Following is the draft of Chapter 5.0 -- Exercising Customer Choice: D R A F T 5.0 Exercising Customer Choice 5.1 There are three alternatives to the requirements as to how a customer can specify purchasing energy from the UDC or through Direct Access: 5.1.1 Alternative 1: A customer would be required to take all of its energy requirements for all of its meters and various locations from either the UDC or from a Direct Access retailer including itself under self-service approaches. If the UDC is providing its energy, 100% of it would come from the Power Exchange. If a retailer were providing the energy, it could be supplied by a combination of the Power Exchange and other generating sources. Pros: This all-or-none approach from a UDC's perspective is the simplest arrangement. It minimizes the opportunity for dispute on settlement. Cons: 1. This approach limits customer choice as to how they acquire their energy. 2. With a phase-in, this requirement may limit the ability of large customers with many locations to qualify. 5.1.2 Alternative 2: A customer specifies which meter or meters will be supplied by a retailer via Direct Access. All meters not so specified will continue to receive energy through the UDC from the Power Exchange. Pros: This Alternative provides customer increased flexibility over Alternative 1. Also, it is consistent with the historical way electric utilities have viewed customers; that is, a meter has historically been viewed as a customer independent of the fact that a particular business or other electricity purchasing organization may have several meters, perhaps at several locations. Cons: There is a small risk that a customer may contract with a retailer to provide energy to its high load factor meters and impose its poor load factor meters on the UDC, which could result in increasing peak prices to other UDC customers. 5.1.3 Alternative 3: A customer can specify a portion of the load served by a meter to be provided by a retailer through Direct Access, with the remaining portion of the load at that meter provided by the UDC. Pros: This provides the customer maximum flexibility in purchasing energy. For large industrials with very large loads on one meter, it would limit the choices if they could not have the UDC and Direct Access suppliers provide portions of the load on a single meter. More choices will create greater market forces. To eliminate the UDC as a provider and a player in the procurement decision process is contrary to the spirit of the restructuring process. There will be a great deal of uncertainty, especially during the initial states with the restructuring process. Many customers would be hesitant to leave their IOU/UDC completely and dive into this new and potentially volatile market. The option of being able to retain a block of one's load (which could represent critical process) with the UDC and experimenting in the free market with the balance would be a very attractive and competitive alternative. Cons: 1. This alternative will greatly complicate the settlement process and could result in "gaming." 2. This alternative could result in settlement costs being shifted to UDC customers. 5.2 Electing Direct Access Or Virtual Direct Access Uniform Statewide Procedures And Forms Will Simplify The Process 5.2.1 Written Notice Requirements To Exit Or Return To Bundled UDC Service Each customer would be required to sign an agreement specifying that it was electing Direct Access and that the UDC was not responsible for procuring and coordinating the delivery of its energy supplies including forecasting and balance responsibility. This Direct Access election agreement would also specify the customer's obligation to continue to pay federal and state approved charges including T&D, CTC, and Public Good. The election must be signed by the customer. In order to prevent misunderstandings, a potential retailer cannot execute this election on behalf of the customer. As part of the Direct Access election agreement, the customer would agree to provide the UDC with the following: A. Customer name and address to verify the metering location for Direct Access service; and B. Any information necessary to enable the UDC to issue a monthly bill. Any Direct Access customer wishing to return to UDC procurement service is free to do so without any special tariff condition. The customer must notify the UDC in writing that it wishes to return to the UDC procurement service. 5.2.2 Timing Requirements To Exit Or Return To Bundled UDC Service Upon the UDC's receipt of the executed Direct Access election agreement, the customer would begin receiving Direct Access service after _____ days to allow for installation of new metering, if required; plus an additional: A. _____ days, if the metering system is telemetry-based; or B. _____ days, if the metering system is not telemetry-based (Actual number of days would depend upon the timing of the UDC's next scheduled meter read; the customer would have the option of accelerating this time frame by paying the cost of a more immediate meter read.) For customers returning to bundled UDC service, UDC service would be effective no sooner than _____ days, or the date specified by the customer, whichever is later. The customer is obligated to provide its previous energy supplier with a copy of the notice to the UDC that they are returning to bundled UDC service. 5.2.3 Limits On Service Changes During The Phase-In Period Customers can change between UDC and Direct Access service at the beginning of any normal billing cycle provided that notice is given _____ days in advance. If a customer elected to change service in the middle of a billing cycle, it can do so by paying appropriate administrative service fees and providing _____ days of notice. It is felt that the marketplace will control the frequency of switching back and forth and there is no need to place an artificial constraint on a switching period. 5.3 Procedures To Discourage Gaming The System 5.3.1 Settlement Of Accounts The requirement to use a 15-minute, integrated meter will provide the appropriate data to discourage gaming the system in settlement of accounts. 5.3.2 Split Load Between Direct Access And Power Exchange Purchases The settlement issue could be completely eliminated if a specific load (representing a load safely below what the real load would be) be identified as that supplied by the UDC. The balance could be supplied from the Direct Access market through a wide range of procurement alternatives. The customer's Scheduling Coordinator would handle all settlement activity for non-UDC load. This is risk-free from a settlement standpoint for the UDC. 5.4 Timely Exchange Of Customer Records Will Facilitate Informed Customer Choice 5.4.1 Agreed Upon Time Limits For Providing Information To The Customer Or Their Agent The UDC will be required to provide customer information within _____ working days upon receipt of the request. 5.4.2 The Data Format The information will be provided in a pre-specified, statewide uniform format in either computer disk or paper as requested by the customer. One copy of this information will be provided at no cost once a year. Additional requests within a twelve-month calendar period will be filled at a cost of $_____. Janet Walters Executive Assistant to David Ned Smith Room 467, GO 1 Pax: 21815 Fax: 21829 .