u.s. public outreach programs competitive retail …...2016/09/15 · prospecting for new customers...
TRANSCRIPT
U.S. Public Outreach Programs –
Competitive Retail Market Transition from
10kV Customers to Households
Eric Matheson
Energy Advisor to Vice Chairman
Andrew G. Place
Pennsylvania Public Utility Commission
September 15, 2016
1
Overview
• Pennsylvania Retail Market Overview
• Transitional Issues
• Public Outreach
– Commencement of competitive reach markets
– End of rate caps for default supply
– Response to “Polar Vortex”
• Consumer Protections
• Key Barriers to Entry
2
• Retail competition was mandated by enabling 1996 legislation. Pilot programs were designed
in 1997, and implemented in 1998. Post pilot-retail choice implemented in 1999.
• Pennsylvania is part of the PJM Regional Transmission Organization (RTO), which provides
open access to the transmission grid covering a 13 state wholesale market in the US.
• Retail competition reached over 8,000MW by 2000. Thereafter, retail market participation
weakened as market prices rose above yet unexpired restructuring settlement imposed default
service (aka SOLR) rate caps.
• After default service rate caps expired by the end of 2010, retail market participation
accelerated upward and peaked at 2.23 million accounts (39.3% of accounts and 64% of load)
in February 2014.
• In January 2014, a severe winter weather pattern (“2014 Polar Vortex”) resulted in many very
high customer bills for variable rate customers, causing some to return to default service.
• By 2015 and 2016, shopping rates stabilized and have recovered some of their “winter vortex
losses”. (2.08 million accounts – 36.6% of accounts and 68.1% of load)
• Future: Anticipate “smart meters” will create the environment for more innovative competitive
supplier products.
3
Pennsylvania Retail Market Overview
Implementation – Rate Cap Period
• Generation, Transmission and Distribution are unbundled. Generation is unregulated.
• Electric utility companies given stranded cost recovery.
• In exchange, electric utilities are required to cap rates on electric generation – helping customers avoid wholesale price run-ups.
• Major electric utility rate caps remain for a decade.
4
Pennsylvania Retail Market Overview - PA Electricity
Generation Choice and Competition Act of 1996
Pennsylvania Retail Market Overview
5
Large to Small Customers
• Competitive retail natural gas markets originated with large customers
– Customers often were interruptible or were able to secure their own upstream transportation for supply.
– Involved fewer stranded cost issues, and fewer transactions
• Competitive retail electricity markets originated with all customers
– Legislatively required
– Relatively mature wholesale markets for transmission service and supply service facilitated simultaneous implementation
– Some Distribution System Operators (DSO’s) did phase in retail choice equally over 3 years for all customer classes based on peak load share for each customer class. 6
Transitional Issues
Factors affecting rate of transition to Competitive Suppliers (CSs)
1.Default service model [opt in] vs. non-default service model [customer must choose a CS from the start]
2.Default service supply price relative to wholesale market prices
3.“Opting in” by customers to receive service by a CS makes prospecting for new customers takes time and effort.
4.Allowance for community “opt-out” aggregation. (PA did not)
5.DSO facilitated CS referral programs for residential and small commercial customers
6.Purchase of receivables [POR] programs – more players
7.Consumer education – takes time to “sink in”.
7
Transitional Issues
Transitional Issues
Factors to consider in rate of transition to CSs
1.Impact on cost of default service
2.Systems limitations – availability of Electronic Data
Interchange (EDI) to facilitate thousands of customer switches
between CSs and Default service, and sharing of
customer/usage information
3.Portability of transmission service [network integrated
transmission service concept]
4.Maturity, competitiveness and structure of wholesale
generation markets
5.Consumer education8
Public Outreach – Part I
Competition’s Early Years
• Competitive suppliers entered the PA market with offers to commercial
and residential customers.
• Statewide electronic media ads, combined with competitive suppliers’
marketing, pushed up shopping numbers for a short period until
wholesale market prices rose above rate caps.
• Suppliers began exiting PA residential market, existing contracts expire
and shopping numbers shrink.
• Consumer surveys showed a statewide awareness rate in the high 90s.
• After a large awareness campaign (mass media advertising, public
relations and grass roots education) called the “Electric Choice”
campaign, a second campaign called “Utility Choice” expanded on that
awareness with additional educational efforts. 9
Public Outreach – Part I
Initial Outreach Outlets• Direct communications [letters] from the Chairman of the PAPUC to utility
customers regarding the pilot.
• Natural affiliations (Example – AARP)
• Hotlines – The Bureau of Consumer Services (BCS) of the PAPUC
established a “competition hotline”.
