31-2101-0001.dhbab.doc

DONALD L. HOWELL, II
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3366

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE AMENDMENTS TO THE COMMISSION’S UTILITY CUSTOMER RELATIONS RULES (IDAPA 31.21.01.000 et seq.).
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CASE NO. 31-2101-0001

COMMENTS OF THE
COMMISSION STAFF

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its attorney of record, Donald L. Howell, II, Deputy Attorney General, and in response to the Notice of Proposed Rulemaking issued on August 28, 2000, submits the following comments.
BACKGROUND
The Utility Customer Relations Rules (UCRR) have not been amended since 1993. After having made substantial changes to the Telephone Customer Relations Rules (TCRR) in recent years, the Commission has turned its attention to the corresponding set of rules governing gas, electric and water utilities. A number of proposed modifications to the UCRR have as their impetus changes already made to the TCRR. Staff supports efforts to provide reasonable consistency between the two sets of rules. Staff also supports the addition of rules that address new developments in the electric, gas and water industries as well as the elimination of requirements that are no longer necessary or useful.
Given the length of time it has been since the Commission last reviewed the UCRR, Staff expected commentors to raise issues that require further study or are beyond the scope of this rulemaking proceeding. In its comments, Intermountain Gas Company identified two areas of concern not originally addressed by the Commission. Staff would suggest that such issues be deferred to an informal negotiated rulemaking workshop for discussion and, if possible, agreement among interested parties on a proposal to submit to the Commission for its consideration.
DISCUSSION
Rule 103. The Commission proposes to eliminate this rule, thereby dropping the requirement that, in lieu of payment of a cash deposit by a customer, utilities accept a written guarantee of payment from another customer. The guarantee option was removed from the Telephone Customer Relations Rules (TCRR) in 1999. A uniform approach to credit policy across industries increases the efficiency and effectiveness of Staff in administering the Commission’s rules. Therefore, Staff supports the proposed deletion of this rule. Perhaps more importantly, Staff supports the Commission proposal because it no longer believes that such a requirement is necessary for the reasons discussed below.
In the past, new applicants were routinely required to pay deposits as a condition of receiving service. The opportunity to obtain a guarantee was a valuable option for customers who did not have an established credit history with the utility and had limited financial means, e.g., students establishing a separate household for the first time or newlywed couples. Another customer, perhaps a family member, could provide the utility with assurance of payment of future bills so that the customer would not have to pay a deposit. The guarantee option has posed a number of administrative challenges to utilities, including difficulty in collecting amounts due from guarantors after a customer was disconnected for non-payment.
Utilities no longer require deposits of all new applicants, and some companies only require deposits in rare circumstances. Centralized record-keeping and management of customer information has vastly improved utilities’ ability to identify and request security from those applicants who pose a credit risk. Cash deposits earn interest while held by utilities. Relatively few customers take advantage of the guarantee option now. Given the changes in utility practices that have taken place, Staff supports the removal of the requirement that utilities offer guarantees to all customers from whom a deposit is requested. Staff wishes to point out, however, that removing this requirement does not mean that utilities must stop offering guarantees. Utilities would be free to continue offering that option to their customers.
Rule 104, 302, and 310. If the Commission approves the elimination of Rule 103, Rule 104, 302, and 310 will need to be modified to remove the reference to the guarantee option. In addition to removing the guarantee reference, the Commission proposes to modify Rule 310 by eliminating the alternative method for determining when disconnection action can commence. Under the proposal, the threshold amount owing must be less than $50.00. Under the current rule, if the amount owed by a customer is an accumulation of two months’ worth of charges, that customer can be disconnected even if the amount owing is far less than $50.00. The Commission eliminated the alternative threshold of two months’ charges and retained the $50.00 threshold in the Telephone Customer Relations Rules in 1999.
Again, Staff argues in favor of consistent credit requirements and rule uniformity across industries. Moreover, the cost to utilities of collection action (mailing notices, making phone calls, and visiting the customer’s premises to disconnect service) probably exceeds $50.00 in many, if not most cases. Spending $50.00 to collect $10.00 makes very little economic sense, except to the extent that taking such action deters a customer from falling into the habit of not paying bills as they become due. Staff recognizes that the proposed change will mean that companies will be unable to send collection notices to or disconnect the service of customers with unpaid minimum bills accumulating over a period of several months. For utilities that do not bill on a monthly basis, cash flow would be seriously affected only if a significant number of low-use customers chose to withhold payment until a $50.00 balance accumulated and collection action commenced.
