Calif. Draft Would Revise PG&E Proposal for New Customer Protection Rules for Retail Gas Suppliers

A California PUC comment (draft) resolution would adopt Pacific Gas & Electric's proposed New Customer Protection Rules applicable to Core Transport Agents (CTAs) with two modifications, relating to the effective date, and to the treatment of recently merged companies in measuring compliance.

The new Customer Protection Rules to be included in Gas Rule 23 are the outgrowth of a prior Commission order, and are largely aimed at reducing the slamming of retail gas customers. The rules were developed collaboratively by PG&E and retail suppliers, and apart from three issues, were not contested.

Most notably, the new rules provide PG&E with the ability to suspend a CTA's ability to enroll any new customer accounts for three calendar months if a threshold level of non-compliance events (such as sustained slamming complaints) is reached (discussed further below). Additionally, if in a 180 day period, a CTA has incurred two suspensions, PG&E shall have the sole discretion to terminate a CTA's Service Agreement with 30 days' prior notice.

A contested issue is how a CTA should be defined for purposes of non-compliance event tracking and suspension.

PG&E proposed that for compliance purposes, a CTA shall include, "any subsidiaries, or recent mergers or acquisitions," meaning all of the non-compliance events of various subsidiaries would be combined to determine if the suspension threshold were met.

Retail suppliers objected to treating various subsidiaries as a single compliance entity due to different marketing approaches used by different subsidiaries focused on different markets. Additionally, retail suppliers said that recent mergers and acquisitions should be excluded from the compliance definition of CTA, because pre-acquisition events are beyond the control of the acquiring CTA.

The comment resolution would find that, for the purpose of compliance, CTA should continue to be defined as including subsidiaries. Absent this provision, "there is the potential to use subsidiaries as a means of circumventing the rules by simply shifting marketing activities from one to another in order to avoid reaching the non-compliance event threshold for suspension," the draft states.

However, the comment resolution agrees that "recent mergers and acquisitions" should not be included in the compliance definition of a CTA, since actions prior to an acquisition are not under the control of the acquiring company.

PG&E had proposed to require compliance with the new customer protection rules after 45 days, but retail supplies protested this period as too short. The comment resolution would extend the compliance deadline to 90 days after PUC approval.

Finally, certain retail suppliers had requested that PG&E be subject to similar customer protection rules, alleging that PG&E customer-facing employees do not always accurately describe and represent core gas aggregation service and CTAs to its customers. The comment resolution would deny this request, citing the PUC's existing authority over PG&E as a regulated utility. "[R]equiring reciprocal or new rules for PG&E as part of this proposal is not necessary nor was it intended," the draft states.

The new rules which would be adopted under the draft would require CTAs to obtain the customer's authorization for enrollment according to existing tariffed provisions governing third party verification and wet signatures, as well as additional new requirements for TPVs.

Among other things, a TPV, "should not use the phrase 'PG&E's Customer Choice Program,' which is misleading to customers. Instead, the TPV should refer to 'Core Gas Aggregation Service.'"

The TPV must also include the customer's acknowledgement that the customer understands that the CTA is not affiliated with Pacific Gas & Electric, and must include "[a]ll material pricing provisions" including the price per therm, the contract termination date, and any fees for early termination by the customer.

During the TPV, customers shall be advised that the customer is allowed a three business day period from the confirmation notice postmark date to rescind the enrollment.

Furthermore, the CTA, or its authorized agent(s), shall not, "make, with dishonest, fraudulent, or deceitful intent, material verbal or written misrepresentations in the course of soliciting or serving core gas aggregation customers."

The new rules place PG&E as the arbiter of complaints for purposes of compliance with the tariffed provisions, and allow PG&E, when hearing a complaint, to request from the CTA written documentation of the customer's authorization for enrollment, marketing materials, the sales call or Third-Party Verification (TPV) for any complaint.

PG&E shall make a determination of whether or not the customer's enrollment authorization was properly obtained.

If the CTA's number of non-compliance events under the new rules exceeds an established threshold over a set rolling time period, PG&E may immediately suspend the CTA's ability to enroll any new customer accounts, of the type -- residential, commercial, or both -- involved with the complaints for the following three calendar months. These thresholds are:

• 7 Verified Complaints in a 30 Day Period

• 11 Verified Complaints in a 60 Day Period

• 15 Verified Complaints in a 90 Day Period

• 22 Verified Complaints in a 180 Day Period

In additional to these total non-compliance events, there are lower, individual triggers for the individual residential and commercial classes under which PG&E may suspend the CTA's ability to enroll customers in that specific customer class. These can be found on page 17 of PG&E's advice letter to implement the new rules.

The rules provide that non-compliance events involving multiple accounts of the same customer, if a singular action led to non-compliance, shall be treated as only one non-compliance event. Additionally, the rules recognize that a single sales agent of a CTA could be responsible for multiple non-compliance events, and provide that, if the CTA cooperates in resolving the problem, the multiple violations would be treated as a single non-compliance event.