• Press releases (PRs) – distribute PRs regarding all significant steps along
the way to media outlets. [example – PRs announcing PAPUC filings by
DSOs and PAPUC approvals of pilot programs]; PRs were released by the
Governor of PA also on retail choice.
• Websites – establish competition websites for DSOs and the Commission;
include Q&As, list of suppliers (what service territories they are marketing
and to which class of customers), etc.
• Library networks
• Legislative offices
• Videotapes 10
Public Outreach – Part I
Initial Outreach Outlets – (Continued)• Public service announcements
• Radio talk shows
• Brochures – Q&A brochures with competition hotline phone number
on it;
• TV/Cable
• Speakers bureaus
• Train the trainers bureau
• DSO educational programs– Marketing plans submitted for PAPUC review
– Education plans submitted for PAPUC review
– Distribution of material plans submitted for review
– Feedback mechanisms submitted bi-monthly, as well as pre-research data.
[independent consultant to measure plan effectiveness]
11
Public Outreach – Part II
Preparing for Rate Caps to Lift
• Competition proponents see rate cap expiration as key to awakening a
dormant residential market.
• In May 2007, the Commission directs a new statewide education campaign, and directs Distribution System Operators (DSOs) to develop education plans for their service areas.
• PA Legislature does not approve $5 million request to conduct statewide
campaign. Voluntary CS funding fails. Without funding, campaign is shelved.
• Commission does move forward with DSOs on 5-year education plans for
the respective territories.
• Office of Competitive Market Oversight (OCMO) created a consumer
education subgroup - comprised of Commission staff, CSs and consumer
representatives [OCA, OSBA] - to develop a comprehensive statewide
consumer education campaign.12
Commission and DSO Outreach
• Commission oversees process, approving DSO’s education plans,
reviewing education materials relating to electric shopping and monitoring
implementation.
• Commission approved DSO plans that funded more than $55 million of
consumer education carried out between 2008 and 2012. DSOs are entitled
to cost recovery in future filings. Some implemented choice education
surcharges.
• Commission’s Office of Communications continues educating consumers
through its public outreach throughout the state.
• Additionally, as major DSOs rate caps begin to expire in January 2010, the
Commission launches PAPowerSwitch.com – an online tool to help
consumers Stop. Switch. Save.13
Public Outreach – Part II
Development Timeline
• April 29, 2011: Retail Markets Investigation kicked off.
• June 08, 2011: First en banc hearing held.
• July 28, 2011: Staff directed to develop consumer education program.
• August 10, 2011-December 2, 2011: 10 tech. working group sessions held.
• November 10, 2011 – 2nd en banc hearing held.
• December 15, 2011 – Education program proposed.
• February 29, 2012 – Commission endorsed customer letter delivered.
• March 1, 2012 – Education program finalized.
• June 29, 2012 – 1st PAPowerSwitch upgrade implemented.
• September 24, 2012 – 2nd PAPowerSwitch upgrade implemented.
• February 28, 2013 – Tri-fold choice brochure delivered.
• December 31, 2013 – DSO choice letter delivered.
14
Part II DSO Public Outreach
• Eight DSOs were directed to produce and mail three separate
mailings to residential and small business
– A Commission-endorsed postcard on PAPowerSwitch to all residential and small
business customers delivered no later than February 29, 2012.• Included the signatures of all five Commissioners.
• The Commission’s call center received significant inquiries from consumers following
those mailings, including many requests for shopping information.
• Additionally, the number of visitors to www.PAPowerSwitch.com doubled during the
month following the mailings.
– Tri-fold flier highlighting PAPowerSwitch and how to shop for a CS delivered no
later than February 2013.
– DSO letter and “Frequently Asked Questions] document delivered end of 2013• Encouraged consumers to shop.
• Directed consumers to www.PAPowerSwitch.com
• Reinforced the notion that all consumers, regardless of who supplies their electricity,
continue to receive safe and reliable distribution service from their DSOs.
15
Commission’s Multi-Media Approach
• Press releases;
• Video news releases;
• Educational videos;
• Targeted mailings;
• Choice education fairs
• PAPowerSwitch.com; and
• Social media
16
The Commission uses various media resources to educate the public, including:
Launch of PAPowerSwitch.com
• The Commission launched PAPowerSwitch in early 2010 and launched a mobile-friendly version in 2014.
• The Commission significantly upgraded the website in 2012 and in the 2Q of 2015.
• PAPowerSwitch gave residential and small business shoppers online access to CS offers, consumer alerts, educational videos and shopping information.
