAWG process should not be seen as lacking because it identified, described and offered a range of alternative solutions for many large problems but did not achieve consensus on any of them. The DAWG process achieved its mission, which did not include trying to achieve consensus on any issues. Moreover, DAWG did achieve consensus quite easily on selection of coordinating committee, subgroup leaders and editing team.

3. What is needed now is a stakeholder working group given a well defined task, a mission to achieve a workable consensus within a set period of time, and a process that enables meaningful representation by all affected parties.

4. DAWG parties could select members of such a group, having done this before as noted in PRO Point 1 above, and find ways to reduce the resource burdens on these "representatives."

Alternative 7.3.2.3 CON

1. Some stakeholders are stretched for resources after DAWG and other working groups, and they may find it difficult to participate in such an effort.

2. There is no assurance that a stakeholder process will be successful. Given the substantially divergent interests of likely participants, the changes for success are small.

Table 7-1 below sets out an illustrative schedule for developing registration requirements and for registering ESPs prior to the commencement of direct access, consistent with the alternatives above. This schedule assumes that developing registration requirements will be a controversial process requiring a final CPUC decision. If this is not the case, or if the Commission's receipt of registration applications becomes a ministerial action, then this schedule is largely moot and the registration process can be considerably shortened. The schedule envisions a process in which ESP applicants will be registered en masse if they meet certain application deadlines, but late applications will be processed individually and may not receive approval by 9/30/97.

Date		Activity
1997: 1/31		OIR/OII Issued or Utility Proposals Filed or Workshops Commence
3/7		Prehearing Conference or Workshop Report
3/14		Initial Comments on OIR/OII or Workshop Report or CPUC Staff and Intervenor Testimony
3/21		Reply Comments on OIR/OII or Workshop Report or Concurrent Rebuttal Testimony
3/31		Hearings (If Required)
5/30		CPUC Decision
8/1		Registration Applications Due
9/1		Protests to Registration Applications Due
9/30		CPUC Decision Approving Registrants Applications
10/1		Open Season Commences

The above timeline does not provide for any gap between approval of registration applications and the start of the open season. This could be a burden on some applicants. However, it is likely that virtually all applicants will be approved (although some may be required to cure defects in their original applications), so that the applicants are likely to begin advertising and other business activities while their applications are pending. In any case, applicants will know whether any party has protested their applications 30 days before the start of the open season.

7.3.3 Consumer Education

The two tables below set out alternative schedules for developing and implementing a Consumer Education Plan (CEP) as described in Chapter 5. Both schedules assume that the CEP can be developed by the CEP Group in a largely consensus-based process without a requirement for formal evidentiary hearings. The DAWG members expect that the CPUC would be able to issue a decision on the CEP Group's consumer education application after reviewing issues addressed in protests to the application, should any parties choose to file a protest.

The first schedule, shown in Table 7-2, envisions that the CEP Group would jointly file an application for development of a CEP. The application should describe the process of consultant selection, should include a preliminary scope of consultant services, should describe the procedures to insure stakeholder involvement, and should request a specific funding mechanism consistent with P.U. Code 376. A subgroup of utility communication experts has already begun preliminary meetings, at the request of the DAWG members, as reported in Chapter 5. The CPUC should encourage municipal utilities to participate in this joint application and in the development of the CEP. Without such coordination, mass media advertising (print ads, radio, and, if necessary, television) may create confusion, since they will necessarily reach customers of investor-owned utilities and municipal utilities alike.

Date		Activity
1997: 2/7		The CEP Group Jointly Files Consumer Education Application and Funding Request
3/10		Protests Due
3/31		CPUC Decision
5/30		Vendor Selected
8/1		Consumer Education Plan Completed
8/1		Education Efforts Begin
10/1		Open Season Commences

The second schedule, shown in Table 7-3, assumes that the utilities constituting the CEP Group would be prepared and willing to proceed with significant aspects of the CEP without further direction from the Commission. The key element of this proposal that differs from the first, is that utility work begins in 1996 with a vendor selected by the end of 1996. Thus, the CEP Group would file an application almost immediately after reply comments are filed in response to this DAWG report. Also, the actual vendor-constructed CEP must be presented to the Commission for approval and revisions, as per stakeholder input. The time for these two processes requires utilities to submit the application prior to a Commission ruling on the DAWG Consumer Protection and Education report.

Date		Activity
1996: 12/15		CEP Group Files Consumer Education Application, Vendor Recommendation and Funding Request, in anticipation of CPUC decision on DAWG report.
1997: 1/15		Protests Due
3/1		CPUC Decision
3/15		Vendor Retained and Education Plan Process Begins
5/1		Education Plan submitted to CPUC
6/1		Comments on Plan by Stakeholders due
7/15		Commission Ruling on the Plan and Education Efforts Begin
10/1		Open Season Commences

7.3.4 Accommodating Delay

The timelines shown above are very compressed, and do not permit any slippage should delays be encountered. Some parties believe, however, that modifications to the schedule of direct access could occur and still allow direct access to commence on January 1, 1998, in case there is a delay in the schedule for registration and education activities. Of course, if the ISO does not require daily reporting of metered usage information, existing metering would be sufficient to accommodate large customers, and it may be possible to shorten the 60 day period for meter and communication infrastructure installation now reflected in the schedules.

