Unlicensed Independent Entities Offering Billing Services Affecting Electric Retail Choice; Doc. No. M-00011466
[31 Pa.B. 3006]
Public Meeting held
May 4, 2001
Commissioners Present: Robert K. Bloom, Vice-Chair- person; Nora Mead Brownell; Aaron Wilson, Jr.; Terrance J. Fitzpatrick
By the Commission:
The purpose of this Tentative Order is to solicit comments from interested parties with respect to the provision of certain billing services being offered by unlicensed entities to electric utility consumers. Over the past several months, the Commission has become aware of several unlicensed entities offering to provide services to consumers in the processing and issuance of monthly electric utility bills. Specifically, these entities request consumers to change their billing address with their electric distribution company (EDC) to that of the unlicensed entity. As a result of this change, all correspondence from the EDC, including the consumer's monthly bill, is forwarded to the unlicensed entity. Commission staff has identified several potential issues with respect to the provision of such services, which we will discuss more fully herein, and we invite other parties to aid in resolving these issues.
Description of Services
By way of background, the provision of this type of service has evolved mostly as an Internet, fee-based billing aggregator or consolidator service offered to consumers. Typically, the consumer enrolls with the service provider and contacts billers to arrange to have their monthly invoices for services sent to the billing entity. In turn, upon receipt of the invoices, the billing entity gathers all billing data, including transaction details, from billers and then processes the information for electronic presentment to the customers, typically by way of electronic mail.1 The consumer is given an opportunity to review the aggregated billing information and to make an electronic payment to the billing agent. Upon receipt of payment, the billing entity disburses the monies to the respective billers, keeping a portion of the payment as a fee for its services.2 By provision of this service, the billing entity is offering consumers a convenient and efficient one-stop method of bill payment.
Until recently, the provision of electronic bill presentation and payment (EBPP) services had been limited to certain revolving monthly bills, such as credit cards. However, within the past year, an increasing number of billing entities have offered to include monthly utility payments in their service offerings. Moreover, in the new era of deregulation, the prospect of enhanced customer care and cost reduction is especially appealing to utilities, resulting in more utility companies seeking EBPP solutions.3 However, such a wealth of benefits does not come unhindered with costs and concerns as leading edge technology bumps up against the existing regulatory regime.
The concept of bill aggregators is of unique concern to the utility industry as new unlicensed entities begin offering a service that was once the sole province of the utility, subject to Commission rules and regulations regarding customer service. Even since the implementation of Electric Retail Choice, the concept of third-party billing entities has evolved to include only licensed electric generation suppliers (EGS) who would provide billing services (that is, compile ''raw'' billing data for processing and issuance to the customer) directly to the consumer on behalf of an EDC and/or the EGS providing generation supply to the consumer.4 In the present instance, however, the entity is not providing a service on behalf of the EDC and/or EGS or assembling bills on the basis of usage and rate information. Rather, it is merely receiving and replicating the EDC/EGS actual bill and thereafter presenting it to the customer in a different format.
Commission's Preliminary Views
Prefatorily, we wish to emphasize that we do not seek to discourage the practice of EDCs employing EBPP services, nor do we wish to preclude the ability of customers to designate independent entities as their bill aggregator or processor. We recognize that consumers may wish to utilize such services in an effort to ease their monthly bill paying obligations and these entities may offer consumers a valuable service. However, we have concerns that these services may have unintended but serious implications with respect to application of our Chapter 56 customer service rules.
As an example, the Commission is aware that generally, EDCs are not equipped with data systems allowing customers to have dual mailing addresses. As a result, when the mailing address is changed to allow monthly bills to be sent to the independent billing entities, all correspondence, such as notices of temporary service interruptions to effect repairs, utility dispute reports or notices of termination, is likewise forwarded to the independent billing entity. It is not clear whether this important information would be timely passed along to consumers, or whether consumers realize that a change in their billing address affects the mailing of all utility correspondence. Given the host of consumer-related issues these services present, we solicit comments from interested parties with respect to the policies the Commission should adopt regarding unlicensed independent billing entities. Initially, although we do not believe that it would be in the public interest to preclude these activities or to unnecessarily restrict their availability to consumers, we welcome comments from interested parties regarding this and all other issues identified by this Tentative Order or that are otherwise raised by the services being offered by these unlicensed entities.
Licensing of Billing Entities
Rather than precluding these entities from offering billing services to consumers, we question whether these entities should properly be characterized as providing ''third party billing'' services under the Electric Retail Choice program. If the independent billing entities are viewed as third-party billing entities, it would be necessary under our existing rules for such entities to become licensed EGSs. See Secretarial Letter issued on September 1, 1999 at Docket No. M-00991230, F.0002, at page 4. Additionally, such entities would be required to follow Commission regulations concerning the issuance and payment of utility bills and dispute resolution, such as those directing the bill format, detail and dispute resolution procedures that must be used by EDCs and EGSs. See 52 Pa. Code § 54.4 and Chapter 56.
We recognize that the bill aggregators are not performing the basic bill compilation in the way that EDC or EGS consolidated billing or third-party billing would be handled. Rather, the bill aggregators are acting on behalf of consumers in receiving and paying the utility bill. However, we note that these bill aggregation services might be viewed as a means of circumventing the Commission's consolidated billing and third-party billing rules. For instance, the Commission has found that third-party billing entities have the same obligation as EDCs and EGSs providing consolidated billing services to make other providers whole even when the customer fails to pay the third-party billing entity. Electric Choice Issues, Docket No. M-00991230, F.0002, Order on Reconsideration adopted on November 18, 1999. It is not clear what the policies and practices are of unlicensed entities with respect to forwarding payments to the service providers.
