WGES Testimony in Support of Customer Account Information, March 2010

Washington Gas Energy Services, Inc. (WGES) submits these comments in support of Electric Companies and Gas Companies - Customer Account Information.

Washington Gas Energy Services, Inc. is one of the largest competitive providers of electricity and natural gas in the Mid-Atlantic region, including Maryland, and supplies over 280,000 residential and commercial customers in Maryland, Virginia, Delaware, the District of Columbia and Pennsylvania.

Requiring Maryland's electric and gas utilities to provide retail suppliers with customer lists that include key customer information greatly facilitates the ability of competitive suppliers to bring money-saving offers and other valuable supply options to residential and small commercial customers. At a time when most large commercial customers are benefiting from participation in the competitive energy market, it is these smaller users that stand to gain the most from exercising their options to choose.

The various customer list data elements prescribed in this bill allow suppliers to:

1. Efficiently target the proper utility account holder,
2. Make offers to customers in a variety of settings and venues,
3. Tailor pricing and offer structure to the usage patterns and usage levels of potential customers, and
4. Assure smooth customer enrollment processing.

At the same time, the bill assures the protection of consumers' privacy, rights and interests by:

1. Allowing all customers to opt out of including their information on customer lists
2. Including ONLY information particularly useful to energy purchasing and pricing (usage and utility classifications)
3. Including NO sensitive customer information (payment record, Social Security numbers, phone numbers)
4. Prohibiting the use of the information for any purpose other than energy marketing and prohibiting the sale or transfer of the information to any other party.

The passage of this bill would bring Maryland's energy choice policies into conformance with those of its neighboring states. Pennsylvania, Delaware and Virginia all require customer lists with content similar to that provided in this bill to be available to suppliers. Together with the implementation of other conforming business rules, such as the final implementation of new business process regulations enacted by the Maryland Public Service Commission, Maryland can also expect to see an influx of new competitive suppliers bringing more choices and savings to Maryland consumers and businesses.

Targeting the Proper Account Holder

Suppliers wishing to reach mass-market customers currently must purchase mailing or contact lists from direct marketing companies. But these lists are often inaccurate with regard to matching names and addresses in utility account records, and they do not indicate whether an address is occupied by renters or owners, an important distinction when it comes to who makes decisions about energy purchases.

Reaching Customers through a Variety of Venues and Settings

Having access to customer account numbers enables suppliers to market to customers in new ways, making it easier for customers to learn about their options. For example, suppliers would be able to set up booths at state fairs and in shopping malls, similar to what Verizon and other wireless companies do, and customers would have the ability to learn about the offers and decide to sign up for service on the spot. Few, if any, customers have their utility account numbers handy in such venues, a piece of information required for customer enrollments under Maryland regulations. A marketer with access to a customer list could acquire that information for them and then proceed with the enrollment process.

Tailoring Pricing and Offer Structures to the Usage Patterns and Usage Levels of Potential Customers

A customer's load profile and historical usage information allows a supplier to develop products specifically designed to meet the energy-use patterns of these different customers. For example, suppliers can develop products and pricing consistent with the seasonal usage patterns of customers depending on their home heating source (homes with electric heating have much higher winter use than homes heated with natural gas, oil or propane). Customer load profile data can have an even greater effect on pricing to small commercial customers where the load characteristics of different businesses vary significantly.

In addition, knowing what rate class and/or SOS type a customer is in allows a supplier to understand the default price that customer receives from the utility and what price to compare that customer receives.

Ensuring a Smooth Enrollment Process

When suppliers enroll customers for service by exchanging electronic data with utilities, customer name, address and account number must accurately match utility records. If the match is not perfect, enrollments are rejected, customers must re-check their information, and accounts must be re-enrolled. At times, WGES has experienced enrollment rejection rates as high as several percent. But, when suppliers have access to utility customer lists with account numbers, they can prescreen and correct for these errors in advance.

It is sometimes argued that supplier access to accurate utility customer account names, addresses and account numbers could allow unscrupulous suppliers to “slam” customers with unauthorized enrollments. The PSC has clear anti-slamming rules prohibiting unauthorized enrollment of customers. These rules can be found in COMAR 20.53.01.06 and they clearly state that if a violation is found, the supplier must provide a full refund to the customer, and the PSC has the means to impose additional measures against a supplier as they see appropriate – which could include revoking a supplier's license.

Protecting Customer Privacy, Rights, and Interests

The information included on customer lists is useful for one purpose only – to provide electricity or natural gas service to a customer. The list does not include any unique identification information that can be used for any other purpose. These lists do not include a customer's Social Security number, driver's license number, or telephone number, nor do they include any information about a customer's payment history. This bill further provides that the information contained on the customer lists cannot be used for any other purpose, nor can the information be sold or transferred to any other party.

Under the provisions of the bill, for customers who continue to have concerns about privacy or do not wish to be contacted for any other reason, the bill requires that the customer be given the opportunity to opt out of being included on the list.

Utility Cost Recovery

Finally, the bill includes language that allows the utility companies to recover prudently incurred costs associated with providing these lists directly from suppliers. The costs associated with providing these lists should be very small, and given that, it is reasonable for suppliers to pay fees for securing the lists if necessary.

We thank you for the opportunity to share our perspective on this bill and we urge the Committee to give the bill a favorable report.