PROPOSED RULEMAKING
[52 PA. CODE CH. 57]
[L-970121]
Standards for Changing Customer's Electric Supplier
[27 Pa.B. 5270] The Pennsylvania Public Utility Commission (Commission) on April 24, 1997, adopted an order to promulgate proposed regulations to implement and codify 66 Pa.C.S. § 2807(d)(1) (relating to duties of electric distribution companies) which requires the establishment of regulations ensuring that an electric distribution company does not change a customer's electric supplier without direct oral confirmation from the customer of record of written evidence of the customer's consent to a change of supplier. The contact persons are Terrence J. Buda, Assistant Counsel, Law Bureau, (717) 787-5755 and Joseph Farley, Bureau of Consumer Services, (717) 787-4963.
Executive Summary
On December 3, 1996, Governor Tom Ridge signed into law, 66 Pa.C.S. Chapter 28 (relating to Electricity Generation Customer Choice and Competition Act) (act). The act revised the Public Utility Code, 66 Pa.C.S. §§ 101, et seq., by inter alia, adding Chapter 28, relating to restructuring of the electric utility industry. The purpose of the law is to permit customers to buy electric generation from their choice of electricity generation suppliers.
Section 2807(d)(1) of the act requires the establishment of regulations ensuring that an electric distribution company does not change a customer's electricity supplier without direct oral confirmation from the customer of record or written evidence of the customer's consent to a change of supplier. The purpose of the regulations is to implement and codify this provision of the act.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a), the Commission submitted a copy of this proposed regulations on September 30, 1997, to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Consumer Affairs and the Senate Committee on Consumer Protection and Professional Licensure. In addition to submitting the proposed regulations, the Commission has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Commission in compliance with Executive Order 1996-1. A copy of this material is available to the public upon request.
If the legislative committees have objection to any portion of the proposed regulations, they will notify the Commission within 20 days of the close of the public comment period. If IRRC has objections to any portion of the proposed regulations, it will notify the Commission within 10 days after the expiration of committee review period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the regulations, by IRRC, the General Assembly and the Governor of objections raised.
Commissioners Present: John M. Quain, Chairperson; John Hanger, statement follows; David W. Rolka; Robert K. Bloom
Public meeting held
April 24, 1997
Proposed Rulemaking Order By the Commission:
By order entered February 6, 1997, we issued an Advanced Notice of Proposed Rulemaking (ANPR) to establish regulations to ensure that customer consent is obtained prior to the change of a customer's electric distribution supplier. The ANPR was published in the Pennsylvania Bulletin on February 22, 1997, at 27 Pa.B. 934, and a 30-day comment period set.
We received comments from the Pennsylvania Electric Association (PEA) on behalf of its member companies, from the Office of the Consumer Advocate (OCA), from New Energy Ventures - Mid Atlantic (NEV) and from the Enron Corporation (Enron). After consideration of all the comments we are ready to set forth the proposed regulations establishing requirements that must be met prior to changing a customer's electric generation supplier.
In our ANPR we invited comments on four specific areas of interest involving customers changing electric suppliers. These included the procedures necessary to ensure that customers do not have their suppliers switched without their consent, the customer's responsibility for payment of bills when an unauthorized change is alleged, record maintenance/reporting requirements and potential penalties that the Commission could impose for unauthorized changes of suppliers. We received comments on all these areas.
Procedures for Changing a Customer's Electricity Supplier
The Electric Generation Customer Choice and Competition Act (act) requires that the Commission promulgate regulations to ensure that customer consent is obtained prior to a change of electric suppliers. The act allows an authorized change to be initiated once an electric distribution company has received direct oral confirmation from the customer or written evidence of the customer's request.
The proposed regulations permit customers to contact the electric distribution company directly and supply certain customer specific information to initiate the change of service. The PEA commented that the Electric Distribution Company (EDC) should be able to require that the customer provide certain information prior to initiating the change including the customer's name, address, Social Security number, present supplier, proposed supplier and electric distribution customer account number. We agree that the customer must provide certain information to prove that they possess the authority to initiate the switch. Our proposed regulations include that requirement.
Electric suppliers will receive and initiate attempts to secure oral authorization from customers to change suppliers. NEV commented that the EDC can validate the request through direct oral confirmation. In Enron's view, there need be no direct communication between the customer and the EDC if the electric supplier has verified the request using an appropriately qualified independent third party. The OCA endorses the option of a customer contacting a supplier directly to initiate a change providing a record is kept of the contact.
