Date: Tuesday, 10 Sep 1996
Subject: Chapter 6
To: DAWG - TEAM "D"
From: Michael Shames & Susan Brown
RE: Chapter 6 of DAWG Consumer Protection Report
This is the proposed chapter 6 for discussion at the September 12th meeting at the Oakland Hilton. I look forward to a discussion on this proposal at that meeting.
Existing California law embodied in the Unruh Act prohibits all business establishments from engaging in any form of arbitrary discrimination whatsoever, and the intent of the law has been liberally construed both as to types of prohibited discrimination and protected groups. Vulnerable consumers, including the poor, small residential and language and racial minorities, have been found to fall under Unruh's purview.
There is concern that certain new providers to the market may choose not to offer energy services in certain geographical areas, similar to California's experience in the insurance industry. While it is permissible to limit services to large industrial customers, for example, it is not legal to exclude certain classes of customers because of geographical areas, coinciding with racial/ethnic concentrations.
Thus, the Commission should require providers to submit data both at the time of their registration with the Commission, and on an annual basis, on customer applications for service and the basis for credit determination. Further, the Commission should promulgate regulations analogous to those adopted by the Insurance Commissioner, or the federal Community Reinvestment Act, which require all providers whose business revenue in California exceeds a given amount to file information by zip code, including: the number, percentage, race or national origin, and size of customers (residential, small business or industrial) served in various communities accompanied by a map showing those customer concentrations, including the rates being offered each; the number and percentage of direct mail and telephone solicitations for new business in various communities, including zip code and racial/national origin identification of the customer; and the number and percentage of applications, with zip code and race or national identification, for which the energy provider declined to provide direct access service.
This data would enable the Commission to ensure that all customers benefit from deregulation through access to choices about their electricity provider and/or aggregator. Additionally, it will ensure that certain geographical locations are not charged higher rates than others for like services. Finally, it will minimize the likelihood that certain groups of customers, such as the poor or racial minorities, will by necessity be "captive" customers of the local utility by virtue of not having attractive choices offered to them analogous to those offered other like customer groups. Requiring providers upon initial licensing to specify what types of customers they intend to serve will assist the Commission in monitoring that unlawful redlining does not occur. Additionally, retail energy suppliers must maintain with the Commission written policies on applications for service and the basis for its determination of credit. The policy must describe the criteria for becoming a customer of the supplier, and the criteria must be filed upon application for license/registration and kept updated at all times.
A retail energy supplier, including aggregators and meter suppliers, may hold themselves out as serving customers with a particular set of end-uses or load curves, or who meet other criteria related to the generation source and pricing policy of the supplier, so long as such criteria do not have the effect or intent of discriminating among customers on grounds prohibited by the Unruh Act or Equal Credit Opportunity Act. (See previously submitted discussion of fair credit and terms.)
a) Recurring and non-recurring charges must be disclosed in a uniform manner to be determined by the Commission. The total monthly recurring price shall be disclosed as a total centers per kWhr basis. Upfront or non-recurring charges shall be totaled and the effect of these charges on the recurring price of electricity shall be disclosed.
(b) The customer's right to redress will be explained in a uniform manner to be determined by the Commission, including no-cost and prompt complaint and dispute resolution. The Commission will also specify mechanisms for oversight and monitoring customer complaints and energy providers against whom there are numerous complaints and/or disputes.
including an option for the customer to elect release of the
personal information.
d) Explanation of the customer's options and rights regarding switching of service to another provider or the UDC and any fees or costs for switching service.
Because electric consumption information is personal information and because electric service is a necessity, the public interest is best served by protections against release of personal electric service information. Personal information includes customer-specific information relating to usage and bill payment patterns.
In order to protect customer privacy, the UDC shall not release personal information to electricity retailers, energy service providers, or other agents of the customer without tacit approval by the customer. An adequately noticed Opt-In procedure, where the customer is given an opportunity to object to release of personal information, is sufficient to gain customer approval.
The opt-out method of obtaining customer consent is inappropriate for it does not ensure informed consent by that customer. As the Commission noted in its CNEP order, default release of private information is an inadequate protection of customer privacy. With CNEP, the federal government overruled the CPUC's order and an opt-out method was deployed. However, there is no federal preemption on retail usage information --- at the moment.
The only way to ensure informed consent is to require a demonstration that the customer understands the decision they are making to release personal information. Opt-out does not reveal that understanding. Failure of a consumer to act may well be caused by a malunderstanding of the choice presented to the consumer. Or it may be attributable to oversight, obtuseness of the choice, logistical foul-ups or even misadministration by the post office or energy provider. There are a myriad of reasons and ways in which a consumer may inadvertently "opt-out" and thus reveal personal information, and many of them are out of the control of the consumer.
The only way that a clear demonstration of the consumer's intent can be ensured is where the consumer must "opt-in" in order to choose that one's personal information be released by the UDC.
Metering and Communication equipment should be controlled by the party which can operate and maintain that equipment effectively and in the most efficient manner. The Customer, the ESP, the UDC, and the public-at-large all have an interest in the equipment's safe and effective operation; so Operating and Performance Standards are necessary to insure that all parties' legitimate interests are protected.
Also, the Customer should have the right to elect ownership or rental/lease of site-specific equipment and the ESP should hold the residual right to elect ownership or rental/lease of the remainder of the system. In the long run, effective control does require ownership. But, whoever actually owns the customer-premises equipment, substantial control should remain in the hands of the premises owner.
6.5 Landlord/Tenant Issues
Electric Service is regarded as an absolute necessity for
all persons by the law; real property owners are legally required to have electric service installed at their property before it may be occupied, whether by the owner or by any other person. (Civil Code Sec. 1951.5) There are legitimate questions as to who would own the electric meter or be responsible for the meter in a rental arrangement.
Currently, electric service is provided primarily, not to any residential or non-residential tenant of real property, but to the owner. Tenants, of course, enjoy certain rights in billing if they, in fact, are charged for the service they use. But owners exercise reasonable control over the nature of that electric service, even including the decision whether they or their tenants are to be the Electric Service customer. Property rights in a premises tend to determine control over goods and services appurtenant to the premises, regardless of whether those appurtenant facilities are owned or not.
With the deregulation of telephone maintenance, the customer was put in a position to choose phone and phone service. The landlord is responsible only for the inside wiring, but nothing else. Choice of electric service brings with it the opportunity for the customer to choose the type of electric service and the meter to be used. In master-metered arrangements, clearly this choice will be limited. However, in individually metered arrangements, it would seem that each customer should have the choice of meter and the responsibility for maintenance of that meter. The landlord should not be able to impede this choice.
This issue is a compelling one due to the possibly illegal tie-in arrangements that have developed in the provision of Cable TV service and other telecommunications services. Telecom providers have entered into arrangements where they install wiring and infrastructure for a residential or small business complex in such a way as to preclude other providers from offering service to those residents. In fact, many providers have entered into written contracts expressly excluding other providers from serving the complex and requiring property managers to enforce this provision. Such arrangements are probably illegal and should not be tolerated in the nascent electric industry.
Thus, the operation of an electric metering or communications system can be specified along any appropriate performance standard.
Utility Consumers' Action Network
1717 Kettner Blvd. Suite 105
San Diego, CA 92101
619-696-6966