Although Staff doubts that customers who have always paid their bills(small or large(as the bills become due will suddenly decide not to pay because of a change in collection policy, it is true that the Commission will be increasing the amount of time a customer can delay paying bills, perhaps for a whole season in the case of a minimum use customer. If approved, the new requirement will provide additional incentive for utilities to incorporate the use of payment reminders that do not include the threat of disconnection and offer or diligently market automatic payment options and level payment plans.
Staff supports all of the recommended changes to these rules.
Rule 107. The proposed modifications to Rule 107 will allow utilities to return a deposit by either crediting the customer’s account or issuing a refund without requiring an explicit request from a customer. Under the current rule, companies are required to refund a deposit absent customer instructions to issue an account credit. Under the proposal, neither method will be the preferred default procedure, giving companies greater flexibility in handling the return of customer deposits. Applying credits to future bills may provide customers with the benefit of more immediate use of their deposit money, avoiding the delay often associated with providing cash refunds. In a separate rulemaking docket (Case No. 31-4101-0001), the Commission has proposed that the same change in language be made with respect to the corresponding Rule 107 of its Telephone Customer Relations Rules (UCRR). Staff supports the proposed rule change and urges the Commission to maintain consistency between Rule 107 of the UCRR and TCRR for administrative efficiency. Simply put, it is easier for Staff to accurately administer rules and resolve disputes if the rules are the same, regardless of the type of company involved.
Rule 201. The Commission is proposing to change the rule to require “monthly” instead of “regular” billing. Utilities may apply to the Commission for permission to bill on a less frequent basis. Staff supports the more specific language under the proposal. Staff is painfully aware of customer dissatisfaction arising from a major interexchange carrier’s decision to change from monthly to quarterly billing. Staff supports a rule change that will establish the presumption that bills will be issued monthly and prescribes a method for granting exceptions. Rather than having a grandfather provision in the rule itself, Staff supports granting immediate exemptions to all utilities that currently bill on other than a monthly basis.
The Commission is also proposing to eliminate the reference to “the utility’s nearest office” in this rule. The increasingly-centralized customer service operations of large utilities have made this reference to the local office obsolete. The purpose of Rule 201.11 is to specify how customers can reach the company to ask about their bills. A local office, if one exists, may not be the best place to direct customers. Staff supports this proposed rule change.
Rule 207. The Commission is proposing that a new rule be adopted to prohibit billing for services or merchandize not ordered or otherwise authorized by the customer. The proposed rule is similar to Rule 205 of the Telephone Customer Relations Rules. Staff encourages the Commission to adopt the rule as proposed. Unfortunately, practices such as slamming (the unauthorized switching of a customer’s local exchange or interexchange service provider) and cramming (the provision of services or addition of charges to a customer’s telephone bill without the customer’s authorization) have become commonplace in the telecommunications marketplace. Similar market abuses have appeared in states where deregulation of energy service providers is underway. Adopting the proposed rule will clearly state the Commission’s policy as the energy industry and regulatory policy evolves.
Rule 300. The Commission proposes to eliminate the requirement found in Rule 300.04 to maintain a list of residential and small commercial customer classes. The list was initially developed to help utilities determine which classes were covered under various provisions of the Commission’s rules. Staff is not aware of any request in the past several years for the list by either a utility or a customer, and questions the use of Staff resources to maintain a document that is evidently of little value. Therefore, Staff supports the proposed change.
Rule 304. The proposed changes to Rule 304 will clarify and simplify the requirements for notification of customers prior to disconnection of utility service. Under the proposal, the requirement of initial notification of the intent to disconnect service (the seven-day notice) and final notice (the 24-hour notice) remains the same. These notices expire within 21 calendar days after the proposed termination date, giving companies three weeks to disconnect service if the customer fails to respond to the notices. Additional notice must be given if the company does not actually disconnect service within this time frame and still intends to disconnect service. Essentially, the process starts over again, with both an initial and final notice required.
If the customer receives the required notices and fails to pay an undisputed bill, no additional notice is required under two specific circumstances. First, if the customer receives notification, makes a payment arrangement, and subsequently fails to keep that arrangement, no additional notice is required. Second, if the customer receives notification and tenders payment with a dishonored check, no additional notice is required. It is important to note, however, that customers who make and break a payment arrangement or pay with a dishonored check but have not been subject to recent collection action by the company are entitled to prior notice before disconnection. In other words, breaking an arrangement or paying with a dishonored check cannot result in disconnection without any notification whatsoever. The link between prior notice and the customer’s action in response to the notice is necessary in order to avoid circumstances where a customer who is not subject to collection action misses a self-imposed payment target or encounters difficulty with their financial institution.