We agree that it is important to make changing a carrier as easy and convenient as possible for customers. We also note that the act requires that certain things occur before a change takes place. In this instance, the act requires that the EDC receive direct oral confirmation from the customer of record. Therefore our proposed regulations require that a contact occur. In the interests of making this easy for a customer, our proposed regulations permit the supplier to immediately transfer the call to the EDC so the change can be initiated. In addition, the electric supplier is permitted to announce the transfer and to stay on the line to render assistance if it is needed. In those instances when transfers are not possible, the supplier is permitted to supply the customer with a phone number to the EDC so that the customer can initiate the change. Alternately, the supplier may acquire written authorization from the customer and supply that to the EDC to initiate the change.
The proposed regulations offer similar options to agents and marketers involved in the direct marketing of a supplier's services. The lone exception being that on supplier initiated contacts, immediate transfers to the EDC are prohibited. We believe this consumer protection is necessary to avoid the unauthorized change of service problems that have occurred in the telephone industry. Under our proposed regulations, the customer would have to make direct contact with the EDC to initiate the change. The supplier retains the option of securing written authorization on these contacts. We seek comments as to whether this is an appropriate balance between consumer protections and marketing.
NEV commented that the Commission should recognize that the reference to customer of record in the act include designated agents of the customer of record. We agree that some customers may consent to having another person act on their behalf. Therefore, our regulations allow for customers to produce a signed document identifying the persons permitted to act on their behalf. In this regard, the PEA comments included a requirement that the EDC have the option of requesting written confirmation of the customer's previous oral communication. In those instances where the customer cannot verbally provide the required information, the EDC shall require that the customer either call back with complete information or produce written authorization. In addition, the proposed regulations allow the EDC to make a request when evidence exists that the request is not being made by or with the approval of the customer.
We agree with the OCA that written authorization should not include canceled checks or forms used to enter contests. Our proposed regulations limit valid written authorization to a document signed by the customer whose sole purpose is to initiate the change of electric suppliers.
Customer's Responsibility for Payment of Bills
As noted in our ANPR, customer allegations of unauthorized changes of carriers in the telephone industry have often been accompanied by disputes over bills rendered by the carrier accused of making the switch. Therefore we invited comments on this issue. NEV commented that suppliers should be paid for services provided. The comment stresses that when a supplier change is upheld customers should be required to pay outstanding bills including interest and other outstanding charges. The OCA takes the position that customers should not be required to pay suppliers who have ''wrongfully slammed them.'' We agree with both commentators. Therefore our proposed regulations require that an allegation of an unauthorized change of supplier be considered a dispute and be processed consistent with our Chapter 56 regulations. In addition, if the customer files the dispute within the first three billing periods since the change and an unauthorized switch is discovered, the customer is not responsible for electric supplier bills rendered during that period. We believe that not requiring the customer to pay for the unauthorized service will be a significant incentive in limiting unauthorized changes of electricity supplier. We welcome comments on the merits of this proposal.
In addition, we agree with the OCA that customers should not be responsible for charges involving switchbacks when unauthorized switches have occurred. Our proposed regulations reflect that position.
Record Maintenance/Reporting Requirements
The OCA commented that both suppliers and distribution companies should track unauthorized change of supplier complaints and report to the Commission on an annual basis. NEV takes the position that every supplier should maintain complaint records and provide them at the request of the Commission but there should be no routine reporting requirement. In our view, especially as customers begin making choices about their electric supplier, this information is very important. Therefore our proposed regulations require reporting on an annual basis. We fully realize that the future may lessen or eliminate the need for the requirement. Therefore it is our intention to revisit these regulations within the next 5 years to make appropriate revisions.
Potential Penalties for Unauthorized Change of Supplier
We agree that the Commission already possesses the tools to penalize distributors and suppliers for violations of these regulations. The tools include fines as well as the revocation of licenses. As a result, there is no need to propose additional penalties at this time.
In proposing these regulations we believe we have met the intent of the act. We have made it as easy as possible for customers who wish to change electric suppliers to do so. In addition, we have established the necessary protections to assure that customers do not have their electricity supplier changed without their consent.
