conditions of service are either set by statute, by commission, or governmental agency rule. The
utility generally has an obligation to serve customers within its service territory and service is to be
provided on a safe and reliable basis. He indicated that there are mechanisms for resolving disputes
between the customers and the provider. If there is any agreement in the area of restructuring, it is
that as the state is moving from regulation to a more competitive environment in the area of
generation, customer protections will diminish unless measures are taken to stop that from occurring.
The agreement among parties seems to be that protections are most needed during the transition
period, although there is also a majority opinion that beyond the transition period, customer
protections could diminish rapidly and seriously if protective measures are not taken.
b. Standard Offer
PSC discussion and recommendations - Mr. Mecham said a standard offer is defined as an offer of bundled services to all centrally situated customers in a geographic area at regulated
rates. The idea is to protect customers against the risks of the market and it can be characterized as
giving customers a choice of remaining on regulated rates rather than tracking the market.
Ms. Beverly White, Committee of Consumer Services (CCS), commended the co-chairs for
their recommendation to learn from electrical restructuring programs that are being initiated in other
states. She stated that there is still much to learn about how institutional arrangements affect market
behavior and learning from the successes and mistakes of others improves Utah's chances of
restructuring in a manner that continues to provide Utah citizens with low-priced electricity and safe
and reliable service.
Mr. Doug Larsen, PacifiCorp, said that the standard offer approach has merit and PacifiCorp
is testing that approach in its Oregon pilot program. He stated that the initial results in the Oregon
pilot program and in California show that the majority of residential and small commercial
customers seem content, for the time being, to stay on a tariff-bundled price.
Ms. Betsy Wolf, Salt Lake Community Action Program (SLCAP), said that it is essential to
develop a standard offer to protect residential and small commercial customers from the potential
risks of restructuring, and the ultimate consumer protection is to have a safe and reliable power
supply at reasonable prices. She indicated that since all consumer protections are meaningless
without access to affordable energy, SLCAP believes that the provision of a standard offer is
important.
c. Obligation to Serve and Connect
PSC discussion and recommendations - Mr. Mecham pointed out that the obligation to connect must be a part of any restructuring plan. He indicated that the obligation should be
imposed on at least one provider and that the obligation can transfer between and among various
providers, but that the obligation should be part of the condition of serving in the state.
Ms. Nancy Kelly, CCS, said electric utilities in Utah are legally obligated to provide reliable
service to all customers in their territory at prices based on cost of service. She stated that
restructuring Utah's electric industry will alter the existing relationship between utilities and
customers. Generation will be separated from transmission and distribution and the obligation to
serve will be separated from the obligation to connect. She indicated that CCS recommends that the
incumbent retain the obligation to serve customers without other options and that they serve all
customers with the average cost generation dedicated for this purpose.
Mr. Doug Larsen, PacifiCorp, stated that the owner of the transmission and/or distribution
system should have an obligation to connect customers to its system and that during the transition
period to competition, the default service provider should be the incumbent utility.
Mr. Charles E. Johnson, Consultant, said that if the task force moves toward deregulation of
utilities, a competitive market, and generation supplies, that it should proceed slowly and cautiously.
Ms. Betsy Wolf, SLCAP, said that SLCAP concurs that both obligation to connect and to
serve are necessary. She indicated that it is important not only that customers are served, but at
reasonable rates.
Ms. Karen Silver, SLCAP, expressed concern that if all the problems are not worked out
before proceeding with deregulation that some customers will be lost in the system.
d. Dispute Resolution
PSC discussion and recommendations - Mr. Mecham said that in a restructured environment the rules related to dispute resolution that are in effect for incumbent utilities now
should be made applicable to all new providers.
Ms. Margo Hovingh, CCS, said that with respect to dispute resolution, customers are
protected by the PSC's informal and formal complaint rules and if the state goes to a deregulated
system, it is imperative that it pass laws that will ensure consumer protection. She stated that the
laws and rules now applicable to public utilities should be applicable to all competitive providers.
Mr. Doug Larsen, PacifiCorp, said that as the transition is made to a competitive market, the
relationship between the generation providers and local distribution companies needs to be dealt with
to make sure that consumers are protected.
Mr. Charles E. Johnson, Consultant, suggested that with respect to dispute resolution, in
particular for the smaller consumers, that the end provider of electricity be responsible for resolving
disputes among any of the functional suppliers they are dealing with and that the end user not be
involved in those disputes.
Ms. Karen Silver, SLCAP, said SLCAP would support that current protections be kept in place for the good of the customers and the service of the providers.
e. Consumer Education
PSC discussion and recommendations - Mr. Mecham said that public education should be
conducted by a governmental agency and that advertising, town meetings, and community
presentations should be used in that effort, but that public education should not begin until a firm
decision to move forward is made.
Ms. Kelly Francome, CCS, said that while CCS acknowledges the need for education, it questions the effectiveness of it. She indicated that no matter how much education is passed on to
consumers, the issue may be too complicated and too vital to many consumers to risk changing
providers to save what could be a potential few pennies.
Mr. Doug Larsen, PacifiCorp, said PacifiCorp supports consumer education programs.
Consumers must be provided with reliable information in order to compare and select among
products and services, and to protect themselves against unfair or abusive marketing practices.