The current rule has been difficult for utilities and the Staff to administer. Customer rights and responsibilities have not been clearly understood. Eliminating confusion about when notification is required and under what circumstances no additional notice is necessary will benefit all concerned. Staff supports the proposed change.
Rule 305. Staff supports the proposed addition of language to disconnection notices regarding how partial payments are to be applied. Some utilities are now offering a variety of non-utility services and merchandise, e.g., bill payment insurance, satellite dish television, and surge protection devices. Customers need to be informed as to how payments of less than the full amount owing will be applied to their account. In order to protect customers from losing utility service and to protect ratepayers from subsidizing uncollectible amounts attributed to non-utility service, any amount paid will be applied first to bills for utility service. Staff notes that this proposed change is linked to the proposed change to Rule 313.
Rule 306. The Commission is proposing to eliminate the requirement that energy utilities report disconnection activity during the months of November through March. When the Commission originally adopted restrictions on disconnection of electric and gas service to residential customers (frequently referred to as “the moratorium”), reports were required to allow the Commission to monitor utilities’ actions in light of the adoption of the then-new customer protections. The moratorium policy is now firmly entrenched. In Staff’s opinion, the resources expended by utilities and Staff on preparation, submission, review, and analysis of the reports is no longer justifiable. If the Commission becomes concerned about a particular utility, it can exercise its authority to investigate that company’s actions. Staff prefers this more targeted approach, and encourages the Commission to adopt the proposed changes to Rule 306.
In its comments, Intermountain Gas Company proposed elimination of the portions of Rule 306 that requires utilities to offer customers a Winter Payment Plan. The company maintains that this program is costly to administer and presents information indicating that few customers take advantage of this special program. Although Staff agrees in principle that unnecessary regulatory requirements should be eliminated, Staff is reluctant to encourage the Commission to eliminate the Winter Payment Plan without knowing the experience of other energy utilities. Staff is also concerned about the possible impact on consumers of recent electric and gas rate increases. Higher energy bills might make the Winter Payment Plan a more attractive option for customers unable to pay in full during the winter heating season. The Commission should defer this issue to a rulemaking workshop to be held at a later date.
Rule 313. The Commission is proposing to have payments applied first to the undisputed balance owed by a customer for utility services. Rule 313.03 currently requires application of payment to the oldest undisputed balance, which does not take into account the variety of utility and non-utility services that may appear on a customer’s bill. In order to preserve utility service, payments should be applied first to utility services, whether the amount owing for utility service is 30, 60 or 90 days past due. If a payment exceeds the amount owing for utility service, then any remaining portion of the payment can be applied to other services. If adopted as proposed, this rule will mirror Rule 312.03 of the TCRR. Staff supports the proposed change in the interest of protecting customers from losing utility service and ratepayers from subsidizing uncollectible amounts attributed to non-utility services as well as promoting administrative efficiency.
The proposal also eliminates the requirement specifying the due date for the first payment under a payment arrangement as well as notification provisions for customers who fail to meet that deadline or pay with a dishonored check. Staff supports allowing utilities and their customers the flexibility to negotiate the terms of a payment arrangement. The requirements for providing customers with notice of disconnection are adequately addressed in other rules and do not need to be reiterated in this rule.
Rule 404. This proposed new rule establishes response deadlines for utilities responding to informal complaints filed with the Commission. Staff has experienced delays in receiving responses from utilities upon occasion. The problem of untimely responses has been more pervasive with telecommunications companies, prompting the Commission to adopt a corresponding Rule 404 in the TCRR. Staff supports the adoption of this rule so that all utilities, regardless of industry type, are required to respond in a timely manner and make a good faith effort to resolve complaints.
STAFF RECOMMENDATION
Staff recommends adoption of the proposed changes to Rules 104, 107, 201, 300, 302, 304, 305, 306, 310, and 313. Staff also recommends adoption of new Rules 207 and 404 and elimination of Rule 103. Finally, Staff recommends that an informal negotiated rulemaking workshop be initiated for discussion among interested parties of possible further revisions to the Utility Customer Relations Rules.

Respectfully submitted this day of October 2000.

______________________________
Donald L. Howell, II
Deputy Attorney General

Technical Staff: Beverly Barker

BAB:jo:umisc/comments/31-2101-0001.babdh
STAFF COMMENTS 3 OCTOBER 25, 2000