8.0 Customer Billing

This chapter will outline alternative solutions to issues surrounding the distribution and collection of customer energy service bills. It will also discuss possible statewide format standards for bills and the processes of how the exchange of germane billing information may be completed between the various billing parties. Finally, the billing distribution options will be addressed.

The most appropriate alternative to these billing questions may well depend upon the Commission's November 15, 1996 policy decision on unbundling. ¹ The resolution of "track 1" and "track 2" items to be unbundled, or more specifically, the determination of which monopoly services will be open to competitive forces (and when), may impact the market's enthusiasm to embrace third-party customer billing. Lacking insight on the timing of full service unbundling, issues below are left intentionally generic.

8.1 Where there are multiple providers of services to a single customer, who provides the billing for that customer's "energy services"?

8.1.1 Alternative A: UDC Bundled Billing

The UDC shall, on a monthly basis, dispense a single bill to each of its direct access customers. That bill shall include a breakdown of all generation, transmission, distribution, customer, CTC, Public Goods and other applicable charges attributed to that customer over the past month. The direct access customer's energy service provider shall supply all requisite information to the representative UDC immediately after receiving usage information from the customer's meter read, so that the customer's entire bill may be calculated and dispensed in a timely fashion. Information linkage between energy service providers and the UDC will occur via ² EDI or other technological innovations.

Pros: 1) Since the direct access customer is still a customer of the UDC for wires and pipes services, the UDC would simply continue billing for services it supplies to the customer and add to that, any additional services provided to the customer by the market.

2) UDC charges are likely to constitute the majority of the customer's bill, at least during the industry's "transition period" (1998-2005), so it may be appropriate that the UDC continue to maintain control of billing for its services.

3) The UDC's billing system infrastructures are better positioned to accommodate billing third party services to direct access customers given the proposed phase-in schedule of the Commission. It's questionable whether the market will be able, or willing, to systematically bill all direct access customers for all energy services on January 1, 1998 thereby delaying direct access phase in.

4) The regulated UDC currently has responsibility for providing its customers with certain legal notice of regulatory events, service options and rule reform. This requirement is often accomplished by inserts in a customer's bill. Similarly, other consumer interest groups may, from time to time, use a bill insert as a mechanism to inform UDC customers of pending issues. ³ UDC bundled billing would resolve the issue of how this type of notification might occur in the future and also provide an independent source of consumer information on restructuring issues, energy efficiency, and other public goods programs..

5) A direct access customer can change his supplier or aggregator consistent with the terms of his supply contract and "switching" standards established by industry market rules. ⁴ Arguably, there is a greater potential that a customer's bill will be mishandled during this switching process than if a single agency, such as a UDC, perpetually bills the customer. Similarly, customers currently call UDC for billing or system reliability problems. Unbundled UDC billing may require that the customer call both the UDC and the energy service supplier.

6) Reduces costs for third party suppliers because they don't have to add billing to their costs of service.

Cons: 1) Some aggregators have represented that UDC bundled billing would preclude them from entering the restructured electric service marketplace. They have indicated that, at minimum, the CPUC must establish a rigid schedule of what monopoly services will be unbundled and when.

2) Customer is prevented from making its own selection of who it would like to bill their services.

3) ⁵ Depending on Commission's decision regarding "track 1" and "track 2" unbundling, customers may lose an opportunity to have certain electric services repackaged to accommodate their particular needs at the lowest cost. This presumes that these services couldn't be segregated out sufficiently by the energy service provider for the UDC to bill these service components separately on the bundled bill.

4) If UDC provides a bundled bill to the direct access customer, energy service providers may lose brandname recognition for the services that they provide. This may inhibit market penetration.