Additionally, under the Electric Retail Choice program, payment to a third-party billing entity is the equivalent of payment to the service provider. That would not be the case with unlicensed billing parties. For instance, a customer who makes full payment to the unlicensed entity would not be credited with payment to the EDC unless and until the unlicensed entity forwards that payment to the EDC. A lapse in the remittance of that payment might result in the imposition of late payment charges or the initiation of service termination proceedings.
While we have some concerns about allowing these bill aggregation entities to provide services without an EGS license, we note that requiring licensure would most likely limit or eliminate the availability of these valuable services to consumers. Alternatively, it might be feasible to utilize less stringent licensing criteria, resulting in a limited license. However, even a more streamlined and less burdensome licensing process might unnecessarily restrict entities from offering this service to consumers.
Customer Service Issues
Assuming that it is preferable to allow these billing activities to continue, with or without any licensure requirement, it is necessary to address various issues likely affecting customer service. For instance, as previously mentioned, generally EDCs are not presently equipped with data systems that allow a customer to have dual mailing addresses, thus requiring that all correspondence be sent to the billing address. As a result of a change in the billing address to that of an independent billing entity, customers may not receive important, nonbilling correspondence from the EDC, such as termination notices, notices of temporary service interruptions and notices of special programs being offered by the utility.
Perhaps the most obvious solution to this dilemma is to require EDCs to enable customers to simultaneously maintain dual mailing addresses so that they receive all nonbilling correspondence from the utility while utilizing independent billing services. Yet, we recognize that the immediate implementation of new data systems that would allow such a change in practice may prove to be unduly burdensome for the EDCs. In the alternative, we question whether it would be feasible for the EDCs to arrange with independent billing entities to send billing information, upon customer authorization, through a means other than regular mail, such as electronic mail or by facsimile transmission. In that manner, the customer could continue receiving all other mail from the EDC while receiving its billing information from the independent billing entity.
Another option, short of imposing burdens on the EDCs to change their systems or to send billing information through alternative means, would be to require EDCs to provide certain consequential information in connection with a customer's request to change their billing address to that of an unlicensed entity. For example, the EDC could be directed to inform the consumer that a change in their billing address would effect a change in their mailing address, thus resulting in the forwarding of all correspondence to the unlicensed entity. Additionally, the EDC could inform the customer that despite their timely payment to the unlicensed entity, the failure of the entity to forward that payment to the EDC in a timely fashion could subject the customer to late payment charges and/or service termination. As an alternative to providing specific information to customers requesting a billing address change, perhaps the EDCs could use periodic bill inserts or other limited consumer education campaign to generally advise consumers of the potential consequences of changing their billing address for the purpose of utilizing the services of independent billing entities.
Possibly, an acceptable solution could be implemented in connection with requiring these independent billing entities to receive a form of limited license from the Commission. As part of this licensure, the entity would be obligated to provide the applicable notifications to the consumers. In this regard, however, we again caution that any licensure requirement may serve to quell the provision of this service to consumers, thus eliminating any potential benefit to customers and industry alike.
In addition to encouraging comments from interested parties on all of the questions we have raised in this Tentative Order, we recognize that a host of issues with respect to unlicensed independent billing entities may exist that we have not touched upon. We leave it to those parties who are most affected by these services to identify and propose resolutions of these issues. To ensure that all parties have sufficient time to formulate their positions and to respond to proposals advanced by other parties, we will provide a comment period expiring on June 22, 2001, and a reply comment period ending July 20, 2001; Therefore,
It is Ordered that:
1. This Tentative Order soliciting comments regarding the provision of billing service by third-party billing agents is issued to the public for comment.
2. A comment period ending June 22, 2001, is hereby established.
3. A reply comment period ending July 20, 2001, is hereby established.
4. Written comments, an original and three copies, shall be submitted to the Secretary, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265. Additionally, a diskette containing the comments in electronic format shall also be submitted. Comments should specifically reference the previously-referenced docket number.
5. A copy of this Tentative Order and any accompanying statements of the Commissioners be served upon all Electric Stakeholders, including EDCs, licensed EGSs, the Office of Consumer Advocate, the Office of Small Business Advocate, Office of Trial Staff and shall be made available to interested parties. Additionally, a copy of this Order and all comments and reply-comments shall be posted on the Commission's website.
6. The contact person for this matter is Robert V. Eckenrod, Law Bureau, (717) 787-7904.
7. A Final Order shall be issued subsequent to the receipt and evaluation of any comments and reply comments filed in accordance with this Tentative Order.
JAMES J. MCNULTY,
1 Alternatively, the bill aggregator may simply collect the bill summary information for presentment to the consumer. In this situation, the consumer only sees the bill payment amount and the due date. The actual bill or bill details remain with the biller and the consumer must contact the biller for transaction details. This arrangement is usually seen in those cases where a biller has made previous arrangements with the consolidator to present consumers bills through an EDI transaction in an effort to reduce customer service costs for the biller.
2 This is only meant merely as a simple illustration of a typical billing consolidator's service. In many cases, there may be other services attached to the provision of bill consolidation services such as the provision of long distance or other telecommunications services.
3 By way of example, on November 1, 2000, GPU Energy introduced internet billing in association with CheckFree, a leading internet billing consolidator.
4 A third-party billing entity is a licensed EGS who is not providing generation supply to the customer. See Order Implementing Competitive Metering and Billing Arrangements adopted on June 26, 1998 at Docket No. R-00973953.
[Pa.B. Doc. No. 01-1023. Filed for public inspection June 8, 2001, 9:00 a.m.]
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