BILL ANALYSIS                                                                                                                                                                                                    



                                                             


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|SENATE RULES COMMITTEE            |                  SB 1159|
|Office of Senate Floor Analyses   |                         |
|1020 N Street, Suite 524          |                         |
|(916) 445-6614         Fax: (916) |                         |
|327-4478                          |                         |
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                       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  
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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  







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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 








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               SUPPORT/OPPOSITION:  SEE ABOVE

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