To: Team "D" Participants
From: UCAN
RE: Consumer Education
Date: June 13, 1996
Right to Know: Consumer Education
A. COMMUNITY BASED EDUCATION
Points: Education plan must be required by CPUC
Messages must be independently crafted
Should use CBOs for education
Education must begin prior to commence and continue through transition
The Commission has demonstrated the efficacy and effectiveness of
community-based education in its implementation of a public education plan
for CNEP (Caller Notification Education Plan). Recognizing that the
introduction of CallerID would present new and important impacts upon
telephone customers, the Commission required that Pacific Bell and other
phone providers commence a "bottoms-up" education plan as a precondition
for the commencement of CallerID service.
The efficacy of this approach towards customer education is discussed in
depth in "Evaluation of the October 11 Pacific Bell CNEP on CPN Delivery"
by Professor Brenda Dervin of Ohio State University. This report,
commissioned by theCommission's CACD and delivered on November 21, 1995,
establishes a number of important principles for educating customers about
changes in utility service.
Some of the relevant hallmarks of this education plan were:
i. Independently crafted messages. Professor Dervin stressed the need
for involving community representatives in co-production of campaign messages.
For CNEP, the Commission approved the hiring of a nationally recognized media
consultant to develop themes and mass advertising and sought the input of
intervenors to refine the proposed themes.
ii. Use of Community Based Organizations (CBOs) to educate
customers. The Professor emphasized the use of high involvement/high
interaction outlets and recommended that at least 50% of the campaign need
be implemented out in the communities. Recognizing the educational
advantages offered by the state's existing network of non-profits, the CPUC
required that these CBOs be hired to effect customer education.
iii. Concerted education plan commencing 6 months prior to the
beginning of the new regulatory scheme and continued through the
transition. The campaign must be iterative and sustained, according to
Dervin. Accordingly, the CNEP began educating customers almost 6 months
prior to the introduction of Caller ID service in California. The plan
proved to be so successful that Pacific Bell could not accommodate the
crush of customers seeking blocking protections and implementation was
delayed until customer responses could be completed. The plan is to
continue for one year after the introduction of the service.
iv. Make the Campaign Relevant To Customers. Electric
restructuring is going to require a new awareness by customers of matters
that had been heretofore largely handled by the monopoly utility. It
will be essential that customers are educated, in simple terms, why they
should care. The message must be interactive and accessible to all
customer groups, including multi-lingual and multi-cultural communities.
These four essential elements must be applied to the Electric educational
plan. This education effort would commence at least six months prior to
January 1998 and would be crafted by a qualified independent entity to
impart to residential customers the following points:
o Companies other than the local utility will be offering electric service
o Customers will have the right to choose these other services or stay with
the local UDC
o In making that choice, the customer must understand prices, risks and
personal usage patterns.
o Utilities will provide customer with personalized energy usage profile.
o CPUC and others will provide customer with energy shopping information.
B. EDUCATIONAL MATERIALS AND PROGRAMS
Points: Customers will require educational programs and materials that
will permit comparison shopping for price, quality of service,
provider track record, understanding of choice and quantification
of risk.
The CPUC will take the lead in making these materials available to
consumers.
Non profits and private companies can play an important role in
customer education
The CPUC should work to reduce transaction costs associated with
aggregation
UDCs will initially provide a personalized energy usage profile to
individual customers
Focus upon underserved communities
1. CPUC Education Responsibilities
The Commission is charged with significant customer education functions.
With the new reliance upon the competitive market to provide basic electric
and telephone services for small consumers, the CPUC's new challenges are,
in the simplest of terms:
1. Promote a competitive marketplace with multiple buyers and sellers.
2. To arm all consumers with the information necessary to make informed
choices.
These two elements are essential components to a competitive market.
This underlying premise compels the CPUC to adequately inform consumers of
their choices of service and service providers. This mission can be
accomplished with three strategies:
i. Sponsor and disseminate price and quality comparisons of deregulated
services;
ii. Monitor customer education conducted by private participants and
administer an education trust funds for electric and telecommunications
industries; and
iii. Work to help aggregate customers, especially traditionally underserved
communities.
