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Regulatory Activities – Consumer Protection – Significant Cases

Significant Cases – Consumer Protection

In addition to utility-specific cases, the Public Service Commission (PSC) also sets up proceedings to examine rules and practices that impact all residential customers of energy, private water, or telecommunications services. Frequently, these types of cases will end up as rule-making cases, where the PSC considers the adoption of agency regulations that apply to all electric or gas utilities, all local telecommunications utilities, or private water utilities. The PSC also is responsible for the licensing and oversight of energy suppliers, and has established rules and regulations that apply to suppler licensing requirements, and the marketing, solicitation, contracting and billing activities of suppliers.

The following are recent PSC actions that are important to residential consumers:

BGE – Peak Rewards A/C Program is modified after July 22, 2011 Extended Outage

The PSC has approved changes to BGE's voluntary Peak Rewards program to address problems that occurred during an extended service reduction during the summer as a result of the program. These changes give added flexibility during emergency events. BGE already has implemented changes in its program information and communication to make sure that customers clearly understand how the program operates before joining, and receive better information prior to the reduction of air conditioning in their homes.

Background: BGE activated its Peak Rewards program on Friday July 22, 2011 after several days of unusually hot weather. BGE and the PSC received complaints from a number of customers about the cycling off of their air conditioning compressors during Friday afternoon and early evening. Complaints were reported in the press, including those in blogs and on Twitter. From OPC's review, the complaints fell into one of several categories:

  1. Lack of understanding about the possible extent of the loss or reduction of air conditioning during an emergency event
  2. Insufficient warning in advance of the activation of the program
  3. Call delays with the BGE communication system
  4. Inadequate or incorrect information from BGE customer service representatives
  5. Radio signal problems, causing delays in cycling the air conditioning compressors back on.

Program Description: Peak Rewards is a voluntary program for BGE customers. This program has been approved by the PSC. It is designed to help ease the high demand for electricity on very hot days in the summer months or in emergency events. For participating customers, the program allows BGE to cycle compressors on central air conditioning units during periods of peak electricity demand. The customer receives monthly credits for four summer months in return for participating in the program.

There are two parts to the program. "Emergency events" are those that affect reliability of the electricity system in the region. BGE will activate the emergency program at the direction of the PJM Interconnection, the operator of the electricity grid system in the mid-Atlantic area. Depending on the tier or "cycle" that a customer has chosen, the Company cycled off the compressor 50%, 75%, or 100% of the time during the emergency event. The event is "called," and therefore started and stopped, at the direction of PJM. If you are a participating customer, you cannot override the event.

BGE may also call "non-emergency events". These events are called primarily because of very high electricity prices in the region due to high electricity demand, and may be localized events. For these events, BGE will cycle off the compressor at the 50% level. A participating customer can override these events two times in a year.

Both emergency and non-emergency events usually are called Monday through Friday, between the hours of 1 p.m. through 7 p.m. Days and times can vary, however, as well as the length of the event. BGE reports that it historically has 1 emergency event and 6 non-emergency events a year.

OPC supports the voluntary Peak Rewards program, because it can deliver both reliability and cost benefits to our customers. However, this was the first time that customers experienced such a lengthy emergency event, and in the case of customers at the 100% level, the loss of air conditioning in the home for several hours. The emergency event raised several consumer concerns about the operation of the program.

BGE investigated and provided information to the Commission and OPC about all of these customer concerns, and was required to address them in a satisfactory way. The Company will need to take additional steps to make sure that customers can determine whether the voluntary program is right for them and their household members, that there is sufficient advance notice of the events, that BGE customer service representatives provide accurate information to customers, and that the radio signals perform properly.

It is very important for customers to understand the potential impacts on electricity use when enrolling in programs like Peak Rewards. These programs may work very well if there are no household members in the home during daytime hours during the week. However, if you work or stay in the home during the day, have household members who are small children, elderly, or with any type of illness or medical condition, or experience discomfort without air conditioning, this voluntary program may not be right for you.

For more information about the operation of the program, please see https://peakrewards.bgesmartenergy.com.

If you would like to share a particular concern or problem that you experienced during the Peak Rewards event on July 22, please contact us at info@opc.state.md.us.

PSC Adopts New Price Comparison Rules 

There are new rules for the display of price comparison information by electric utilities and energy suppliers.  This spring the PSC invited comment on the existing "Price to Compare", which has appeared on utility bills for the past ten years.  This price had been used to help consumers compare supplier price offers with the price of electricity supplied by the electric utility.  OPC identified certain problems with the current method of comparing utility Standard Offer Service (SOS) prices with supplier prices and recommended changes.  These recommended changes were adopted by the PSC, and the electric companies made changes to their billing statements beginning August 2010.  See PSC Order 83423 in Case No. 9228 and OPC comments submitted in this matter. 

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PSC Requires Utilities to Buy Supplier Billings and Allows Shut-off of Electric and Gas Distribution Service for Non-payment of Supplier Charges

In 2009 OPC lost a ten-year battle to prevent the shut-off of electric and gas distribution service when a residential customer is behind in payments to an energy supplier. At the urging of energy suppliers, the PSC agreed to require regulated gas and electric companies to purchase the accounts receivable of energy suppliers. This means that the supplier billings become utility expenses which can be recovered in rates from customers. As a result of this decision, the PSC also allowed the utility companies to shut-off service if the customers do not pay the supplier charges.   The PSC has issued regulations, and the utilities filed proposed tariffs with the PSC to carry out these new rules.  The tariffs have been approved and are now in effect.

OPC has opposed these regulations because termination of utility service should be allowed only in the event of non-payment of regulated utility charges.  The competitive suppliers’ “bad debt” now will become an obligation of residential ratepayers, thereby converting private debt into public utility debt, and unfairly forcing residential ratepayers to subsidize the business activities and credit risk of unregulated competitive suppliers. While this action was taken to benefit energy suppliers, OPC believes that it is bad policy to require ratepayers to subsidize competitive businesses, and to replace usual debt collection remedies with the drastic remedy of utility shut-offs for the benefit of these suppliers.

PSC Rule Making 17-Competitive Electric Supply 

OPC Comments on Rule Making 17

PSC Rule Making 35 Competitive Natural Gas Supply   

OPC Comments on Rule Making 35

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PSC Case No. 9175 – High Bill Complaints and Alternate Payment Plans

The Public Service Commission (PSC) has an ongoing case to address the high bill complaints from the winter of 2008-2009 and to consider alternate payment plan rules. OPC has been an active party in all of the PSC proceedings and work group actions. During these proceedings, OPC has been a strong advocate for PSC adoption of clear and comprehensive rules requiring gas and electric utilities to offer alternate payment plans before utility services can be terminated. OPC had previously supported the adoption of comprehensive alternate payment plan rules in PSC Case No. 8919 , but only limited changes to PSC regulations were adopted at that time. 

On January 30, 2009, the Public Service Commission began an investigation into the arrearages, collection and termination practices of Maryland electric, gas, and combined electric and gas utilities, in response to the increasing arrearages and uncollectible balances of the utilities. See 2008 PSC report on Arrears and Terminations PSC expanded the scope of that case on February 11, 2009 to investigate a large increase in consumer complaints to the PSC’s Office of External Relations (“OER”) about high utility bills.  The PSC held hearings on February 26 and March 4, 2009, and the People’s Counsel testified in support of a continued investigation and the adoption of alternate payment plan rules. See OPC Presentation on March 4, 2009 PSC Case 9175 .

On April 24, 2009, the PSC issued an order with guidelines regarding alternate payment plans. The PSC directed the larger utilities to offer payment plans in compliance with these guidelines, OPC April 9, 2010 ALERT  and set up a work group to collect and review data from the utilities on customers with alternate payment plans. In December 2009, the PSC clarified that the April 2009 order limited the directives to customers with high bills from the 2008-2009, but encouraged the utilities to offer them voluntarily. See OPC December Alert . The work group continued to meet, OPC as an active participant.  However, the utilities, PSC Staff, OPC, and consumer representatives did not reach any agreement.  A report stating the lack of consensus was submitted to the PSC in August 2010.

During both the 2009 and 2010 sessions of the General Assembly, bills were introduce to require utilities to offer alternate payment plans. The bill was passed by the House of Delegates in 2009, but the Committees did not take a vote on them in 2010. OPC testified in support of these bills. See OPC Testimony 2010 House Bill 1255 and 2010 Senate Bill 971.

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The PSC Agrees with OPC and Low-Income Advocates When It Issues New Extreme Weather Regulations

During the 2009 session, the General Assembly passed a law requiring the Public Service Commission (PSC) to restrict utility service terminations during extreme weather in the summer weather, and allowing the PSC to expand the restriction in winter months. Office of People’s Counsel (OPC) had testified in support of this bill as an important consumer health and safety measure, see OPC Testimony 2010 House Bill 453 . The PSC set up a rule-making session and agreed with the proposal of OPC and low-income advocates to adopt a more expansive weather restriction rule for reasons of public health and safety. Despite the objections of utilities, the PSC’s emergency regulation proposal was accepted by the General Assembly’s AELR Committee. The emergency regulation remained in effect through July 31, 2010.  The PSC has issued permanent regulations, Code of Maryland Regulation (COMAR) 20.31.03.03 .  See OPC Alert September 2010.  The purpose of the regulations is to prevent the terminations of gas and electric service to customers during periods of extremely cold and hot weather.

The regulations prohibit terminations of both gas and electric service on any day for which the local weather forecast made at 6:00 a.m. has a high temperature of 32 degrees or lower in winter, projected for the next 72 hours. In summer months, this restriction would apply to all electric service and gas service (if used for cooling and the utility is on notice) if the local temperature forecast at 6 a.m. is for 95 degrees or higher in summer, during the next three days.

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