BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1159| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 1159 Author: Sher (D) Amended: 4/21/99 Vote: 21 SENATE ENERGY, U. & C. COMMITTEE : 8-0, 4/13/99 AYES: Bowen, Baca, Brulte, Kelley, Mountjoy, Peace, Solis, Speier NOT VOTING: Alarcon, Hughes, Vasconcellos SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 SUBJECT : Electrical restructuring: electric service: changes SOURCE : Author DIGEST : This bill deletes the third-party verification requirement for residential customers when a change in electric service provider is made via the Internet or via written transaction. ANALYSIS : Current law establishes procedures for a customer to change electric service providers and requires the electric service provider to contract with a third-party to verify that the customer intended to change electric service providers. This bill deletes the third-party verification requirement for residential customers when the change is made via the Internet or via written transaction. When the change is CONTINUED SB 1159 Page 2 made via the Internet, this bill require the customer to be asked to respond to a separate screen acknowledging their desire to change electric service providers. When the change is made via written transaction, this bill requires the customer to sign an acknowledgement that they do indeed want to change electric service providers. Current law says that a change in electric power provides by an aggregator does not trigger the third party verification/confirmation procedures in current law. This bill deletes this provision. This bill requires the aggregator or provider of electric power to keep a record of the verification or confirmation for two years and to make those records available, upon request, to the customer and to the California Public Utilities Commission (PUC). This bill authorizes the PUC to require third-party verification for all residential changes described, if certain findings are made. Comments For telephone customers, the unauthorized switching of a customer's long-distance telephone company has been a rampant and persistent problem. This problem, known as slamming, has been the most common complaint received by the PUC over the past several years. A series of federal and state laws have been enacted to attempt to get a handle on the problem and the change in state law that seems to be the most responsible for a decrease in slamming complaints is the requirement for third-party verification. Under this requirement, a long-distance telephone company must use a third-party to verify the customer's desire to switch. Concerns about similar slamming problems arising in the newly-competitive electric industry prompted a similar third-party verification requirement to be imposed when competition was first permitted in 1998. The author believes the current verification requirements are too strict and lead to customer frustration, and can SB 1159 Page 3 delay, or in some cases prevent, a customer from switching electric service providers. To overcome these problems, this bill eliminates third-party verification when a customer changes electric service providers through the Internet or in writing. Under those circumstances, this bill requires customers to confirm their desire to switch providers by using a separate screen to confirm a switch order in the case of the Internet and, in the case of a written order, by requiring a separate signature set off in a box. Because the author believes slamming problems arise primarily in a telemarketing setting, this bill retains current law's third-party verification requirements when a customer is telemarketed. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 5/18/99) California State Council of Laborers Clean Power Campaign Green Mountain Energy Resources New Energy Ventures, Inc. Office of Ratepayer Advocates Southern California Edison Company Sempra Energy ARGUMENTS IN SUPPORT : The supporters of this bill argue that the third-party verification requirements are unnecessary, causing unwanted telemarketing and unnecessary delay in switching electric service providers. This bill, according to the supporters, do not unduly dilute customer protection because the third-party verification requirement remains for telemarketers. Further, according to the supporters, this bill benefits electric service providers, because their cost of acquiring new customers will be reduced. NC:cm 5/18/99 Senate Floor Analyses SB 1159 Page 4 SUPPORT/OPPOSITION: SEE ABOVE **** END ****