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Utilities Oppose Proposed Switch Block Mechanism, Inclusion Of Price To Compare Statement On Bills

Utilities Say Price To Compare Language Inappropriately Positions The Utility As An Energy Advisor, Implies Default Service The "Most Favorable" Rate

Consumer Counsel Recommends Penalty For Spoofing Be Revocation Of Retail Supplier's License

Consumer Counsel Seeks To Include Comparison Of Shadow Billed Costs On Bills

January 16, 2020

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Copyright 2010-20
Reporting by Paul Ring •

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Several Ohio natural gas utilities filed comments in opposition to a proposed switch block mechanism, and a proposal for price to compare language to appear on bills, which are contained in a draft Public Utilities Commission of Ohio rule on natural gas utility billing, including consolidated billing

Price To Compare On Bills

As first reported by, the draft rule would require that utility natural gas bills (including consolidated bills) shall include the following price to compare statement: "In order for you to save money by selecting a competitive retail natural gas provider, your price to compare, which is the standard choice offer (SCO) rate or the gas cost recovery (GCR) rate, is (dollar amount per Mcf) for this billing month. The SCO rate or GCR rate is approved by the public utilities commission." [sic]

In jointly filed comments, Dominion Energy Ohio (DEO) and Vectren Energy Delivery of Ohio, Inc. (VEDO) stated of the proposed requirement for a Price to Compare statement to be included on bills that, "The Companies do not support this proposed revision, for several reasons. First, the Companies do not believe the statement as proposed is accurate; second, the Companies do not believe the proposal is consistent with state energy policy and company specific code-of-conduct requirements; and finally, adopting the rule would require significant programming and bill changes, which are not justified given other concerns."

DEO and VEDO said that, "The statement is not necessarily true. Regarding the accuracy of the statement, it is not necessarily true that a customer will save money based on a comparison with the SCO."

DEO and VEDO further stated the following concerning the price to compare language proposal:

• "The SCO is a variable rate and changes every month, depending on the prevailing market price of natural gas. Since the SCO is a variable rate, a fixed-rate offer may exceed the SCO at the time of initial rate comparison, but save money over time depending on the market price of gas."

• "There is a lag between the printing of bills and when a customer is actually enrolled in a given offer. What the SCO is at the time a bill prints will almost certainly not be the same as it is at the time a customer makes a rate comparison or actually enrolls in a given service."

• "If a customer is under contract and subject to early termination fees, that would also affect whether they would “save money” by enrolling in the SCO."

• "A pure comparison to the SCO may not reflect benefits a competitive supplier may be offering via a bundled service."

• "Not all customers are eligible for the SCO, so the statement could create confusion."

DEO and VEDO further stated, "The statement raises concerns regarding state energy policy and company-specific codes of conduct. The Companies are also concerned that the proposed statement is contrary to the state energy policy encouraging competitive markets. Under R.C. 4929.02(A)(7), Ohio’s policy is to '[p]romote an expeditious transition to the provision of natural gas services and goods in a manner that achieves effective competition and transactions between willing buyers and willing sellers to reduce or eliminate the need for regulation of natural gas services and goods under Chapters 4905. and 4909. of the Revised Code.' Contrary to this policy, the proposed statement implies that the rate 'approved by the public utilities commission' is the most favorable."

DEO and VEDO further stated, "The Companies are also concerned that including this statement on the bill would create code-of-conduct concerns. The Companies are required to (and do) take a position of neutrality with respect to a customer’s choice for commodity service. If customers call the Companies and appear to be seeking advice regarding commodity service, the Companies refer them to generally available resources, such as the PUCO Apples to Apples webpage, and do not provide customer-specific advice. Contrary to these efforts, the proposed statement would effectively position the utility as an energy advisor and could be read to encourage customers at a minimum to call the Companies for advice and even to select the SCO rather than a supplier offer. The Companies do not believe they should be placed in that position, but that is the effect this statement would likely have."

DEO and VEDO further stated, "Inclusion of the statement would impose significant programming costs. Given the issues identified above, the Companies would not recommend this change even if it could be made without cost. Including the proposed statement, however, would impose significant incremental costs. The lengthy statement would also consume a large amount of space on the bill. For DEO specifically, the space on its bill is already effectively maxed out. Unless existing information is removed from the bill, including this statement would require either wholesale reformatting of DEO’s bill presentation or adding a second page to DEO’s bill. Additionally, many of DEO’s customers are not currently eligible to shop or to select SCO service (e.g., PIPP customers, customers with arrearages who have broken more than one payment plan in the last 12 months, nonresidential customers). Including the message on ineligible-customer bills would create confusion, yet programming the bill message to vary based on eligibility factors would be a major undertaking for DEO."

