July 25, 1996

To: Lynn Maack, DRA

DAWG D Working Group Members

Fm: Susan E. Brown

Re: Draft of consumer bill of rights, TET-like fund, registration and oversight and consumer education sections for final DAWG report of August 30, 1996.

As a follow-up to my June 18 draft distributed to the Direct Access Working Group (DAWG) D members, The Greenlining Institute and Latino Issues Forum (hereinafter "Greenlining") submit the following for inclusion in any final draft submitted on August 30, 1996. For the reasons articulated herein, these comments either expand upon or reject certain proposals already set forth in existing drafts on the same topics. Greenlining also hereby expresses its interest in being included in any final drafting/editing team for the August 30 report.

The Greenlining Institute and Latino Issues Forum have some concern about the summary cancellation of remaining DAWG D meetings to the extent that responsibility for determining what will be contained in a final report is thereby necessarily delegated to a handful of persons. While we have utmost confidence in their skills and judgment, Greenlining has been the originator of most of the consumer education and protection principles contained in the Commission's restructuring decision. As such, Greenlining is deeply committed to participating fully to ensure that those adopted principles are adequately fleshed out in any final report, especially as those principles focus directly on California's most vulnerable consumers.

Greenlining will expand later on its proposals for the administration and funding of a Restructuring Education Fund, as referenced under section 1.1.1, and it will further propose a Code of Conduct for energy providers.

CONSUMER PRINCIPLES FOR RESTRUCTURING OR CONSUMER BILL OF RIGHTS

I. Right to Know

Customers must be ensured of access to no-cost, accurate and multilingual informational and educational materials which enable comparison of price, quality, service record and terms of service offered by all market participants. Such materials must be readily available to all customers and must be disseminated in various languages through multiple media intended to reach different customer groups. The materials must contain all basic information necessary for customers to make informed decisions about electricity suppliers, including different suppliers' previous experiences in the market and track records.

II. Right to Choice

All customers should have the ability to choose between competitive services, including aggregation, in a deregulated market, and barriers which impede free choice, including redlining, must be eliminated. Monitoring mechanisms, analogous to the anti-redlining regulations currently in place for large insurance companies operating in California, should be instituted and analyzed annually for enforcement purposes. Discrimination by providers based on race, gender, ethnicity, and other unlawful categories must be discouraged through appropriate sanctions and penalties.

III. Fair Dealing

All classes of customers should have access to affordable choices and pricing options without discrimination. Service options must be responsive to customer needs and performance must be verifiable. Slamming, excessive rates, overbilling and other marketing abuses which exist in the telecommunications area must be prohibited and met with severe sanctions, including license revocation, penalties, full restitution to the customer, and a fund for community education. Energy providers must be made responsible for the actions of their agents or representatives. Geographic rate deaveraging must be prevented, and tariff compliance certification should be required (i.e., rates in all parts of the state should be within a required range, such as 5%.) Credit terms, including compliance with the Equal Credit Opportunity Act and Fair Credit Reporting Act, must be required, and a provider of last resort, or default provider, should be mandated at fair and reasonable rates for all customers.

IV. Right to Redress

Regulatory oversight must continue to ensure that there is a neutral, prompt, no-cost and effective forum for receiving customer complaints against electricity providers and instituting investigations where warranted. The forum must provide complaint resolution and redress for limited and non-English speaking customers. Regulatory powers must include enforcement, oversight and levying penalties, --including suspension or revocation of a provider's CPCN or license--, monetary sanctions and full restitution to consumers, including penalties being paid into a fund for consumer education. Consumers must have the right to petition for enforcement actions. Pending resolution of Commission investigations against providers charged with slamming or defrauding large numbers of customers, the Commission may order the provider to post a bond sufficient to satisfy any likely judgment where the provider's place of incorporation or association is outside California or where there is evidence of fiscal instability.

V. Customer Participation

Customers must be able to participate in regulatory oversight of the restructured industry, which should be on-going during and after competition commences, including the above-specified right to petition the Commission for redress.

VI. Right to Privacy

[no changes to July 8, 1996 draft]

VII. Quality of Service

[no changes to July 8, 1996 draft, except for deletion of brackets]

VIII. Required Codes of Conduct & Oversight

[no changes to July 8, 1996 draft, except to specify that any alternative code must be equally or more stringent in terms of the protections that it offers customers and that all market providers must meet minimum fiscal responsibility standards or provide a bond and that top management and officers must disclose to the PUC and keep updated at all times: their legal name(s); business address; state where incorporated or associated, including the date of organization, articles of incorporation or association, and the name, title and address of each officer and director; name, title and telephone number of customer service contact person; name, title and telephone number of the regulatory contact person; brief description of the nature of business being conducted; and disclosure of any past civil or criminal actions taken against the company or any officer or director of the company for any illegal acts related to the operation of the business for the past ten years by any state or federal jurisdiction.]