• With easy navigation and a postal code search, users can filter and sort competitive offers and switch online.
• The Commission was given authorization to impose assessments on CSs to recover the costs of its choice related expenses. Implementation regulations were subsequently developed.
17
Development of PAPowerSwitch.com
• Development cost: $500,000.
• Average cost of website maintenance, weekly email
alerts, website hosting and reporting for
PAGasSwitch and PAPowerSwitch is $9,250 per
month.
• PAPUC Staffing costs = 1 FTE [Full time equivalent].
• CSs enter their own offers.
• Pavone is the current web-hosting vendor.
18
19
PAPowerSwitch
Features of PAPowerSwitch.com
• Not just a “shopping” website
• Educational videos
• Other educational links– Consumer protection rights
– Low income programs
– Energy efficiency (EE) tips and links to DSO EE programs
– Smart Meter educational section
– Understanding your electric bill
• Very popular – 55,000 to over 125,000 “hits” per month.
20
• Posting of a “consumer alert” as a slider on the PUC website (www.puc.pa.gov)
• Posting of a “consumer alert” on the home page of www.PAPowerSwitch.com
• Press releases on January 31 and February 14
• Development of a separate page on www.PAPowerSwitch.com devoted to information on fixed vs. variable products
• Addition of a fixed vs. variable Q&A on existing fact sheets and an enhancement to “Frequently Asked Questions” on variable rates 21
Public Outreach - Part III
PAPowerSwitch During Polar Vortex
of 2014: Variable Rate Exposure
• 3 part-time educators in PAPUC Communications Dep.
• Attend local special events and set up in public spaces [Shopping Malls, Farm Shows, Fairs, etc]
– Set up booths and computers to help customer navigate our PAPowerSwitch website.
– Customers can switch on the spot.
• Electronic Media– Facebook page to promote PAPowerSwitch and a PUC Twitter account for
information about utility service outages, conservation tips, consumer events, was created in early 2013.
– Between Jan. 1, 2014, and Jan. 1, 2015, “likes” for the PAPowerSwitch Facebook page rose from 245 page to 2,438, or by 895%.
– Digital ads that the PUC ran during the past winter generated more than 2,000 visits to the PAPowerSwitch website.
22
Public Outreach
Where We Stand Today
• Make sure CS names provided to customers are marketing in each of the applicable service territories. Some CSs only provide service to certain areas and for certain customer rate classes. Therefore, when providing CS information to consumers, be sure to include the customer rate classes and service territories they are marketing in.
• Ensure that customers know who to call to enroll [generally the customer should work with CSs to enable enrollment].
• Develop a common terms to avoid customer confusion over terms of retail choice.
• Be sure customers understand the length of time necessary to become enrolled, and when the first CS bills will come due.
• Be sure consumer representatives and Commission employees are aware of BCS hotline number; have effective communications of the hotline number externally.
• Emphasize that retail choice participation does not impact the reliability of DSO distribution service. DSO’s remain responsible for ensuring delivery of energy to the home or business.
23
Public Outreach
Lesson’s learned
• Standards and Practices for competitive suppliers are
needed to ensure the fairness and integrity of the
residential energy market.
• Anything that damages the reputation of the
competitive market harms not only consumers, but also
all suppliers participating in the market.
24
Consumer Protections
Enhanced Consumer Protections
The Commission continues educational outreach on key regulatory changes in the marketplace, including:
• Disclosure and Customer Notification Requirements;
• Enhanced Information on Variable Rate Products;
• Accelerated Switching;
• New CS Contract Summaries highlighting important terms and conditions; and
• Contract Renewal and Changes in Terms Notices.
25
Slamming and Billing Protections
• Slamming – zero tolerance: 52 Pa. Code § 57.177
(customer dispute procedures)
• Strict billing and payment standards:
52 Pa. Code § 56.11
• Bill format for residential and small business
customers: 52 Pa. Code § 54.4
26
Consumer Protections
Marketing/Sales Activities
Advertised prices = disclosure prices = billed prices.
Licensees shall provide consumers with accurate
information about their electric generation services using
plain language and common terms.
Door-to-door, telemarketing and other marketing regulations
are found at 52 Pa. Code Chapter 111.
27
Consumer Protections
Response to 2014 Polar Vortex
1.2014 Polar Vortex: Bitter cold, high demand and price spikes in the wholesale energy market.
2.Customers needed the ability to switch CSs, or return to default service, more quickly.
3.New Accelerated Switching regulations shorten the timeframe for a customer to switch CSs.
4.A typical change in CS reduced from 16 to 45 days to as little as 3 business days.
