January 28, 2000

Via Hand Delivery and E-Mail
Mr. Peter Yochum, Bureau Chief
Board of Public Utilities
Two Gateway Center
Newark, New Jersey 07102

Pursuant to the discussion that occurred at the January 13, 2000 meeting of the Customer Account Services Working Group (the CAS Working Group), the Ratepayer Advocate hereby files a summary position paper regarding the proceeding for competitive customer account services. The CAS Working Group has met four times since the initial meeting of November 9, 1999 and has failed to reach a consensus on any issues. On January 13, 2000, a joint utility position paper (Utility Paper) was circulated that proposes a dilatory procedural schedule and erroneously presents arguments as to whether any customer account services should be opened to competition. In response to the Utility Paper, which clearly voices the utilities’ desire to keep all customer account services closed to competition, it is the Ratepayer Advocate’s position that all customer account services be opened to the competitive market through this proceeding. The Electric Discount and Energy Competition Act (the Act) is unambiguous in its directive regarding the opening of competitive customer account services. N.J.S.A. 48:3-49, et seq.

The New Jersey Legislature has mandated the Board’s course of action for opening customer account services to competition in unequivocal terms, as follows:

...the board shall initiate a formal proceeding to investigate the manner and mechanics by which customers are afforded the opportunity to contract with the incumbent utility or electric [or] gas supplier for customer account services and to establish the necessary standards for safety, reliability and testing for meters and information exchange protocols applicable to both [ ] suppliers and incumbent utilities that will permit customers to choose a supplier for some or all such customer account services. The board shall issue an order for providing customers the opportunity to choose a supplier for some or all customer account services not later than [August 31, 2000 for the electric industry and December 31, 2000 for the gas industry] ...

N.J.S.A. 48:3-54(a) and (b). Thus, the Act clearly states that as of August 1, 2000 for at least the electric utilities, the Board is to have issued an Order "that will permit customers to choose a supplier for some or all such customer account services. Id. In order for a customer to choose a supplier for any customer account services, the Board will necessarily have had to complete the proceeding to allow competitive electric customer account services by August 1, 2000 and at that time be ready to implement the framework for such competitive choices.

In contrast to this statutorily mandated schedule, the Utility Paper proposes a protracted procedural schedule that would not allow a customer to choose a supplier for even one of the customer account services until well into the year 2001. Pursuant to the Utility Paper, the Board is to issue a February Order that would initiate a Phase I proceeding to determine whether supplier consolidated billing should be offered to consumers. To even raise the issue of "whether" flies in the face of the goals of the electric and gas restructuring and competition and the direct mandate and language of the Act. According to the utilities, the Order addressing only that one aspect of customer account services would be issued August 1, 2000; then a Phase II proceeding would first be initiated to determine the shape and parameters of the utility cost of service studies (COSS) on customer account services that are necessary to establish bill credits. If the utilities’ proposal were followed, the Phase II Order would not be issued until December 31, 2000 -- meaning that the COSS would not even have been performed yet! Thus, if one were to adopt the utilities’ proposal, not one customer account service would be available to a customer on a competitive basis until well into year 2001. The utilities further propose to delay competition for all other customer account services, such as metering and meter reading until after the transition period ends.

The Board is also statutorily directed to take action against the obstructive utility stance, wherein the Act states, "[t]he board shall require that electric [and] gas utilities, in the continued regulated provision of customer account services, not take actions that would unreasonably impede a transition to a competitive customer account service market." N.J.S.A. 48:3-53(a) and (b). The Act is also clear in that customers are to be afforded the opportunity to contract with either the utility or a supplier for customer account services no later than one year from the starting date for the implementation or retail choice for electric and gas public utilities. Id. The Ratepayer Advocate, Enron and MAPSA have submitted statements to the CAS Working Group that point to the statutory language regarding competitive account services and that support the opening of all customer account services to a competitive market. In response to the Utility Paper, Enron succinctly sets forth the utility position versus reality, as follows:

The utilities argue that it is incumbent upon the alternative suppliers to set forth "the scale and scope of services they are prepared to offer consumers." However, the Act does not provide that such services shall become competitive upon a demonstration by alternative suppliers that they are prepared to offer such services. Metering and billing services have been a part of the utilities’ bundled rates for more than 80 years. In recognition of this fact and in order to achieve the overall purposes of the Act, i.e., to lower energy costs and to restructure New Jersey’s regulated energy market place, the Act specifically requires the electric utilities to unbundle their services and charges in three key areas, including "customer account services and charges", so that these services and charges can be separately identified and charged. N.J.S.A. 48:3-52a.

Statement in Response to Proposal by the Incumbent Utilities dated January 13, 2000, by Enron Corp., dated January 20, 2000, p. 2.

In light of the statutory language and the utilities’ position, the Board in its February Order should respond by commencing the necessary evidentiary, rulemaking and working group proceedings to analyze and open all customer account services to competition within the mandated timeframe. In fact, the President of the Board has publicly announced the Board’s intention to carry out the directives in the Act by stating that "[r]ather than relying on your current utility having to read a meter at the home, we are going to allow for competitors to come in and offer you all sorts of meters." David P. Willis, Big Changes for Utilities Ahead, Asbury Park Press, Sunday, January 16, 2000 at A23. The Ratepayer Advocate recognizes the importance of setting forth the parameters and assumptions for utility COSS and proposes a schedule that both addresses the COSS and carries out the proceeding within the timeline embodied in the Act.

As the Board is aware, there are approved stipulations in the gas unbundling cases that require the gas utilities to prepare COSS for customer account services to be filed between February 29, 2000 (Elizabethtown Gas) and March 20, 2000 (other gas utilities)¹. In fact, the gas utilities have already done avoided cost studies and they have agreed to perform embedded cost studies. The gas utilities should be required to abide by their respective stipulations with respect to the COSS. The Ratepayer Advocate proposes a procedural schedule below that requires the electric utilities to submit such COSS within the same timeframe as the gas utilities. The Ratepayer Advocate thus proposes a procedural schedule that accomplishes the statutory mandate and completes the Customer Account Services Proceeding by August 1, 2000, as follows: