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Retail Suppliers File Petition Requesting Maryland PSC Implement Supplier Consolidated Billing By June 30, 2019

Propose Qualifications For Suppliers To Offer SCB, Including Threshold Level Of Experience in Terms Of Years, Number of Customers Served

September 8, 2017

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

A group of retail suppliers have petitioned the Maryland PSC to issue an order that mandates: (1) the implementation of Supplier Consolidated Billing (SCB) as a billing option available to customers of competitive licensed retail electricity and natural gas suppliers by June 30, 2019 at the latest; (2) the adoption of several policy provisions concerning SCB; and (3) the establishment of a rulemaking proceeding and working groups to facilitate the drafting of new and revised COMARs needed to implement SCB.

Filing the petition were NRG Energy, Inc. (NRG), Interstate Gas Supply, Inc. d/b/a IGS Energy (IGS Energy), Just Energy Group, Inc. (Just Energy), Direct Energy Services, LLC (Direct Energy), and ENGIE Resources LLC (ENGIE)

Proposed Qualifications:

The suppliers proposed the following financial qualifications for a supplier to use SCB:

• The supplier shall have at least five (5) years of experience serving customers in Maryland or other competitive electricity or natural gas markets.

• The supplier shall have experience of serving at least 25,000 residential electricity or natural gas customers in Maryland or other competitive electricity or natural gas markets.

• The supplier shall have at least five (5) years of experience or the equivalent with handling:

     (1) Call center operations;

     (2) Complaint functions; and

     (3) Billing, credit, and collections functions.

     (4) The supplier may satisfy the requirements of (1) through (3) above by entering into an agreement with a third party, including an affiliate, with the requisite 5-years’ experience, to provide supplier consolidated billing services in Maryland.

• The supplier shall post security naming the applicable distribution utility as the beneficiary in the event of nonpayment of distribution charges, in an amount equal to two months of distribution charges, using the highest two months in the most recent twelve-month period, which amount may be reviewed and adjusted quarterly.

• The supplier shall provide and maintain security payable to the Commission with a face value of $250,000 for the purpose of maintaining certification, in the form of a surety bond, a guarantee provided by a parent corporation or other person, letter of credit, cash, or other financial surety or guarantee. This security would be in addition to the security provided and maintained by the supplier to demonstrate financial integrity under COMAR 20.51.02.08 and 20.54.02.08.

• The supplier shall maintain a local office in Maryland.

The suppliers propose that suppliers offering SCB shall certify that they will comply with the following legal requirements, as applicable:

1) COMAR 20.30 (relating to customer deposits, late payment charges, and customers’ rights pamphlets);

2) COMAR 20.31 (relating to terminations of service);

3) COMAR 20.32 (dispute procedures);

4) COMAR 20.50.04 (relating to customer relations in the provision of electric service) and COMAR 20.55.04 (relating to customer relations in the provision of natural gas service);

5) COMAR 20.51 (relating to electricity supplier licensing requirements for competitive billing) and COMAR 20.54 (relating to natural gas licensing requirements for competitive billing);

6) COMAR 20.53 (relating to competitive electric supply) and COMAR 20.59 (relating to competitive natural gas supply)

Receivables

The suppliers proposed that, to provide SCB, the supplier would be required to purchase the full value of the utility’s receivables, meaning that it would be at a zero discount rate. The payment period would be the same as the timing for the utilities to purchase supplier receivables under the existing POR procedures -- payment to be due by the 5th day from the due date noted on the consolidated bill. It is further proposed that the purchase would be without recourse for all charges and, otherwise, on the same terms that the utility purchases supplier receivables for the existing utility consolidated billing (UCB). The supplier, in turn, would be responsible for collecting from the customer all the charges, just as the utility does today with UCB.

"Importantly, this proposal regarding accounts receivables would preserve all existing protections enjoyed by Maryland’s retail customers with respect to the Commission’s standards and billing practices for residential service set forth in COMAR 20.50.04.01 et seq. (electricity), COMAR 20.55.04.01 et. seq. (natural gas) and other applicable COMARs," the suppliers said

Disconnect for Non-Payment

The suppliers propose that SCB suppliers be permitted to direct the utilities to disconnect a customer for non-payment of commodity supply, for a lawful reason authorized by COMAR 20.31.02.02

Suppliers would be required to have, "made reasonable attempts to collect the past-due bills using normal collection procedures," as utilities are currently required to do under COMAR 20.31.02.05.B

SCB suppliers would not be permitted to direct the disconnection of a customer for non-payment of non-commodity or value-added services

The utilities would continue to be responsible for physically disconnecting service, and the notice process would be the same as currently used for utility-initiated disconnections, commencing with the issuance of written notice to the customer, with the utility taking all remaining steps set forth under COMAR 20.31 through the physical disconnection.

Specifically, the utility would continue to handle the communications required by the COMARs and would implement the terminations in a manner that is consistent with COMAR 20.31, including the restrictions on terminations in COMAR 20.31.03 (relating to serious illness and life-support, elderly, winter restrictions, etc.) and COMAR 20.31.05 (relating to residential customers qualifying for the Utility Service Protection Program).

"It is imperative that any SCB rules or regulations afford the supplier the same tools to disconnect for non-payment as currently afforded the utilities," the suppliers said

"The current regulatory and legal construct includes established and well-defined termination proceedings that allows the utilities, when utilizing UCB for shopping customers for electricity and natural gas, or for delivery service in a dual bill scenario, an equitable means to manage their uncollectible accounts. The same tools must be available to suppliers offering SCB," the suppliers said

SCB suppliers would be permitted to submit a disconnect request under the following circumstances: (1) non-payment of a delinquent account; (2) failure to comply with the material terms of a payment arrangement; (3) failure to complete payment of a deposit, provide a guarantee of payment, or establish credit; or (4) tendering payment for reconnection of service that is subsequently dishonored.

