Pennsylvania Office of Consumer Advocate

 

 

Pennsylvania Office of Consumer Advocate
555 Walnut Street
5th Floor Forum Place
Harrisburg, PA 17101-1923

Phone: 717-783-5048 or toll free 800-684-6560
Fax: 717-783-7152

Email: consumer@paoca.org

Recent Highlights from the Activities of the Pennsylvania Office of Consumer Advocate

OCA is committed to advocating for the interests of Pennsylvania consumers and to keeping consumers informed about their utility service.

Electricity / Natural Gas / Telecommunications / Water /Consumer Education Outreach

Introduction

The last few years have seen a dramatic change in our utility industries. The Office of Consumer Advocate (OCA) has played an important, constructive role in representing the interests of Pennsylvania consumers during this tumultuous period. The OCA has continued its traditional representation of consumers in rate cases and other proceedings before the Pennsylvania Public Utility Commission (PUC). In response to new issues, the OCA has greatly expanded its activities at the federal regulatory agencies, as well as in important regional organizations such as the PJM Interconnection. The OCA also helps to educate and inform consumers through its Website (www.oca.state.pa.us), its toll-free consumer number (800-684-6560), and its outreach programs. A brief summary of the OCA's activities in each major area of the utility industry is set forth below.

Electricity

On December 3, 1996, Governor Ridge signed the landmark legislation that restructured Pennsylvania's electric industry and opened up the competitive retail sale of generation. The OCA actively participated in the "stakeholder" process that helped to develop that legislation, urging in particular the adoption of ratepayer protections such as rate caps and universal service programs. In what was OCA's goal to ensure that all consumers would benefit and not be harmed during the transition to a more competitive electricity market.

The OCA played a paramount role in advocating the interests of Pennsylvania consumers throughout the complex restructuring of the electric industry. The OCA's expert testimony and legal briefs addressed all of the major policy questions that determined whether consumers could benefit from electric competition. These issues included the calculation and recovery of stranded costs, the unbundling of rates into their competitive and noncompetitive components, consumer protection rules in a partially regulated and partially unregulated industry, competitive safeguards to ensure that competition is fair and open, rate caps, and universal service programs to ensure that all customers have access to affordable electric service.

The Public Utility Commission Orders consistently relied on the OCA's policy and technical recommendations. For example, with respect to calculating the utilities' stranded costs, the Commission concluded: "Though there is no single proposal that we find completely convincing on every component of its analysis, we adopt the testimony of OCA witness Smith as the most reasonable determination...We are also convinced that witness Smith performed an objective analysis of the issues in this proceeding, a task that the Commission believes no other party truly performed." The Commission also concluded that the complex computer model presented by the OCA witnesses to estimate stranded costs was "the most reasonable presented in the record of this proceeding." Although these proceedings were subject to further settlement negotiations, the Commission's adoption of OCA recommendations resulted in reductions of more than five billion dollars in the stranded costs that were to be paid by Pennsylvania consumers.

The OCA also filed detailed comments in the approximately twenty PUC rulemaking and generic proceedings that implemented the requirements of the electric competition legislation. In many of those proceedings, the PUC adopted critical consumer protections which we proposed.

In the years following the restructuring proceedings, the OCA has remained active in trying to ensure that electric restructuring continued to benefit consumers. To protect consumers' interests while offering them the greatest number of competitive options, the OCA continues its active role in a number of complaint proceedings, petition proceedings brought by electric utilities and alternative electric generation suppliers, and in on-going appeals. Current major issues include the development of competitive default service, extension of rate caps and provider of last resort service, as well as electric utility merger proceedings.

The OCA is also active at the regional and federal level in seeking to ensure that the evolving rules permit wholesale competition to benefit Pennsylvania retail customers. This includes numerous filings before the Federal Energy Regulatory Commission and active participation on stakeholders committees formed by the PJM Interconnection.

Finally, as noted further below, the OCA plays a major role in educating and informing the public about electric restructuring issues. We publish statistics showing the extent to which consumers are being served by alternative generation suppliers. We also distribute monthly, both in hard copy and on our Website, the highly popular residential electric shopping guide comparing the prices charged to residential customers by each active generation supplier.

