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Pa. Consumer Advocate Says Supplier Consolidated Billing Would Increase Costs, Opens Door For Texas-Style Fees For Customer Service Functions

January 24, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Pennsylvania PUC should reject a petition from NRG Energy to implement electricity supplier consolidated billing (SCB) because SCB would increase costs and open the door for the charging of additional fees for customer service functions, the Pennsylvania Office of Consumer Advocate said in comments to the PUC

EnergyChoiceMatters.com exclusively reported that NRG Energy had petitioned the PUC in December to implement SCB (see story here)

"If an EGS wants a more direct relationship with the customer or wants to bill for other products and services, this can be done through the dual billing option provided for by the Customer Choice Act. There is no need to shift distribution charges and customer care functions to the EGS to achieve this relationship," OCA said.

"The OCA would also note that supplier consolidated billing would necessitate a complex and confusing division of responsibilities for utility service. Of particular concern is the need for EDCs to meet the requirements of Chapter 14 of the Public Utility Code which governs deposits, payment arrangements, collections, terminations, winter moratoriums, reconnection and reporting requirements. Equally important is the need for the EDC to handle outage calls, storm management responsibilities, and emergency calls. Supplier consolidated billing would require the customer to have a separate contact for these important functions," OCA said

"SCB is also likely to increase costs to consumers. NRG points to billing credits that were originally included in the Restructuring Settlements for supplier consolidated billing to suggest that SCB will reduce costs. Much has changed since those billing credits were established in 1998. Many EDCs have made significant new investment in their Customer Service and Billing Systems, particularly as part of the deployment of smart meters. These costs are not avoided by customers selecting a supplier consolidated billing option. The EDC must always stand ready to serve the customer with billing services whether the customer returns to default service or switches to another supplier that does not provide consolidated billing. Simply put, supplier consolidated billing would either result in stranded costs for the EDC (the recovery of which is not provided for in the Customer Choice Act) or would require customers to pay twice for billing service. This unnecessary cost does not advance the competitive retail market," OCA said

"The OCA is also concerned that supplier consolidated billing may create confusion in the market for consumers and may result in additional costs for consumers. If implemented, it is reasonable to assume that not all EGSs would wish to engage in SCB. Indeed, as the Commission recognized, it is more likely that the majority of suppliers would not wish to forego the ease and convenience of utility consolidated billing under POR. It is questionable how EGSs like NRG who would now be shouldering the additional costs of expanded calling/customer service centers, compliance with Chapter 56, uncollectible expense and other operational expenses would remain competitive with EGSs who choose not to embark on SCB," OCA said

"One possible answer would be the imposition of fees for handling customer service functions, a method that has been employed in Texas," OCA said. OCA cited as examples, from a Green Mountain Energy terms of service document, a $5.95 payment processing fee for telephone payments using a live agent, a $5 fee per bill period fee for copies of bill records (after the first request in a year), a $15 fee for making five or more payments per month on an account, and $5 per call fee for reminders of past due amounts.

"In bearing such costs, the OCA submits that pricing distortions may occur, which could cause significant confusion for EGS customers. The Customer Choice Act requires that information 'be provided to consumers in an understandable format that enables consumers to compare prices and services on a uniform basis' or in other words, allow for apples-to-apples comparisons of offers. See 66 Pa. C.S. § 2807(d)(2). See also 52 Pa. Code § 54.1. It can be reasonably presumed that EGSs implementing SCB would recover the costs to do so by adding it to their per kWh price or via additional fees on customers' bills. If added as an increase to the per kWh price, the offer would likely appear less than competitive with other supplier offers but adding it through fees would result in such EGS pricing not being able to be compared 'apples-to-apples' to non-SCB EGS pricing or the EDC price to compare. Neither option appears to advance Pennsylvania's retail choice market," OCA said

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