2. Price and Quality Comparisons
If a consumer is unable to comparison shop for utility services, then
the market will fail. In order to shop, a customer must be able to
determine value. In order to establish value, the consumer must be able
to compare price and quality of competing services. The "competitive"
markets don't always succeed in providing such information. Notably,
long-distance and local-long distance telephone services and the auto
insurance industry has failed to properly apprise customers of this
essential information. (In response, the state's Department of Insurance
has a program to assess and public comparative rates or customer service
records for auto insurers. It is also statutorily charged with creating a
"hotline" service for price comparisons to customers.)
The Commission will need to increase its educational efforts to
supplement the information provided by the private market. These efforts
should include:
a. Monthly listing of licensed energy providers
b. Bi-annual listing of price comparisons and energy providers
c. Bi-annual listing of consumer complaint information
d. Annually-revised glossary of energy service terms and description of
services
e. Telephonically-accessed listing of service providers whose license
has been revoked, suspended or limited and an alert about unlicensed
providers
f. Creation of representative service benchmarks for different types of
customers upon which comparisons of service can be readily made.
This information should be made available to customers at no cost. It
can be distributed though CPUC offices, community-based organizations,
other state agencies and by all licensed energy providers.
3. Customer Education by Private and Non-Profits
Beyond simply providing price comparison information and evaluative
services, the CPUC will be obligated to monitor private consumer education
by market competitors and non-profits to ensure accuracy of the
information. There are three concrete steps that can be taken by the CPUC
to improve the quality of consumer information in the market. These steps
include:
1. The Commission should provide copies of its education materials to
CBOs and other state agencies for distribution to clients.
2. As part of its public outreach and dispute resolution functions,
the Commission should train individuals in CBOs and assorted social service
agencies to handle electric and telecommunications complaints. These
designated individuals will then be familiar with the kinds of complaints
and available remedies to customers who have problems with their newly
competitive services. The individual could advise the consumer, help
mediate a resolution or refer the customer to the CPUC and/or other
appropriate entities for resolution of the complaint. This training effort
could substantially increase the likelihood that consumers will get
assistance. It will also serve as an early warning system for potential
systemic problems in the market and it potentially reduces the workload on
the Commission's Consumer Services Division.
3. The CPUC can also serve an advisory function for market
participants. During the transition period, the CPUC should provide a
service whereby it will review marketing materials voluntarily submitted by
service providers to the CPUC. By undergoing an accuracy review by the
CPUC, the market providers may be protected against possible private action
for misleading or false advertising. And the CPUC is able to proactively
prevent potential customer confusion.
4. Help Lower Transaction Costs for Aggregation of Customers
Small customers will need to be aggregated in order to gain adequate
market leverage to benefit from electric competition. Absent aggregation,
these customers may fare poorly if the power exchange does not perform
adequately. As demonstrated in insurance, banking and other complex
services, aggregation of small customers minimizes transaction costs and
increases market leverage. In newly established markets like electric and
telecommunication services, it is essential that such aggregation occur, so
as to give small consumers some opportunity to secure improved service and
lower costs.
During the five-ten year transition period, the CPUC should be active in
helping promote aggregation. It can serve as a coordinator for private
companies to find customers. For example, it can distribute information to
the state's customers about available aggregators in rural, inner city and
other underserved communities. It can establish a hotline where interested
consumers can learn of the potential aggregators. For example, the CPUC
has established a reseller program for cellular services but most consumers
are unable to track down the names and phone numbers for these resellers.
A call to the CPUC hotline is of no value -- they don't have this
information. But they should.
The CPUC can be even more active and work with the private market to
aggressively promote customer aggregation. It can assist municipalities
and other public agencies who seek to create muni-lites for electric or
phone services. It can list the aggregators' names and product information
on the CPUC Web Site and make the information available at CPUC offices.
