BILL ANALYSIS
SB 1159
Page 1
Date of Hearing: June 21, 1999
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick Wright, Chair
SB 1159 (Sher) - As Amended: April 21, 1999
SENATE VOTE : 39-0
SUBJECT : Electrical restructuring: electric service:
changes.
SUMMARY : Deletes the requirement for third-party verification
when a residential customer switches electric service providers
via the Internet or a written transaction, and instead requires
verification in the same medium that the sale takes place. This
bill extends third-party verification requirements to
aggregators, and requires aggregators and energy service
providers to keep records of confirmations. Specifically , this
bill :
1)Deletes the third-party verification requirement for
residential customers when the transaction occurs via the
Internet or written documents.
2)Requires the customer, for Internet sign-ups, to click on a
separate screen to acknowledge they are switching to a new
supplier of energy.
3)Requires the customer, for written sign-ups, to sign an
acknowledgement located in an area separate from the rest of
the application form.
4)Extends third-party verification requirements to aggregators.
5)Requires aggregators and energy service providers to keep a
record of the confirmation of a change for two years, and to
make those records available, upon request, to the customer
and to the California Public Utilities Commission (CPUC).
6)Authorizes CPUC to require third-party verification for all
residential changes, if certain findings are made.
EXISTING LAW :
1)Establishes procedures for a customer to switch electric
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service providers.
2)Requires third party confirmation via telephone to verify that
the customers intended to change electric service providers.
3)Exempts aggregators from third-party verification
requirements.
FISCAL EFFECT : Unknown
COMMENTS :
1)The unauthorized switching of a customer's long-distance
telephone provider, more commonly known as slamming, has been
a widespread problem since the deregulation of the
long-distance telephone market. The incidence rate has fallen
significantly in recent years, however, due to federal and
state consumer protection, anti-slamming laws. To protect
consumers in a deregulated electricity market, the Legislature
passed SB 477 (Peace), [Chapter 275, Statutes of 1997], which
requires independent, third-party verification via the
telephone when a customer selects a new energy service
provider.
2)According to the sponsors of this bill, third party
verification by telephone works well when a customer chooses a
new energy supplier via the telephone. The energy service
provider can switch the caller over to a third party for
verification without initiating a separate call to the
customer. Problems arise, however, when the customer signs up
for service via the Internet, or via the mail. In these
instances, a separate phone call to the customer to verify the
decision takes place several days after the initial
transaction, and sometimes longer. If the independent, third
party verification company is unable to reach the customer in
a timely manner, the switch to a new provider is delayed or
canceled altogether.
3)The author believes current verification requirements are
excessively burdensome, and can delay, or prevent, a customer
from choosing a new energy service provider. This bill
deletes the requirement for third-party verification when a
residential customer switches electric service providers via
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the Internet or via a written transaction and instead requires
verification in the medium that the sale takes place. For
Internet sign-ups, the customer must click on a separate
screen to acknowledge they are switching to a new provider.
For written sign-ups, the customer must sign an acknowledgment
of the transaction, set off in a box, and separate from the
rest of the application.
4)SB 477 drew a distinction between a marketer calling the
customer and the customer calling the marketer by not
requiring third-party verification when the customer calls the
marketer. The two scenarios differ in that a customer who
calls a marketer is likely to be doing so after having thought
about their choice and finally deciding to act on that choice.
This bill makes a similar distinction by treating customers
who voluntarily contact the marketer through the Internet or
via a written document differently than those who receive
unsolicited appeals from marketers.
5)This bill does not change third-party verification
requirements for telemarketers. Slamming in the
telecommunications industry is considerably more widespread
than in the electric power market. This is due to a number of
factors, including the low profit margins in the residential
electricity market, and the relative ease of switching
telecommunications companies. Switching telecommunications
providers requires only the customer's telephone number,
whereas electric service providers require the customer's
account number.
REGISTERED SUPPORT / OPPOSITION :
Support
Clean Power Campaign (sponsor)
Green Mountain Energy Resources (sponsor)
New Energy Ventures
Sempra Energy
Sierra Club California
Opposition
None on file
SB 1159
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Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083