In separately filed comments, Duke Energy Ohio also expressed concerns with the price to compare language proposal

Duke stated, "Duke Energy Ohio has two concerns about this proposed rule change. First, and most importantly, the opening phrase of the statement is incorrect and misleading. It blatantly suggests to the customer that he can 'save money by selecting a competitive retail natural gas provider.' But there is no evidence or assurance that a competitive service (CRNGS) provider will necessarily charge less per Mcf than the natural gas utility charges. Nor does state policy, as set forth in R.C. 4929.02, instruct the Commission to promote CRNGS providers' services over those of the natural gas utility. There is simply no reason for this phrase and it should be eliminated."

Duke further stated, "Furthermore, if the Commission determines that it is appropriate to move forward with a required price-to-compare message, it is important to understand that it may take some time to implement, depending on the timing of approval. Thus, if the Commission approves a change similar to the one proposed by Staff, it should allow a reasonable amount of time for compliance with that change."

The Ohio Consumers Counsel supported the inclusion of price to compare language on bills, offering modifications to the proposed language

OCC proposed the following price to compare language to appear on bills: "In order for you to save money, a competitive retail natural gas supplier would have to offer you a rate that is lower than your price to compare, which is the standard choice offer (SCO) rate or the gas cost recovery (GCR) rate, is (dollar amount per Mcf) for this billing month. The SCO rate or GCR rate is approved by the public utilities commission.”

OCC further said that the PUCO should adopt a rule that requires natural gas utilities to conduct shadow-billing, with such information presented on bills

OCC said that, "Based on a review of the choice offers that are available for residential customers on the Energy Choice Ohio website, very few of the offers can save money for customers. There are 286 total natural gas offers available to customers in COH, DEO, Duke, and VEDO’s service territory as of January 13, 2020. Out of those offers, there are thirty-six offers (or 12.6%) that were the same or lower than the utility SCO (or GCR) rate. Excluding introductory teaser rates and variable rate offers with terms of one or two months, a total of 26 offers (or 9%) of the total statewide offers provided any opportunity for customers to save money on their natural gas (or at least not lose money)."

OCC said that, "The shadow-billing data from Columbia Gas show, as of July 2019, that its million consumers have paid $1.7 billion more for marketer gas (since April 1997) than had they bought gas from Columbia. The Columbia Gas data, showing a huge transfer of wealth from Ohioans to gas marketers, would suggest that something is broken and needs to be fixed for the protection of the public."

OCC said that the following shadow-bill statement should appear on shopping customer bills: "Your natural gas supply costs with (Name of Supplier) were ($ for the month). Customers who were served on the (standard choice offer 'SCO') or (gas cost recovery rate 'GCR') for the month paid ($ for the month) for the same level of usage."

Retail suppliers opposed the draft proposal for including price to compare information on bills.

Switch Block Mechanism

As previously reported, the proposed rule would include a switch block mechanism

As proposed, the draft rule states, "Each gas or natural gas company will allow any customer to request a retail natural gas supplier block be placed on the customer’s account. The block will prevent the customer’s commodity service provider from being switched without the customer’s authorization (via customer provided code or pin number) to the gas or natural gas company. The release will be provided to the gas or natural gas company from the customer or other authorized person on the account."

Regarding the proposed switch block, DEO and VEDO stated, "This revision would impose significant programming and business-process costs on the Companies. For customers who elect to place a block, it raises obstacles to shopping, as tracking yet another passcode and making an additional phone call will be necessary to change suppliers. These costs and inefficiencies would not appear warranted unless 'slamming' issues were or were becoming widespread. The Companies are not aware that this is the case, and without such evidence the Companies are concerned that such changes are out of step with state energy policy. Absent a compelling showing that the new functionality is clearly needed, the Companies do not support this revision. As previously stated, if there have been any abuses, those issues should be dealt with directly—addressing either the actor or the practice—not by universally imposing a requirement."

