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PSC Staff Cite Retail Choice, Customer Protection "Concerns" Regarding BGE Prepay Pilot Proposal, Offer Modifications

PSC Staff Suggest Allowing Retail Suppliers To Offer Prepay Service Under Form Of Supplier Consolidated Billing

July 19, 2017

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

In commenting on a proposal from Baltimore Gas & Electric to implement a prepay pilot program, Maryland PSC Staff said in comment that it, "has a number of specific concerns regarding customer protection and retail choice markets," with respect to the application, but said that Staff believes the concerns can be addressed through modifications to the proposal.

Among Staff's stated concerns is the interaction of the BGE prepay program with the retail market

"Given Maryland's successful history with retail choice markets, it seems less effective to design a pre-paid program that does not integrate fully with the restructured energy market in Maryland. While retail marketers may argue that BGE, as a regulated utility should not provide any type of prepaid services, Staff suggests that BGE should develop a program that takes into account retail market development. As proposed, retail providers could only participate in the pre-paid market under utility consolidated billing ('UCB'), without a means to present bills of their own or specialized pre-paid rates to customers. BGE has not proposed to reflect in pre-paid rates, reduced costs of collection, cash working capital, customer service, or billing," Staff said

While not one of Staff's formal recommended modifications to the BGE prepay program as a condition for approval, Staff suggested that retail market concerns could be addressed by allowing retail suppliers to offer prepay on their own through supplier consolidated billing

"Retail choice providers, through a pre-paid program, would be able to offer a new billing approach of supplier consolidated billing ('SCB') that has been heretofore impractical in Maryland. SCB is the competitive retail counter part to UCB. Through SCB, the retailer bills and collects for both the retail commodity and the regulated distribution rates. This has been impractical in Maryland, because a retail supplier would not possess the right to terminate a nonpaying customer's service as an electric or gas company could. The use of a prepayment method to collect funds prior to the use of service is likely to provide a solution to that hurdle for SCB without requiring termination for failure to pay a supplier's bill. Any retail choice involvement would require a review of rates, proper notice of variable rate changes, much as existing UCB does now; however, the opportunity for retail providers to provide service under SCB may create more interest in the Maryland market. Similarly, Staff would insist that retail suppliers offering prepaid meet the same stipulations as we are proposing for the BGE Pilot," Staff said

Among the specific modifications Staff proposed as a condition of approving BGE's prepay pilot is that, "Prior to any further development of the Pilot, the Commission should direct the Company to engage retail choice stakeholders to align the Pilot design with retail market enhancements, including consideration of supplier consolidated billing or other measures that encourage market improvements."

Other notable proposed modifications include:

• Staff believes participating consumers should be protected if the prepaid program leads to disconnections due to Company error or if security lapses in the prepaid system lead to disconnections. Staff requests that BGE guarantee payment to customers for lost food or other perishable costs due to disconnections caused by Company error in operating the prepaid program or if there are prepaid system failures such as hacking that lead to disconnections. Additionally, Staff requests that BGE guarantee the security of consumers' personal information security and privacy under the prepaid program and agree to provide affected customers three years of identify theft protection if customer's personal information or privacy is compromised by participation in the prepaid program.

• Staff would require that each customer be given two 48-hour grace periods over the course of the year long Pilot to pay his/her bill once the account has reached zero balance before service is disconnected. A customer would activate these grace periods by calling BGE or requesting them via an email or text.

• Staff would add the requirement that participants have an active credit card or checking account to participate in the pilot.

• Staff believes that the Commission should require BGE to add an autopay option to the pilot.

• As proposed, BGE will provide customers multiple alerts, with the option to request additional alerts, as a customers prepaid balance approaches a zero balance. BGE's proposal does not include a notice when the customer's balance actually reaches zero. Staff requests that the Commission require BGE to issue alerts when a customer's balance reaches zero. Staff also would require that BGE notify a customer when service has been disconnected

• Staff requests the Commission require pre-approval of all notifications and alerts BGE proposes to send to customers participating in the Pilot as well as the customer education and promotion materials.

In filed comments, the Retail Energy Supply Association said that, "[a]pproving BGE’s proposed prepaid pilot program would undermine the competitive marketplace, erect an additional barrier for competitive retail suppliers seeking to develop competitive prepay offerings, and harm customers."

RESA said that, "BGE’s Pilot Proposal would insert BGE smack into the middle of customers’ contractual relationships with their competitive retail suppliers," as, "[t]he customer would be required to check with BGE to see how much money she has in her prepay account, and would receive communications from BGE about her supply, even though she elected to contract with a supplier for her supply."

"[B]y: (1) offering a prepay program paid for by captive customers; (2) lacking the capability to allow retail suppliers to offer similar, or more attractive, prepay programs; and (3) inserting itself into customer/supplier relationship on a daily basis as explained above, BGE’s prepay proposal harms the development of the retail market (and is therefore anti-competitive) and discriminates against suppliers in favor of BGE’s own prepay program," RESA said

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