Ms. Betsy Wolf, SLCAP, said that it is important to have a variety of constituent groups,
including providers and different customer groups working on program design and planning in order
for consumer education to be effective. She indicated that it is important that education be targeted,
should have multi-media, information provided in different languages, and should start out with
general information about the topic.
f. Universal Service
PSC discussion and recommendations - Mr. Mecham said that in the electric industry it has not been necessary to date to have a universal service program as it has been accomplished by
having reasonably low rates. If a restructuring program is adopted that includes a standard offer with
an obligation to serve, an explicit universal service program would not be needed because it would
be addressed in those ways. He indicated that if there is a need for an explicit program, PSC would
suggest that it should be competitively neutral and funded through a charge on a per kilowatt hour
basis or through a customer charge.
Mr. Jeff Fox, Crossroads Urban Center, indicated that universal service encompasses two
areas: 1) ensuring that affordable utility service be provided to people despite the area they live in;
or 2) despite the people's income. He stated that the interests of all consumers can be better served
if electricity rates are affordable so that customers of UP&L can make their payments in a timely
manner, avoiding shut off, returned checks, and other actions. He pointed out that it is time for the
state to look at a variety of utility assistance programs for the low income and see which would be
best in terms of helping the companies and the low-income customers.
Mr. Doug Larsen, PacifiCorp, said that since customers will have guaranteed access to
service through a default provider under open access, a universal service program would appear to
be as unnecessary as it has been under a monopoly service.
Ms. Betsy Wolf, SLCAP, said there are many different kinds of programs that could give
assistance and could be explored and SLCAP would hope that the Legislature will do as other states
have done in restructuring and enact this kind of assistance.
g. Safety and Reliability
PSC discussion and recommendations - Mr. Mecham said that in order to keep the system reliable, providers in the market must provide the services tied to safety and reliability. He indicated
that the state can impose safety and reliability requirements on the distribution system, the Federal
Regulatory Commission can do the same thing for the transmission system, and the Legislature can
set requirements for generators that are serving in the state.
Mr. Roger Ball, CCS, said safety is a key issue from the point of view of the people who
work in the system as well as from the point of view of customers. He indicated that the kind of
safety issues that might develop may be for people who are already at risk.
Mr. Doug Larsen, PacifiCorp, said that state and federal regulators should continue to have
jurisdiction over the safety and reliability of service. He stated that there needs to be some rules
established, if the state transitions into the competitive market place, on who can serve the customers
and what type of generation backup the providers need. From PacifiCorp's perspective, the rules
and programs governing all power providers in a competitive market need to be set and administered
by the PSC. PacifiCorp would like to be part of the process of determining what those rules and
programs are.
Mr. Leon Pexton, Utah Municipal Power Agencies, said the major issue of reliability and
safety is that they cannot be isolated from distribution, transmission, and generation. Each have their
unique problems and to focus on one area without focusing on the other two invites a disaster.
Mr. Mike Peterson, Rural Electric Association, suggested bringing together engineers in the
state who are working on these issues to give the task force a report on what is happening with
reliability.
h. Aggregation
PSC discussion and recommendations - Mr. Mecham said the PSC encourages promotion of aggregation with the proper protections.
Ms. Nancy Kelly, CCS, said that because of the natural segmenting of the market that occurs
from aggregation, small customers need an aggregator to represent them and give them a good deal
at a lower price. CCS recommends that the incumbent utility remain the aggregator for small
customers as well as retaining the obligation to serve.
Mr. Doug Larsen, PacifiCorp, said that the consumer protection rules should apply equally
to aggregators as they do to the host utility providers.
Mr. Charles E. Johnson, Consultant, said there are two issues to address regarding
aggregation: 1) who is doing the aggregating; and 2) who is being aggregated. Mr. Johnson said that
as far as who is being aggregated, he would suggest that even though the current UP&L rate classes
are in some sense artificial that they be kept and that any aggregators offer rate schedules similar to
UP&L's.
Ms. Betsy Wolf, SLCAP, said that aggregation can be an important element to provide
choice to groups of customers who might not otherwise have choice. It is important that if there is
going to be customer choice and aggregation, for municipalities, individual customers should have
the ability to opt out. She stated that aggregators should be required to meet consumer protection
requirements that electric service providers need to meet.
i. Regulation of Electric and Service Providers
PSC discussion and recommendations - Mr. Mecham said that all providers should be licensed to ensure that they have financial and technical expertise to provide the service they are
proposing to provide and that they also have the generation resources to provide the services they
want to offer.
Mr. Roger Ball, CCS, said that the state has many kinds of regulation taking place at the
present time and that one of the desires of deregulation is to reduce the amount of state regulation
that is dealt with. He indicated that deregulation could potentially increase regulation rather than
decrease it.
Mr. Doug Larsen, PacifiCorp, said he concurs with Commissioner Mecham on this issue.
Mr. Charles E. Johnson, Consultant, suggested that the end service provider should be
responsible for all of the services provided unless the customer wants to opt out. He also suggested
that while there are a number of marketeers who intend to offer all kinds of bundled services, he
would recommend that if the state moves in this direction, that those services not be allowed to be
bundled, but that the electric service be priced separately.