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Connecticut Draft: "Little" Supplier Interest in Offering Supplier-Consolidated Billing, Would Lead to Confusion
A draft order from the Connecticut PURA would conclude that there is "little supplier interest" in offering supplier consolidated billing (SCB), and would find that, "there does not appear to be real benefits to ratepayers," from supplier consolidated billing.
The draft order, which is intended as a report to lawmakers, notes that the electric distribution companies (EDCs) and suppliers have not conducted studies that estimate the costs to implement SCB, and thus the Authority is, "unable to provide this information to the General Assembly."
"Without such a study, the changes to the EDC and Supplier systems and processes discussed above are inconclusive. Also unknown is whether the cost to Suppliers of performing SCB would be any less than the EDC; what the benefits of SCB are and who would benefit; and whether SCB is feasible. Especially if only a small number of Suppliers elect to offer SCB. In the end, any additional costs to implement and operate SCB would most likely be passed on to the customers," the draft states.
However, based on the information from PURA's review of SCB, the draft would conclude that, "The Authority is concerned that having the potential of more than 50 suppliers billing for EDC services can create a complicated mess."
"The ease by which a customer may move between Suppliers complicates this matter further. Because customers can switch between Suppliers or to/from standard offer service, SCB could impact the [] Supplier's ability to provide accurate and timely bills. The additional lag time for EDCs receiving payment from numerous different Suppliers is also cause for concern. This lag may jeopardize not only the EDC's bill collection but also that of the entities for which the EDCs bill. Additionally, because Suppliers do not have the physical capability to terminate service, they would have little leverage in their billing collection service," the draft notes.
The draft would disagree with SCB supporters who imply that the only way to address various supplier concerns with utility consolidated billing (UCB) is by offering SCB.
"First, Suppliers always have the opportunity to interface with their customers and market their products and services through numerous means. Suppliers could improve customer education and communication from the time the customer begins purchasing service," the draft says.
"Second, if the products, pricing and services are limited by the current UCB, the Supplier has the option to bill its customers directly under a dual billing option. This dual billing option is a tool for Suppliers to perform customized billing and rate structures. Potential customers could weigh the service under a single UCB bill versus those billed under the dual billing option," the draft says.
"Third, shifting the responsibility of consolidated billing from the EDCs to potentially 50-plus Suppliers would, in the Authority's view, likely increase customer confusion and decrease customer service satisfaction. The EDCs are and will most likely continue to be the best equipped to address issues pertaining to the services that they provide. It is not reasonable for these entities to address issues concerning each other provider's services. Additionally, customer confusion under the current UCB may be alleviated by modifying the UCB billing format to more prominently display Supplier information and responsibilities," the draft says.
Furthermore, the draft would conclude that, "only a small number of Suppliers participated in this proceeding and provided limited information. They did not provide any information addressing the costs associated with SCB. The Authority concludes that there is little Supplier interest in offering SCB."
"In this proceeding, the Authority has not permitted SCB. The billing of all electric services by a multitude of Suppliers at this time does not seem practical," the draft would conclude. "The reasons are numerous. First, and foremost, there does not appear to be real benefits to ratepayers. If the desired result is to offer ratepayers the convenience of a single electric bill, the UCB is the most administratively and perhaps cost efficient way to provide this benefit. Second, the billing components of electric service consist of numerous charges, the vast majority of which are for services provided or administered by the EDCs. These EDC charges are very complex with some having annual or semi-annual reconciliation mechanisms. Third, while the costs are unknown, it appears likely that enabling the EDCs to transfer the necessary billing information and for the Suppliers to obtain the necessary resources to successfully assume the billing responsibility would be costly. Any additional costs resulting from SCB would likely be passed on to ratepayers. Finally, given the responsibilities that the EDCs have over billing aspects, such as meter installation and reading, bill inserts, and implementing rate changes, transferring the billing responsibilities to entities that have no responsibilities in these matters seems ill advised."
The draft noted that before SCB is approved, important issues concerning the need for additional PURA oversight and customer safeguards and protections should be reviewed. "For example, the Authority would need to: (1) address the qualification of Suppliers who choose to provide SCB; (2) address SCB customer complaints; (3) ensure that financial assurance instruments are in place for each SCB Supplier; (4) monitor Supplier billing practices; and (5) enforce Supplier billing compliance with statutes and regulations. Such oversight would likely require an increase in the Authority's staff and thus, increased costs."
"An additional consideration is that the Authority's regulations include numerous requirements regarding billing, customer notices, and service termination that have been implemented to protect customers. Thus, Connecticut statutes and the Authority's regulations would need to be thoroughly reviewed to determine the changes, if any, that would be made to protect customers under SCB," the draft notes.
"If the General Assembly seeks to pursue the costs and benefits of SCB, the Authority recommends that a full study be performed that explores what this process would entail for both the EDCs and Suppliers. This study should not only identify and quantify the physical and administrative changes and associated costs that would be required for the EDCs and Suppliers to effectuate SCB, but it should also: (1) provide detailed information regarding consumer protections; (2) detail the effect on consumer rates; (3) identify all benefits and benefactors of SCB including how SCB is in the best interest of ratepayers; (4) explore the existing Supplier switching process; and (5) how SCB would comport with existing statutes and regulations.," the draft states.
Finally, the draft would conclude that supplier consolidated billing is not permitted under current statute.
"[S]tatutory changes would be needed if the General Assembly intends to permit SCB. Conn. Gen. Stat. §16-244i states that the EDCs must provide metering, billing and collection services, with a limited exception that permits Suppliers to provide direct billing and collection services for electric generation services. Pursuant to Conn. Gen. Stat. §16-245d, PURA is only authorized to adopt regulations that permit Suppliers to bill for electric generation services. Therefore, absent a statutory change, the PURA has no authority to adopt regulations or issue a Decision permitting Suppliers to bill directly for all components of electric service and exercise responsibility for other billing-related functions that are currently performed by EDCs," the draft says.
Docket 13-08-15
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