Natural Gas

The OCA took a leading role in the negotiation of the natural gas choice legislation in 1999, as well as in the specific utility restructuring proceedings that followed. We presented testimony from a team of experts who addressed all the major consumer issues in each case. These issues included the unbundling of competitive and non-competitive service rates, the determination of costs related to restructuring under the Act, universal service programs for low income consumers, and consumer education and protection requirements in the new partially competitive natural gas markets. As of July 1, 2000, the OCA was also given the statutory authority to represent the customers of the Philadelphia Gas Works before the Pennsylvania Public Utility Commission regarding that municipal utility's service and rates.

Despite the option of customer choice in natural gas supply, both distribution service and the natural gas supply service of former monopoly gas companies are still regulated by the PUC. This means that the OCA continues to participate in the purchased gas cost (Section 1307(f)) proceedings filed by each of the major natural gas utilities. This permits us to ensure that the cost of regulated gas supply is as low as possible. Unfortunately, Pennsylvania consumers were affected when wholesale natural gas prices skyrocketed across the Nation over the past year. We responded by continuing our focus on ensuring that the cost of utility gas supplies are minimized. We also offer education and advice to help consumers to control their bills. This includes advice on budget billing, conservation measures, low income support programs, and other means of trying to keep their costs down. In 2001, the OCA also sought an extension from the usual April 1 conclusion for the winter shutoff moratorium after which gas utilities can shut off customers' service.

OCA has also focused on the new natural gas suppliers. In one case, a natural gas supplier went bankrupt after collecting $281,000 in deposits from Pennsylvania consumers. An OCA attorney traveled to Georgia to intervene in the bankruptcy proceeding. We successfully negotiated an agreement with the new owner of the company to refund deposits to Pennsylvania consumers while honoring the long-term gas supply agreements at their original price.

Finally, the OCA also participates at the Federal Energy Regulatory Commission (FERC) in the major interstate pipeline ratemaking proceedings and rulemakings that ultimately affect the prices paid by Pennsylvania natural gas consumers.

Telecommunications

In telecommunications, the OCA actively participated in the Commission's recent "Global" proceedings which addressed the future of the telecommunications industry in Pennsylvania. The OCA focused its expert testimony and briefs in that case on consumer protections such as rate caps and universal service funding to ensure that the prices paid by Pennsylvania consumers, including rural consumers, are affordable. The OCA also supported efforts to ensure that all consumers get the benefits of competition.

The OCA has also been very active at both the PUC and the Federal Communications Commission (FCC) to prevent the unnecessary addition of area codes in Pennsylvania and around the Nation. The OCA has proposed methods that will help to prevent the unnecessary expense and annoyance to consumers of constant area code changes. Our proposals are also intended to prevent the current ten-digit North American Numbering System from running out of area codes within the next several years. The unnecessary cost to society of such a numbering change could be in the tens of billions of dollars.

The OCA also handles numerous complaints involving the unlawful practices of slamming and cramming. We are usually able to get "slammed" consumers returned to their chosen telecommunications providers and to obtain refunds to "crammed" customers for services to which they did not subscribe. In one particularly egregious slamming case, involving the forgery of a consumer's signature, the OCA was able to convince the PUC to fine the offending company a then-unprecedented amount of $20,000.

Water

Our goal for the water industry is to ensure that Pennsylvania consumers receive safe and potable water service at just and reasonable rates. The OCA continues to represent consumers in numerous base rate increase proceedings, applications and consumer complaints.

In addition to participating in cases involving large water companies, the OCA annually reviews the rate filings, applications, and other activities of the Commonwealth's small water utilities. We seek to ensure that customers of small utilities have the same protections as customers of larger utilities. Even so, small utility cases have their own unique dynamics. The OCA typically has contact with a much greater percentage of customers of small water utilities through informal meetings, correspondence or at public input hearings. These cases present the challenge of protecting the consumers' interests without overwhelming the utility's often limited resources with litigation costs. The OCA has met this challenge by developing expertise in matters related to water companies, through participating in alternative dispute resolution and by participating in rulemakings and other programs which directly impact the regulation of small utilities.

