Consumer Advocate Opposes Settlement on Choice Education, Billing Enhancements at PGW

The Pennsylvania PUC should reject a settlement among Philadelphia Gas Works and retail suppliers to increase customer education and improve operational rules for choice suppliers due to the costs that such measures would impose on distribution customers, the Office of Consumer Advocate said in comments to the PUC (R-2008-2073938).

As only reported in Matters, the settlement, an outgrowth of a collaborative on alternative default service mechanisms at PGW, would implement various retail choice billing and education enhancements (see 11/30). While the settlement does not include any change in default service, Direct Energy Services, LLC and Hess Corporation said in a statement of support that the measures are designed to increase choice and thus volumes served by alternative suppliers, which furthers the original goal of reducing PGW's obligation to purchase gas supplies as a SOLR and the financial stress this places on PGW.

Education measures include bi-annual mailings on choice, and discussion of choice by PGW call center representatives with new delivery service applicants. Billing enhancements include changes to PGW's billing system to support different supplier rate offerings and the implementation of rate ready consolidated billing.

The settlement contemplates that any costs for such measures would be recovered in distribution rates.

OCA noted that, "[t]he end result of this Joint Petition could impose significant costs on PGW customers."

Furthermore, the OCA said that it is not appropriate to "single out" PGW ratepayers to support choice enhancements in distribution rates when the costs of such efforts have not been assigned to ratepayers at other utilities.

"[T]here has been no showing that the benefits of these proposals warrant the added costs required for their implementation or that charging the costs to ratepayers is justified," OCA added.

Specifically, OCA noted that costs which are likely to be incurred under the proposal include the cost of mailing choice education materials to customers, and the cost of training customer service reps to discuss choice with delivery service applicants.

Furthermore, OCA said that Section 2205(c)(3) of the Gas Choice Act prohibits the utility from shifting billing costs associated with retail choice to ratepayers, and thus the costs of the proposed billing enhancements could not be recovered in base rates.

Section 2205(c)(3) provides that various billing charges may be assigned to retail suppliers, and states that, "Nothing in this section shall permit the recovery of such costs from natural gas supply service customers of the natural gas distribution company."

Section 2205(c)(3) does not prohibit the assignment of choice billing enhancements to distribution customers, per se, it only withholds express authorization under that section (the PUC may hold plenary authority under other relevant statutory provisions).