Finally, the CPUC can give financial incentives for mass aggregation.
Just as the California Energy CPUC sponsored a "golden carrot" program for
refrigerator efficiencies, the CPUC can offer financial incentives to phone
companies, water companies, large retailers and other potential aggregators
of electric and local services. The CPUC is acutely aware of the problems
faced by traditionally underserved communities. It has studied and is
aware of low-income, senior, rural, ethnic minority, inner-city and other
readily identifiable subgroups that have been disserved in
telecommunications reforms. It is uniquely qualified to help identify and
aggregate these communities. This task can not be left, exclusively, to
the private market because that market has, and will admit to being,
ill-equipped to address this equitable objective. Markets pride themselves
in achieving efficiency, not equity.
5. The UDC Should Provide Personalized Energy Usage Profiles to Its
Customers
In order to effectively comparison shop, customers will need to
understand their energy consumption patterns and history of usage. It is
unreasonable to expect that customers have saved their bills over the
previous three years in order to secure this information. However, UDCs
have collected a certain amount of historical data about its customers that
can be used.
The UDCs should be ordered to provide, upon request, an energy usage
profile for an individual customer. This profile would include a chart and
breakdown of monthly data for energy consumption and price paid for energy
over the previous 12-24 months, depending upon the information storage
practices of each UDC (typically, utilities save 13-18 months of customer
usage data. It should be adjusted for weather and price changes. It
should also include a comparison to other representative customers' data so
as to provide a benchmark against which to a customer can compare his/her
usage. The first energy profile should be offered at no cost to customers.
Modest charges may be applied to subsequent profile requests.
This profile will be the basis upon which customers can gauge their
historical energy consumption patterns, better assess their energy needs
and gain a sense of the cost of that electricity. This profile could be
released by the customer to retail energy companies to better enable them
to choose appropriate services for that customer.
6. Focus Upon Underserved Communities
Even under the regulatory paradigm, certain residential customer groups
have been underserved relative to other customers. In telecommunications,
rural areas, low-income and minority groups, especially those with
language-diversity, were not as well served as other customer groups. In a
competitive markets, underserved communities will increase as private
markets function to stratify social and economic classeses. Residential
consumers will be cherry picked because the underlying objective of the
competitive market is to discriminate. Unfortunately, the the social
objective of non-discriminatory electric services (c.f. Public Utilities
Code 451, et. seq, 453 et. seq.) is undermined by this competitive reality.
Thus, it is encumbent upon the Commission to focus its attention on
potentially underserved communities, (e.g. rural areas, minority groups,
seniors, renters, low-income, inner city and areas served by antiquated
equipment). In a competitive electric market, these underserved
communities may also be technologically dictated. For example, areas with
distribution constraints or unusual climatic zones may prove unattractive
to aggregators. The Commission will need to pay special attention to the
intentional or inadvertant discrimination that is engendered by the
competitive market.
C. USE OF UDC BILLS TO PROMOTE CUSTOMER EDUCATION AND
AGGREGATION
Points: UDC will be sending monthly bills to most small customers for
distribution service costs
This bill packet has "unused space" that can provide information
The CPUC can require inserts that list aggregators' names and
information
Other state mailers, such as DMV and tax-related mailers can be used.
It can distribute lists of qualified, certificated aggregators along
with customer information about how to evaluate these services. In short,
it can help reduce the significant transaction costs facing any service
provider seeking to "crack" the mass market. Notably, this list can be
distributed an information insert in a distribution companies billing
packet, much like rate increase notices are currently distributed. The
cost of the insert could be defrayed by a contribution from those
aggregators who are listed in the notice.
D. ELECTRIC EDUCATION TRUST FUND
(to be provided separately by Greenlining Institute)
***********
Time is the best teacher. The only problem is she kills off all of her
students..
Michael Shames
mshames@ucan.org
UCAN
1717 Kettner Blvd. Suite 105
San Diego, CA 92101
(v) 619-696-6966
(f) 619-696-7477