The OCA has also supported requests from several consumers and groups to obtain extensions of water service to their homes at reasonable cost. Some of these groups have experienced serious quality problems with existing supplies or have increasingly inadequate supply due to increased development. For example, in 1999-2000, over one hundred families were able to receive water service without advance contributions toward construction in various areas of Pennsylvania-American Water Company's service territory. These communities also benefit by the availability of public fire service in their areas for the first time. Many of these families had experienced substantial outages due to their wells running dry and all relied at least partially on hauled or bottled water to meet their household needs.

Finally, the OCA serves in numerous state and national groups to represent the interests of water consumers, including as a member of the PUC's Small Water Company Task Force, which meets regularly to address existing and emerging problems of small water and sewer systems.

Consumer Education and Outreach

Our activities extend well beyond litigation. The OCA has presented formal testimony both in the Pennsylvania General Assembly and in the United States Congress regarding critical utility issues that affect Pennsylvania consumers.

An increasing portion of the OCA's efforts is spent on educating consumers about changes in the utility industry. Without adequate consumer education, consumers are not able to benefit from increased choices. In fact, consumers may be harmed because they don't know how to make good choices. Worse yet, lack of information may make them vulnerable to illegal practices and scams. The OCA has a Consumer Education and Outreach Coordinator to direct its consumer education efforts. The Consumer Advocate, Outreach Coordinator and other members of OCA staff have participated in numerous consumer presentations, conferences, legislative and other government consumer fairs, and informational forums around the Commonwealth. We also pursue consumer education through our board membership on the Council for Utility Choice, which oversees statewide utility education programs. We are also on the board of the Energy, Utilities and Aging Consortium. The Consortium conducts educational roundtable forums throughout the state, and also holds a biannual statewide educational conference, covering both aging and utility issues. The OCA also provides consumer information and education through its website at www.oca.state.pa.us . The OCA has received over 1.1 million visits to its website, with the largest portions of these "hits" seeking information on electric choice. Finally, the OCA regularly sends mailings to consumers and members of the General Assembly about upcoming cases, public forums and important issues.

The OCA has a toll free number which is available to all Pennsylvania utility consumers. The toll free number (800-684-6560) is staffed from 8 a.m. to 6 p.m., Monday through Friday. In the fiscal year 2001-2002, we handled more than 21,000 consumer inquiries, requests for information and complaints. In many instances, the OCA was able to help these consumers receive refunds or rate reductions. In other cases, we have helped consumers receive necessary utility line extensions at reasonable costs or expanded toll-free local telephone calling areas to help keep their overall bills down. The OCA also has intervened in several cases in which consumers complained of excessive electric outages.  Our call center can assist with service or billing problems when the customer can not resolve the matter themselves.  We are happy to answer all questions or concerns regarding utility service in Pennsylvania.

Of particular benefit to consumers is the OCA's popular Residential Electric Shopping Guide. This guide provides a list of electric generation suppliers with "apples-to-apples" comparative price information for residential customers in each of the major electric distribution service territories and has been widely circulated both in print form and from the OCA's website. The OCA has mailed and distributed nearly 27,000 hard copies of the shopping guides to individual Pennsylvania consumers. In addition, the OCA web pages recorded over 255,000 visits from persons seeking information from the shopping guide. The OCA also has developed a quarterly report outlining the number of customers, percentage of each electric distribution company's customers, the amount of load and the percentage of load for those customers in Pennsylvania who have switched to an alternate generation supplier. These shopping statistics are updated quarterly, are posted on the OCA website and are sent electronically to a wide audience. This report has been used nationally as well as in Pennsylvania.

Conclusion

This is a critical period for utility consumers in Pennsylvania. The current transition to greater competition in many utility functions could lead to lower prices and improved service for all Pennsylvanians. However, as has been seen in other states, this transition could lead to the establishment of essentially unregulated monopolies or oligopolies. This would leave customers without the protections of either regulation or effective competition and will lead to higher prices and unreliable service. It is essential that Pennsylvania consumers be fully and competently represented and informed throughout this transition period. The OCA is committed to advocating for the interests of Pennsylvania consumers and to keeping consumers informed about their utility service.

 
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