Accordingly, under 66 Pa.C.S. §§ 501, 504--506, 1301 and 1501, and the act of July 31, 1968 (P. L. 769 No. 240) (45 P. S. §§ 1201--1208), and the regulations promulgated thereunder at 1 Pa.Code §§ 7.1--7.4, the Commission proposes adoption of the proposed rulemaking to establish regulations to ensure that customer consent is obtained prior to a change of electric suppliers as noted and set forth in Annex A, Therefore,
It Is Ordered That:
1. The Commission's regulations are hereby proposed to be amended by adding §§ 57.171--57.177.
2. The Secretary shall submit this order and Annex A to the Office of Attorney General for approval as to legality.
3. The Secretary shall submit this order and Annex A to the Governor's Budget Office for review of fiscal impact.
4. The Secretary shall submit this order and Annex A for informal review by the designated standing committees of both houses of the General Assembly, and for informal review and approval by the Independent Regulatory Review Commission.
5. Interested parties may submit written comments, an original and 15 copies, within 30 days from the date the notice is published in the Pennsylvania Bulletin, to the Office of Prothonotary, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265. A copy of written comments shall also be served upon the Commission's Bureau of Consumer Services and Law Bureau.
6. A copy of this order shall be served upon all persons who have previously submitted comments in this rulemaking proceeding.
7. The contact persons for this matter are Joe Farley, Bureau of Consumer Services (717) 787-4963 and Terry Buda, Law Bureau (717) 787-5755.
JAMES J. MCNULTY,
Acting Secretary
State of Commissioner John Hanger In the long-distance telephone industry, consumers have repeatedly complained that their long-distance service was switched to another company, or ''slammed,'' without their consent. There is no reason to tolerate such incidents, and the Proposed Regulations issued today are an attempt to prevent such abuses without creating any unnecessary barriers to customer choice.
In particular, the Proposed Regulations relieve the consumer of payment for services rendered for up to three months after the customer reasonably should have known of an unauthorized change of suppliers. This remedy should provide a significant disincentive to slamming while not permitting customers to benefit from delaying complaints of unauthorized switching.
In addition, I note that this Commission has full authority to impose fines and rescind licenses for slamming. I have every intention of using these remedies mercilessly.
The Proposed Regulations require a customer to contact the local distribution utility directly or in writing to authorize all changes in supplier resulting from supplier initiated contact. When a customer or an authorized representative initiates the supplier contact resulting in a change of supplier, the supplier may immediately transfer contact to the local distribution utility to implement the change. Upon such contact, written authorization is required if basic customer information has not been provided.
Are these restrictions necessary to prevent slamming? In particular, is it necessary for the consumer to have direct contact with the local distribution utility in order to process a change of supplier or would written authorization be adequate? Is it useful to distinguish between changes when the customer or the supplier initiated the contact?
I encourage comments on this important consumer and supplier issue.
Fiscal Note: 57-184. No fiscal impact; (8) recommends adoption. Any increased regulatory costs to the Commission will be paid from available resources.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PUBLIC UTILITY COMMISSION
Subpart C. FIXED SERVICE UTILITIES
CHAPTER 57. ELECTRIC SERVICE
Subchapter M. STANDARDS FOR CHANGING A CUSTOMER'S ELECTRIC SUPPLIER Sec.
57.171. Customer initiated contacts. 57.172. Persons authorized to act on behalf of a customer. 57.173. Electric generation supplier initiated contacts. 57.174. Valid written authorization. 57.175. Customer responsibility to pay bills. 57.176. Record maintenance. § 57.171. Customer initiated contacts.
(a) When a customer or a person authorized to act on the customer's behalf contacts the electric distribution company to verbally request a change of electric suppliers the distribution company shall change the supplier when the following requirements are satisfied:
(1) The customer or authorized party provides the electric distribution company with:
(i) The customer's name and address.
(ii) The customer's account number.
(iii) The customer's Social Security number.
(iv) The name of the present supplier.
(v) The name of the proposed supplier.
(2) The customer is sent a confirmation package by the electric distribution company noting the proposed change. Included in this package shall be notification of a 10 day waiting period in which the order may be canceled before the change of suppliers is made. This notice shall include the date service with the new supplier will begin unless the customer contacts the electric distribution company to cancel the change.
(b) When a customer or authorized party is unable to provide the required information to process a change of supplier or the electric distribution company has evidence that the request is not being made by or with the approval of the customer of record the distribution company shall require that the customer supply signed written authorization before the change of suppliers takes place. The electric distribution company shall offer to supply the customer with a form to submit to initiate the change of suppliers. Upon receipt of the written authorization, the electric distribution company shall send the customer a confirmation package that includes the date service with the new supplier will begin unless the customer cancels the change.