8.1.2 Alternative B - Third Party Billing for UDC and Third Party Services.

The third party biller shall, on a monthly basis, dispense a single bill to each of its direct access customers. That bill shall include a cost breakdown of all generation, transmission, distribution, customer, CTC, Public Goods and other charges attributed to that customer over the past month. The transmission charges will be obtained from the ISO, the distribution charges, CTC's and public goods charges will be calculated by the UDC, while charges for generation and other services supplied by the energy service provider will be produced by that entity. All of this information will then be forwarded to the third party biller immediately after the customer's meter has been read so that the customer's bill may be dispensed in a timely fashion. (In one scenario, the energy service provider is also the biller. In that case, the energy service provider could either line item into the bill its own service charges or consolidate all energy service charges, without specific cost breakdown, to one amount.) Information linkage between the third party biller, energy service providers (if not the biller) and the UDC would occur via EDI or other technological innovations.

Pros: 1) If energy service provider is the biller, it would be better able to gain name recognition and perhaps increase the speed of market penetration.

2) Aggregators would be given an opportunity to repackage unregulated services with traditional UDC distribution service. This package would be tailored to better meet the direct access customer's needs and presumably at a lower cost than the sum of UDC distribution charges and those services provided separately by the aggregator . This bill may include services outside those related to the traditional electric marketplace.

3) Third party billing by energy service provider may be less expensive than UDC billing, particularly if UDC provides it with calculations of current customer bill features (franchise fees, utility user tax, etc.).

Cons: 1) ⁶ If the third party biller is an energy service provider, consumer protection issues arise, such as use or dispersal of sensitive customer information, and the termination of service for non-payment, and credit worthiness.

2) Customer is prevented from making its own selection of who it would like to bill their services. UDC precluded from doing billing.

3) In repackaging or rebundling of services, there's an opportunity for the aggregators to skim off savings the consumer would otherwise see from restructuring (exceptional returns to consumers might be minimized).

4) UDC would be dependent on perhaps many entities to bill and presumably collect a large bulk of its revenue. Third party billers, in particular energy service providers, would need to be sufficiently incented to collect both their charges and the UDC's from the customer.

5) The consumer would have no verification that the distribution services billed by the UDC and those billed by the energy service provider correlated to each other.

6) Consumer notification ("Pro #4", Section 8.1.1.) now becomes an issue.

7) ⁷ Little, if any, savings are expected by the UDC from third-party billing. Rather, incremental decreases of specific unbundled components to a UDC billing transaction don't correlate to an equal incremental decrease in its billing costs. The UDC will continue having to calculate franchise fees, utility users tax, distribution charges, and CTC amounts for direct access customers regardless of who ultimately distributes the bill. Similarly, UDC's delivering both gas and electric services may necessarily need to continue dispensing a direct access customer's gas bill. Thus no savings on postage will be realized by the UDC.

8) Its very conceivable that some customers will aggregate there own loads. This is especially true for large customers with various service functions and locations (ex. oil refineries), chains and state and local accounts. If aggregators are to be charged with the billing function, these customers would be charged with calculating their own bills. There may be self-dealing concerns depending on which services are finally unbundled.

8.1.3 Alternative C - Split Billing Options

In this alternative, the customer would receive two bills. This option assumes that the energy service provider is also a third party biller. The UDC would bill the customer for the distribution services, CTCs, PGC, etc. that it provides the customer, and the energy service provider would bill the customer for the services that it provides. Information linkage between energy service providers and the UDC would occur via EDI or other technological innovations.

Pros: 1) The energy service provider would receive brand name recognition from its bill.

2) The UDC would better control the collection of the revenues required to achieve lower costs for its core customers, ensure a positive transition into a competitive marketplace and earn a reasonable return for its shareholders.

3) The customer would be able to verify the consistency of the energy supplied to it against the energy delivered for it.

4) Greater clarity for the consumers on who to call when they have questions about their bill(s).

5) Consumer protection issues would be more easily managed. Legal notification and customer education process would remain with UDC, and self dealing concerns would be minimized.

Cons: 1) Surveys indicate that customers prefer a single bill rather than two bills.

2) Some aggregators have represented that UDC bundled billing would preclude them from entering the restructured electric service marketplace. This may also be true for this split billing option. Aggregators would not be given an opportunity to repackage soon-to-be unregulated electric services with traditional UDC distribution service.

3) Customer is prevented from making its own selection of who it would like to bill their services.