"Absent the ability to direct the implementation of disconnection protocols, an SCB supplier would be unable to respond appropriately to these circumstances and therefore unable to manage its bad debt or have any meaningful opportunity to collect unpaid amounts from its non-paying customers. Simply dropping a non-paying customer to SOS or SS is insufficient and does not enable a supplier the key tool it needs to manage its bad debt, just as it would not give utilities the tool they need in identical circumstances. Moreover, unlike utilities, suppliers do not have the ability to collect uncollectible expenses from other customers through base rates." the suppliers said

Other Issues -- Flat Monthly Charges, Deposits

The suppliers propose that suppliers should be permitted to display utility charges on the SCB as a single, combined price for all energy consumed during the billing period, and have the option of absorbing any increase in distribution rates instead of passing them on to the customers

The suppliers propose that suppliers offering SCB services must be permitted to request deposits from customers consistent with the Commission’s regulations in COMAR 20.30.01 (non-residential customer deposits) and COMAR 20.30.02 (residential customer deposits)

Rationale

Suppliers said that SCB would allow suppliers to offer innovative products to customers such as flat bill plans and prepay service.

In a statement concerning the petition, the suppliers further said that, "SCB will enable customers to gain access to more innovative products and services that meet their individual needs -- including bundled products and services like home security, surge protection, smart thermostats and energy monitoring."

"The implementation of SCB would significantly level the playing field for retail suppliers – no longer would suppliers have to rely on their biggest competitors to send out the monthly bills and manage collections for their customers. The current UCB [utility consolidated billing] arrangement stands in stark contrast to the billing and collection activity of virtually every other commodity purchased by consumers in the U.S. economy; it is unprecedented that a transportation or delivery company stands between customers and their chosen supplier," the suppliers said in their petition

Suppliers emphasized the need for SCB in order for suppliers to forge relationships with their customers.

"One only needs to look at how the utilities take advantage of their direct billing relationship with their customers to see the sales and branding benefits that SCB can afford suppliers. Utilities sell a host of products and services unrelated to delivery services. For example, Potomac Edison has a surge assistance program for $4.99 per month and also offers a 'Connected Home Plan' at a 'low monthly amount conveniently added to your electric bill -- just $14.99 a month.' These programs, and others like them, are in addition to the multitude of products and services that the utilities are allowed to offer through the EmPower Maryland program, the costs for which are billed directly to customers on the utility bill. Moreover, by controlling the bill, the utilities have the ability to send bill inserts that bring news and company branding directly to the customer. As an example, Delmarva Power encourages its customers to 'Go Solar,' BGE relishes its support of renewable resources and its community involvement, and Pepco has partnered with the Arbor Day Foundation to give away free trees to help conserve energy. These are the types of communications that billing entities can offer to sell their products and build their brand. Suppliers, for now, must send their own separate correspondence (which is likely to be viewed by customers as 'junk' mail and discarded), and are denied the ability to use a consolidated energy bill to forge that relationship with their customers," suppliers said

Reviewing the history of SCB in Maryland, the suppliers said, "[T]he Commission endorsed SCB even before the passage of the Electric Customer Choice and Competition Act of 1999 ('Electric Choice Act'), -- which mandated that SCB be allowed for electricity -- and the Natural Gas Supplier Licensing and Consumer Protection Act of 2000 ('Natural Gas Act'). The Commission has recognized not only the legality of SCB in Maryland but also its importance and convenience to customers and its central place in furthering retail energy markets. In prior orders, the Commission cited a lack of interest in SCB from suppliers; that, however, is no longer the case."

The suppliers said that the Electric Choice Act, in § 7-505(b)(5)(i), directs the Commission, by regulation or order, to unbundle electric companies’ rates, charges, and services. The Commission has held that this unbundling requirement, "is a fundamental part of electric restructuring," and involves four components: generation; transmission; distribution; and metering and billing

The suppliers said that Section 7-511 of the Electric Choice Act specifically mandates the implementation of competitive billing and, in § 1-101(j), the term "Electricity supplier" includes a person "who sells . . . competitive billing services."

The suppliers noted that, until 2009, the four Maryland investor-owned electric utilities -- Baltimore Gas and Electric Company (BGE), Delmarva Power and Light Company (Delmarva Power), Potomac Electric Power Company (Pepco), and Potomac Edison -- offered SCB as a billing option.

Of the two investor-owned natural gas utilities with small volume retail choice programs -- BGE and Washington Gas Light Company (WGL) -- BGE does not offer SCB. "WGL has offered SCB since 1996, but the rules of WGL’s SCB program can be improved to make it attractive for suppliers who meet Commission-established SCB qualifications and which addresses the treatment of accounts receivable," the suppliers said

Suppliers propose that SCB be implemented as an additional billing option -- not as a replacement for the current UCB

The suppliers said in a statement concerning the petition, "Under the provisions in the Petition, consumers will be entitled to the same billing and payment protections, whether a supplier or utility renders the bill, which include a clear description of products and services included on the bill, the ability to make alternate payment arrangements, and a timely way to resolve questions or concerns. Utility receivables will be purchased by the supplier at a zero discount and without recourse."

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