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Pennsylvania PUC Finds Utility's Billing Practice To Be "Discriminatory" Against Retail Suppliers

December 7, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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The Pennsylvania PUC issued an order in a Columbia Gas rate case which finds that Columbia's practice of providing "on-bill" billing for non-utility services to only two select providers is, "discriminatory."

The PUC declined to immediately order Columbia provide such "on-bill" billing for all retail suppler non-commodity products, stating reasonable limits may be required, but did direct Columbia to implement any solution in a non-discriminatory manner

Retail suppliers had said in the case that they did not seek to halt Columbia’s billing practice and proposed, rather, that the Commission require Columbia to offer suppliers the same option for 'on bill' billing of non-commodity goods and services

The PUC said that, "The question presented arises in the context of the practice known as 'on bill' billing. 'On bill' billing is a utility billing practice of including charges for non-commodity goods and services as a separate line item on the utility bill and including those charges with the total amount due shown on the bill. R.D. at 107. Typically, 'on bill' charges may be for non-commodity goods and services offered by the utility itself."

"However, in the present case, the utility issuing the bill, Columbia, provides 'on bill' billing for goods and services offered by non-regulated third parties," the PUC noted

"Currently, Columbia’s two agreements for the provision of 'on bill' billing are with Columbia Service Partners, Inc. (CSP) and Nicor Energy Services Company (Nicor), both former affiliates of Columbia," the PUC said

The 'on bill' billing of third party non-commodity charges are for items such as warranty services covering HVAC systems and gas, water, and/or sewer line protection services. Columbia does not currently provide 'on bill' billing for non-commodity good and services to any third parties other than CSP and Nicor. The agreements between Columbia and both CSP and Nicor are legacy agreements established at a time when CSP and Nicor were still Columbia affiliates.

The PUC found that, "In this case, Columbia provides a billing service which is beneficial enough for a third party to pay for the benefit of receiving it. Columbia has offered no reasonable justification for offering the benefit of the billing service to certain third parties, while denying the NGS Parties that same billing service. Therefore, the billing practice at issue discriminates by preferential treatment of the third parties, Columbia’s former affiliates, when Columbia affords the option of 'on bill' billing for goods and services offered by former affiliated third parties but denies the same billing option to the NGS Parties. We conclude, under the given facts, that Columbia’s billing practice is discriminatory."

The PUC said that, "Columbia’s own assertion that 'on bill' billing would imply Columbia’s endorsement of the NGS Parties goods and services, arguably establishes Columbia’s present practice is preferential treatment for its former affiliates. See, R.D. at 97, Columbia M.B. at 15. An endorsement granted by Columbia of the former affiliates’ services is a clear benefit, i.e., the benefit of the association in the consumer’s mind of Columbia with the former affiliates’ service, by inclusion on Columbia’s utility bill. For example, Columbia expressly argues that inclusion of NGS goods and services on Columbia’s bill would be 'forcing Columbia to associate with products and services against its will.' Columbia MB at 6 and 15. If requiring inclusion of a third party’s products and services on Columbia’s bill equals forcing Columbia’s association with those products and services, then Columbia concedes that inclusion of its former affiliates’ services on Columbia’s utility bill equals 'Columbia’s association with those services.' Arguably, Columbia concedes its billing practice constitutes preferential treatment of the former affiliates."

The PUC said that, "Further, a third party’s ability to have its products and services associated with the Columbia 'brand' in the Commonwealth is arguably a business advantage, albeit an intangible one. Columbia occupies the uniquely powerful market position of one of the most recognized utility names in the Commonwealth, serving hundreds of thousands of consumers, spanning twenty-six counties, with a history dating back to the Company’s founding in the Commonwealth in 1885. Columbia’s implied endorsement by its current 'on bill' billing policy is, itself, a business benefit Columbia presently bestows only to two former affiliates."

"We find that Columbia’s billing practice, as presently implemented, is discriminatory, unreasonable and not justified in the given circumstances. Therefore, we conclude that Columbia’s billing practice, as implemented, violates the prohibition on discrimination in provision of service under both Sections 1502 and 2204 of the Code," the PUC said

"Notwithstanding this determination, we agree with the OCA’s Reply Exception that it would not be a reasonable solution in these circumstances for the Commission to compel Columbia to provide the NGS Parties 'on bill' billing service for non-commodity goods and services offered by the NGS Parties," the PUC said

The PUC said that, "Columbia must comply with Section 1502 of the Code and provide its 'on bill' billing policy in a way that is nondiscriminatory. In other words, Columbia must either provide such a service to all entities that provide such non-basic services or must discontinue the 'on bill' billing policy. Columbia may not continue to provide this ability to only the two entities referenced in this case. Should Columbia provide the service to all entities providing non-basic services, we recognize the potential need for reasonable limitations, such as a requirement that the entities be able to provide information to Columbia in a manner that conforms to Columbia’s billing practices, spacing and technologies. As such, we shall require Columbia to report to this Commission’s Bureau of Technical Utility Services, within 60 days of the entry day of this Opinion and Order, its methodology for coming into compliance with Section 1502 of the Code."

"We reiterate the requirements of 52 Pa. Code § 56.83(3) which directs that a customer’s service may not be terminated for nonpayment of such nonbasic charges," the PUC said

Docket R-2018-2647577

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