28
Consumer Protections
Response to 2014 Polar Vortex (continued)
5.New Disclosure Regulations
6.Customers provided with greater, uniform detail in CS disclosure statements, including conditions such as price variability and historical pricing information.
7.More timely information on contract renewal and change in terms notices.
8.A separate CS contract summary along with the full disclosure statement highlights key terms and conditions.
29
Consumer Protections
Key Barriers to Entry
1. Access to Customer Lists
2. Consistent Information Technology (IT) Communication [Electronic Data
Interchange (EDI), DSO web portal for CSs]
3. Access to Customer Usage Data for Prospecting and Billing [EDI]
4. Purchase of Receivables
5. Referral Programs
6. Excess Utility Credit Requirements
7. Regulator Credit Requirements
8. Enrollment Acceleration
9. Seamless Moves and New Customer Enrollment Enhancements
10. Consumer Education
11. PAPowerSwitch
12. Continuous Improvement – Office of Competitive Market Oversight [OCMO]30
Barriers: Access to Customer List
• Customers can opt out every 3 years
• Used by CSs to develop pricing offers
Standard Information includes:
Customer name Meter type (interval?)
Billing/service address Capacity obligation
Account number Net metering status
Rate class/subclass Sales tax status
Load data 12 months usage KWh
Meter read cycle 12 months peak demand, KW
Load profile group On/off peak usage, 12 months
Transmission obligation Loss factors, if applicable
DS customer status 31
Barriers: Electronic Data Interchange (EDI)
• EDI = Common standards for communication
between DSO’s and CSs.
• EDI Communications standardized methods for
sharing of customer information and data, as well
as the processing of customer enrollments.
32
* EDI Technical standards are available at: http://www.puc.pa.gov/utility_industry/electricity/edewg_files_for_downloading.aspx
Barriers: Purchase of Receivables
• CSs in PA cannot terminate service for non-payment
• Inefficiencies could result from dual billing systems.
• Many CSs lack sophistication to bill for the DSO
currently
• Solution: DSO consolidated billing with purchase of
receivables (POR) by the DSO
• If bad debt expense is 1%, DSO purchases the CS
receivables at 99% of CS billing amount.
• DSO issues one bill, and is accountable for all utility customer
collection efforts
33
Barriers: Referral Programs
Referral programs: DSO acts as a facilitator to provide information on retail offer programs
Example: PA’s Standard Offer Program [SOP]
• DSO customer service reps provide information to incoming callers regarding SOP when they field service calls
• CSs pay DSO service fee for referrals
• SOP program characteristics:• 1 year fixed price
• 7% of the current Default Service Price
• No switching restrictions or cancelation fees
• Customers can chose a participating CS, or a CS can be randomly assigned to the customer.
34
Questions?
Eric Matheson
Energy Advisor to Vice Chairman Andrew G. Place
Pennsylvania Public Utility Commission
E-mail: [email protected]
Office Phone: 717-346-3863
35
Appendix A – PPL Education Plan
Objectives – educate customers about:
• The end of rate caps – rates may significantly increase!
• Customer choice, how to shop, and customer rate options
• Provide Provider of Last Resort [default service]
• Customer bill components
• How to calculate the “Price to Compare”
• The “Rate Stabilization Plan”
• Demand Side Response and Energy Efficiency Programs
(Act 129 Programs)
36
Appendix A – PPL Education Plan (Con’d)Communication Medium
• Customer choice bill inserts twice a year
• Direct mailings– Choice/Energy Education Information Kit mailed to all new customers
– Choice fulfillment kits mailed upon customer request
• Expand PPL choice website
• Public speaking engagements
• Community Based Organizations (CBOs)
• Televisions
• Radio
• Newspapers
• Community Library – education on use of “Energy Analyzer”
• Call center scripts updated
• Press releases
37
Appendix A – PPL Education Plan (Con’d)
Design Characteristics
• Target Latino, African American and rural customer
segments in radio and newspapers.
• Target visually impaired customers on radio
• CBO’s target the low income sector
• Developed Literature
– Electric Choice Handbook
– “How to calculate your price to compare” Booklet
– “Shopping for an electric supplier” booklet
38
Appendix A – PPL Education Plan (Con’d)
Budget
• $875,000 budget for 2007-2009 approved in the default service case
• $5/Million per year thereafter, recovered in its 2007 base rate case– Includes education for customer choice, meter data
management [smart meters], Energy Analyzer [customer usage analysis tool], Bill Analyzer, customer rate options and energy efficiency.
– $2.69Million of this funding was related to Energy Efficiency
– Annual level of funding until next base rate case
39