July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
Do state regulators stand to learn more from their electric choice information programs than the customers they aim to reach?
What does it cost to educate an energy consumer about electric choice? Between $1.60 and $2.26, to judge by the public education campaigns in California, Pennsylvania and New Jersey.
In the first year of their information programs, these states spent a combined $103 million, funded through consumer rates. Though an impressive total budget for three public initiatives, that amount pales in comparison to the ad dollars spent by General Motors. The leading national advertiser spent $8.06 million per day in 1998. That averages out to $10.74 annually per American, compared with the $2.26, $2.16 and $1.60 per person spent in a year by California, Pennsylvania and New Jersey, respectively. Yet all of these states have reported high levels of awareness among customers that energy choice was coming.
The impact of these public information campaigns on residential and small business consumers, however, may be far outweighed by their long-term effect on state regulators.
"We learned so much from what people were saying [through the program's feedback mechanisms]," noted Commissioner Nora Mead Brownell of the Pennsylvania Public Utility Commission. "The role of commissions is changing and what we're going to be when we grow up is communicators and mediators. It's important that we begin to think that way and staff that way."
Brownell's observations are backed up by signs of ongoing change at the PUCs. Their regulatory approach appears to be shifting to a focus on customer service.
For instance, the California PUC has developed a set of "responsive government" initiatives for improving the quality of its responsiveness to consumers. The CPUC website details programs for educating consumers about how the CPUC can assist them, and working to put customers in touch with live assistance rather than a maze of voicemail messages.
The Pennsylvania PUC, too, appears to be working to better meet customer needs. A Consumer Advisory Council has been appointed to advise commissioners in matters relating to customer protection. Meetings of the CAC are posted on the commission's website for consumers to access. According to postings of recent meetings, the PUC plans to launch a more low-key consumer education program for gas restructuring than the electric campaign, with a smaller budget. As noted on the site, "The projected savings resulting from gas competition are not as great with electric, and the Commission wants to be careful not to oversell the benefits of such."
The New Jersey law for restructuring the electric and gas industries signals the new focus on customers as well. As other state restructuring laws have done, it orders state regulators to "promulgate standards for the recovery of [education program] costs from customers which include reasonable measures and criteria to judge the success of the program in enhancing customer understanding of retail choice."
All of these changes reflect a new recognition of the PUC as a service organization for customers.
"Increasingly I talk to colleagues who are saying, 'Geez, we've gotta change the way we do business,'" said Brownell. "And