Gradually Phase-In Direct Access During the First Quarter of 1998. If the open season is conducted in December 1997, metering infrastructure would be installed during the first 60 days of 1998. Thus, while some customers would have direct access on day one, others would be backlogged for a period of time while infrastructure is installed. As a result, it would be possible to accommodate a several months delay in both the registration and education timelines.

Different Phase-In Schedule For Residential Customers. In comments on the August 30, 1996 DAWG Report, Southern California Edison, Pacific Gas and Electric and San Diego Gas and Electric companies all supported use of load profiles for residential customers. At some risk of consumer confusion, it may be possible to have an October 1997 open season for business customers and a December 1997 open season for residential customers. (Some believe there will be limited residential interest in direct access. If this is the case, over subscription of the residential portion of the first year phase-in limits may not occur, and there may not need to be any allocation procedures.) This would allow the education program timeline to be delayed several months. If the Commission is willing to allow electricity service providers to offer services to business customers provisionally, i.e., while their application is pending, this would also allow the registration program timeline to be delayed several months.

7.3.5 A Sense of Urgency

Some DAWG participants are concerned with the potential for schedules slipping, causing a delay in direct access implementation. These parties recommend that the Commission consider a "minimum effort" education and registration plan that would be implemented by default, should the CEP implementation not proceed on schedule for any reason. The minimum effort plan could be implemented as either a substitute or a supplement for the CEP. It is therefore recommended by some parties that the Commission request, in the initial CEP Group filings, a "minimum effort plan" along with utility-suggested implementation procedures.

Many DAWG participants expressed concerns over introducing in this report a proposed 1997 funding amount for consumer education. Some asserted that until the CEP is developed, the appropriate funding level will not be known. Others believed that the schedules proposed in Tables 7-2 and 7-3 adequately allow the Commission to make timely implementation funding decisions. There are some important details to note in these schedules, however.

First, the schedule of Table 7-2 addresses only a single funding application on February 7, 1997, to establish funding to develop the CEP. There is no application for funding to implement the CEP. Quite the contrary, as soon as the CEP is prepared it begins to be implemented. Omitted from the schedule is a process for the Commission to (1) authorize CEP implementation funding as a restructuring transition cost, for collection per Section 376 of the PU Code, and (2) require that the CEP be implemented by each utility under the CEP-proposed schedule. Unless those two items are addressed, the implementation of the CEP may not be coordinated at a state-wide level across all three IOU service territories. Without timely implementation of state-wide education, the Commissionís targeted January 1, 1998 date for implementing direct access could be in jeopardy.

Table 7-3 addresses the implementation funding application issue, but does not schedule a CPUC decision on that application until July 15, 1997. Although Table 7-3 indicates that education would start immediately upon CPUC approval, some parties assert that it would be another 30 days before education could start, which would endanger the 1/1/98 target. For this reason, another alternative is proposed that allows education of consumers to begin sooner, using "start-up" educational funding approved early in the process by the Commission as a restructuring transition cost.

The new alternative proposes the schedule in Table 7-4. Under that schedule the CEP group is to file, within its first application, a proposal for start-up funding including details on how that funding would be used. Any additional consumer education funding that is needed would then be addressed in the second application. Under this alternative, the initial education efforts would not have to wait until approval of that second application.

Date		Activity
1997: 1/15		CEP Group files a Consumer Education Application, including vendor recommendation and a "start-up" funding request, in anticipation of CPUC decisions on both the August 30th and October 30th DAWG reports.
2/15		Protests Due
3/31		CPUC Decision
4/15		Vendor selected and CEP process begins
6/1		CEP completed and submitted to CPUC for approval
7/1		Comments on the CEP by stakeholders due
7/1		Education begins with "start-up" activities
8/15		Commission approval of the CEP and authorization of funding
9/15		Balance of CEP education begins

A modest variation to this alternative would have the Commission, in response to this report, preapprove the amount of $10 million as start-up funding for education efforts to begin by July 1, 1997. In this case, the first filing of the CEP Group would take this amount as given and offer a proposal for its use.

The Commission needs to decide among these alternative schedules and processes for determining implementation funding, or suggest another alternative that reasonably accommodates its interest in educating consumers in adequate time to allow for direct access by January 1, 1998. Because the first proposed date of December 15, 1996 (see Table 7-3) for a joint utility application is fast approaching, the Commission may want to address these scheduling issues prior to rendering a decision on the other issues of this report.