(c) When a customer or a person authorized to act on the customer's behalf contacts the electric generation supplier to verbally request a change of electric supplier, the supplier shall offer the customer a choice of the following options:
(1) The customer or authorized party shall be offered an immediate contact including transfer of the telephone call to the electric distribution company to initiate the change. If the customer chooses this option the supplier may initiate the transfer, make the electric distribution company aware of the reason for the transfer and remain on the line to render assistance necessary to process the customer's request.
(2) When it is not practically possible for the supplier to initiate the contact or transfer the call to the electric distribution company, the supplier should provide the customer with:
(i) The distribution company contact number
(ii) An explanation of the information the distribution company requires
(iii) An explanation that the customer must contact the distribution company to initiate the request.
(3) The electric generation supplier may offer to send the customer a written authorization form to be completed and returned to the electric distribution company or to the electric generation supplier. If the written authorization is returned to the supplier, it is the supplier's responsibility to furnish the electric distribution company with a copy of the document authorizing the change.
(d) When a customer or authorized party has verbally provided the electric distribution company with the required information or produced written authorization to change electricity suppliers, the electric distribution company shall make the change in the first new billing period following the 10-day waiting period.
§ 57.172. Persons authorized to act on behalf of a customer
A customer may identify persons authorized to make changes to the customer's account. To accomplish this, the customer shall provide the electric distribution company with a signed document identifying by name those persons who have the authority to initiate changes to the account.
§ 57.173. Electric generation supplier initiated contacts.
When the electric generation supplier or an entity representing an electric generation supplier initiates a contact with a customer that results in a customer request for a change of electric supplier, the customer shall be offered the following options to initiate the change:
(1) The supplier shall provide the customer with:
(i) The distribution company contact number.
(ii) An explanation of the information the distribution company requires.
(iii) An explanation that the customer must contact the distribution company to initiate the request.
(2) The electric generation supplier may offer to send the customer a written authorization form to be completed and returned to the electric distribution company or to the electric generation supplier. When the written authorization is returned to the electric supplier, it is the supplier's responsibility to furnish the electric distribution company with a copy of the document authorizing the change.
§ 57.174. Valid written authorization.
A document signed by the customer of record whose sole purpose is to obtain the customer's consent to change electric generation suppliers shall be accepted as valid and result in the initiation of the customer's request. Documents not considered as valid include cancelled checks, signed entries into contests and documents used to claim prizes won in contests.
§ 57.175. Customer responsibility to pay bills.
(a) When a customer contacts a electric distribution company or an electric generation supplier and alleges that an electric supplier has been changed without consent, the company contacted shall:
(1) Consider the matter a customer registered dispute.
(2) Investigate and respond to the dispute consistent with §§ 56.151 and 56.152 (relating to utility company dispute procedures).
(b) When the customer's dispute has been filed within the first three billing periods since the since the customer should reasonably have known of a change of suppliers and the dispute investigation establishes that the change occurred without the customer's consent, the customer is not responsible for electric supplier bills rendered during that period. If the customer has made payments during this period, the company responsible for initiating the change of supplier shall issue a complete refund within 30 days of the close of the dispute.
(c) A customer who has had electric suppliers changed without having consented to that change shall be switched to the prior supplier for no additional fee. Charges involved in the switch back to the prior supplier are the responsibility of the company that initiated the change without the customer's consent.
(d) If a customer files an informal complaint with the Commission alleging that an electric supplier was changed without consent, the Bureau of Consumer Services will issue a decision that includes a determination of customer liability for any electric supplier bills rendered since the change of supplier.
§ 57.176. Record maintenance.
Each electric distribution company and each electric generation supplier shall preserve all records relating to unauthorized change of electric supplier disputes for 4 years from the date the customers filed the dispute. These records shall be made available to the Commission or its staff upon request.
§ 57.177. Reporting requirements.
Within 90 days after the end of each calendar year, each electric distribution company and each electric generation supplier shall file with the Commission a report containing the following information regarding change of electric supplier disputes for the previous calendar year:
(1) The number of disputes filed by customers.
(2) The number of instances when the dispute investigation established that the customer's electric supplier had been switched without consent.
[Pa.B. Doc. No. 97-1623. Filed for public inspection October 10, 1997, 9:00 a.m.]
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