CPUC OKs Switching Rules, Bill Charging, and Credits

By Published On: September 8, 2006

On unanimous votes, the California Public Utilities Commission approved clarifications for switching rules for direct-access customers and a resolution allowing Pacific Gas & Electric to give ratepayers credits to offset high July utility bills. Also at the September 7 meeting, the commission approved PG&E’s pilot program allowing customers to charge their utility bills to credit card accounts on a 5-0 vote. After three years of utility service, former direct-access customers can move from utility to nonutility providers as long as they give the affected utility six months’ advance notice. The resolution also locks in direct-access customers who return to bundled-service contracts with the utility for a three-year period. Commissioner Geoffrey Brown urged a rekindling of the direct-access market. That market allows large customers to avoid utility service and contract directly for electricity with third-party providers. The divide between large customers who are eligible for direct-access contracts and small customers who are not is referred to as a “core-noncore market.” Such an option will allow a “full competitive market for those who have a choice,” Brown said. The adopted resolution on the switching rules was not the end of the matter. If utilities cannot manage costs for customers who switch, “We need to consider proposals in a new formal proceeding,” noted the adopted CPUC resolution. The commission also embraced PG&E’s plan to provide a 10 and 15 percent credit in ratepayers’ bills next month, and to increase assistance to low-income customers with higher energy bills arising from the late-July heat storm. Regulators increased the funding pot for struggling ratepayers proposed by PG&E from $5 million to $10 million through 2007. The utility estimated that the total credits will be between $125 million and $150 million (Circuit, Aug. 25, 2006). Residential ratepayers will see a 15 percent credit on their bills next month. Businesses, government agencies, agricultural customers, and other nonresidential payers will see a 10 percent bill cut. Southern California Edison and San Diego Gas & Electric are also planning rate reductions. However, they are planning on bill offsets, which may include smaller rate increases instead of one-time bill credits. PG&E’s 12-month test program to allow ratepayers to pay their utility bills with a credit card will soon be launched. Although credit card bill payment is standard in other areas – including for telephone and Internet services – legislation and a failed credit card charging program created hurdles. AB 746, pushed by Edison and passed last year, requires that charging utility bills save ratepayers money. An earlier charge card billing option offered by PG&E resulted in high transaction costs and was suspended by the commission following ratepayer complaints. The pilot program will allow the utility to obtain data as to whether the savings created from bill charges outweigh the program costs, said PG&E vice-president Tom Bottorff. Savings would arise from cost reductions from decreased postage and less processing of checks. At the same time, use of other, less expensive payment options, such as on-line bill payments or in-person payments at utility payment centers, may decline. Ratepayers who choose to put their utility bills on their credit card bills will not be charged associated fees, including the credit card processing fee, during the one-year test program.

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