IX. Right to Affordable Electric Service

[no changes to July 8, 1996 draft except to delete brackets]

X. Transactions costs

[no changes to July 8, 1996 draft except to clarify that various public purpose programs, such as low-income assistance and environmental programs should be funded for the long-term, as delineated in the December 1995 Commission decision]

XI. Improvement over the status quo

[no changes to July 8, 1996 draft]

1.0 Right to Know; Consumer Education

1.1. COMMUNITY BASED EDUCATION

[no changes to July 8, 1996 draft except to expand on the necessity for consumer education both to inform about deregulation and to prevent foreseeable marketing abuses targeted at the most vulnerable customers, particularly the poor, non-English speaking, limited-English speaking and immigrants] The Greenlining Institute and Latino Issues Forum suggest inclusion of the following language under section 1.1.(v).

v. Use Consumer Education to Prevent Foreseeable Abuses. Telecommunications deregulation foretells some of the marketing and other abuses that will come with electric deregulation in California. Not only is it critical that consumer education begin well before-the-fact to inform customers that restructuring is going to happen and what it will mean to them, but they must also be educated to be informed about how to protect themselves from abuses by the unscrupulous. Language minorities, the poor, immigrants and limited English speaking will be most susceptible to targeting by fly-by-nights and quick buck artists. They must be educated both ahead of time and as restructuring progresses about how to evaluate and/or make informed choices among competing energy providers, what credit information may be sought, where to report suspected abuses, what to do if they are overbilled or slammed, where to go for redress, and what their rights are in terms of a provider of last resort. All information must be multilingual and culturally appropriate, and provision must be made for illiterate customers or those, such as the Hmong, without a written language.

1.1.1 Restructuring Education Trust

Greenlining advocates a structure similar to the TET fund, with independent administration and allocation of funds to community organizations who are familiar with slamming and fraud issues, and who also have the confidence of the community.

1.2. EDUCATIONAL MATERIALS AND PROGRAMS.

[no changes to July 8, 1996 draft except that it must be emphasized that all materials and programs must be multilingual and culturally appropriate. Again, it must be clear that educational efforts should be directed toward consumer education about the new deregulated world, particularly for the most vulnerable, and also targeted toward prevention in terms of educating consumers about potential abuses and what to do to safeguard themselves.]

Community groups who have different communities' trust, as well as the ability to communicate and relate to their problems, must be involved in the educational process. To that extent, Greenlining disagrees strongly with the proposition that no participant to these proceedings should be eligible for funding to educate vulnerable groups. Indeed, some of these very organizations are the most knowledgeable about consumer issues attendant to restructuring as they affect vulnerable communities. They are further the groups in which many minority groups have confidence and trust. Also, existing precedent in the Telecommunications Education Trust permitted parties to that marketing abuse case, which engendered the TET fund, to receive monies for community education. There is absolutely no evidence of impropriety or problems under that funding structure. Finally, as detailed above, in section IV of the Consumer Principles, consumer education must include information about how and where to obtain prompt and no-cost redress, including the right to petition the Commission for enforcement actions.

1.2.1. CPUC Education Responsibilities

[no changes to July 8, 1996 except to correct a typographical error which speaks in terms of "preventing chronically underserved communities" and to expand upon Commission duties with respect to preventing marketing abuses, ensuring that vulnerable communities and not targeted by the unscrupulous, ensuring that educational efforts reach those same communities through multilingual and varied media, and monitoring against both redlining and slamming or fraud.] Thus, Greenlining suggests under section 1.2.1.(2.):

1.2.1.

2. To arm all consumers with the information necessary to make informed choices through multilingual and varied media educational efforts, particularly targeted toward the most vulnerable.

3. Education should also be directed toward informing communities about potential abuses under deregulation, including how to safeguard themselves as consumers and what to do in case of fraudulent practices affecting them.

A further subsection should be added after subsection iii, as follows:

iv. Monitor customer complaints and alleged abuses by providers, both in terms of how well educational efforts are enabling customers to report problems and complaints as well as the level of potential fraud or abuse by new providers.

1.2.2. Price and Quality Comparisons

[no changes to July 8 draft except to emphasize that all such price and quality comparisons must be available to non and limited-English speaking.]

1.2.3. Customer Education by Private and Non-Profits

[no changes to July 8 draft except to clarify that market participants should be forewarned that they will be held responsible for the actions of any agents or representatives.] Thus, Greenlining suggests the inclusion of a paragraph 4, as follows:

4. The CPUC must inform providers that they will be held responsible for any fraudulent, deceptive or other unlawful marketing or billing acts performed by their agents and representatives, whether or not they attempt to insulate themselves by classifying such persons as independent agents.

1.2.4. Help Lower Transaction Costs for Aggregation of Customers.

[no changes to July 8 draft except to query whether it exceeds the scope of the December 1995 Commission order]

1.2.5. The UDC Should Provide Personalized Energy Usage Profiles to Its Customers

[no changes except to highlight that such services should be multilingual]

1.2.6. Focus Upon Underserved Communities

[no changes except to reiterate the necessity and duty of the CPUC to monitor and enforce anti-redlining, as set forth above in Consumer Principle II, Right to Choice and section 1.2.1. CPUC Education Responsibilities]