Columbia Gas did not oppose a switch block, but suggested a change concerning how a utility verifies a customer may remove a switch block

Columbia stated, "The Commission proposes a new rule allowing a customer to put a block on his or her account to prevent switching to another retail natural gas supplier. The Commission provides a parenthetical prescriptive method to ensure the customer is placing the block on the account with either a customer-provided code or pin number. These two methods, however, will require customers to remember this pin, as well as IT changes to incorporate the record-keeping and protection of this pin (in the event the utility is even permitted to keep it on file). In lieu of a customer-provided code or pin number, Columbia suggests there may be a more customer friendly solution -- a verified customer authorization. If a customer calls into Columbia’s call center, Columbia verifies that the caller is the customer of record. Once verified, Columbia would be able to place a block on the account, with customer authorization, which would alleviate the customer from remembering a code or a pin number."

Retail suppliers opposed a switch block mechanism

In opposing the switch block, Direct Energy Services, LLC and Direct Energy Business, LLC stated that the switch block would provide a competitive advantage to opt-out aggregators

Direct Energy stated, "The proposed block mechanism would ... provide a competitive advantage to opt-out aggregators. Eligibility requirements for enrollment in an opt-out aggregation and an opt-out list are set by Ohio Rev. Code § 4929.26. A customer who sets a block with the utility has not 'opted out' and would still be eligible for an opt-out aggregation enrollment without the need to remove a block. This process would advantage an optout [sic] aggregation provider over CRNGSs [retail suppliers] by requiring additional steps for non-aggregation enrollments. The process would provide preferential treatment to opt-out aggregators (in addition to the advantages that are set by statute). The block mechanism could create confusion, as a customer may believe a block prevents them from any enrollment, including an opt-out aggregation."

Spoofing, Penalty

In its comments, OCC said that, "Spoofing [of caller ID] should result in a permanent rescission of a marketer’s certification by the PUCO."

Prohibition On Including Non-Commodity Charges On Bills

As previously reported, the draft rules would modify Ohio Adm.Code 4901:1-13-11 to provide that residential utility bills may only contain charges for the natural gas commodity and tariffed distribution service.

Specifically, the draft rule provision, applicable to utility bills, would state, "Natural gas residential bills are to contain only charges that are either a natural gas or competitive retail natural gas commodity charge or an approved tariffed distribution charge or service."

DEO and VEDO opposed this proposed prohibition. "The Companies do not support the recommended prohibition on utility bills containing non-service-related charges. If customers find it convenient to reduce the number of checks they must write to pay for desired services, the Companies do not understand why this billing option should be eliminated," DEO and VEDO said

Duke also opposed the proposed prohibition on the billing of non-commodity charges on utility bills. "Furthermore, Duke Energy Ohio understands that most of its customers prefer to receive fewer bills, not more. Whether the charges being eliminated from a natural gas bill relate to electric utility service, competitive electric providers' commodity services, or other charges, the customer should have the ability to choose whether these items are all included on a single bill. If the customer authorizes the inclusion of something other than natural gas distribution or commodity service, there is no reason that it should be excluded, assuming that the utility in question properly allocates costs and charges the billing entity for that service."

Retail suppliers also opposed the proposed prohibition on the billing of non-commodity charges on utility bills

Compliance With Ohio Law For Reduced Regulatory Burdens

Retail suppliers said that Staff's proposal does not comply with recently enacted Ohio Revised Code Section 121.95(F) which states that, "Beginning on the effective date of this section and ending on June 30, 2023, a state agency may not adopt a new regulatory restriction unless it simultaneously removes two or more other existing regulatory restrictions. The state agency may not satisfy this section by merging two or more existing regulatory restrictions into a single surviving regulatory restriction."

The Retail Energy Supply Association noted that Staff’s proposals, such as the switch block and PTC information, "contain regulatory restrictions as demonstrated by their use of the words 'shall,' 'must,' and 'require.'"

"The Commission should not proceed to adopt Staff’s proposals without also removing regulatory restrictions as required by this statute," RESA said

Direct Energy made a similar argument. Direct Energy further expressed concern that the proposed internal movement of certain rules into different chapters (and deletion of the former, since-moved chapter) may be an attempt to create a reduction in regulatory burden in compliance with the law, despite there being no substantive reduction in regulatory burden through such rule reorganization

"Direct Energy submits that elimination of a duplicate provision or reference to a regulation should not count as a reduction in regulatory restrictions. Such an approach would not meet the spirit of Ohio Rev. Code Ann. § 121.95(F) to reduce regulations imposed on an industry," Direct Energy said

Case No. 19-1429-GA-ORD

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