S-4053

AN ACT Relating to retail electrical customers; adding a new chapter to Title 18 RCW; and creating new sections.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. (1) The legislature finds that:

(a) Electricity is a basic and fundamental need of all residents;

(b) Currently Washington's consumer-owned and investor-owned distribution utilities offer consumers a high degree of reliability and service quality while providing some of the lowest rates in the country; and

(c) Consumer protection, system reliability, service quality, and low-cost electricity rates could be at risk if electrical deregulation occurs.

(2) The legislature intends to:

(a) Preserve the benefits of consumer protection, system reliability, high service quality, and low-cost rates in the event of deregulation in the electrical industry;

(b) Ensure that all retail electrical customers have the same level of rights and protections;

(d) Provide for increased protections for consumers against potential unscrupulous business practices that may occur in the marketing of electricity products or services in a deregulated environment.

NEW SECTION. Sec. 2. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Commission" means the utilities and transportation commission.

(2) "Consumer-owned distribution utility" means an electricity distribution utility that is a municipal electric utility formed under Title 35 RCW, a public utility district formed under Title 54 RCW, a cooperative formed under chapter 23.86 RCW, an irrigation district formed under chapter 87.03 RCW, or a mutual corporation or association formed under chapter 24.06 RCW.

(3) "Department" means the department of community, trade, and economic development.

(4) "Electricity" means electric energy measured in kilowatt hours, or electric capacity measured in kilowatts, or both.

(5) "Electricity distribution utility" means a consumer-owned or investor-owned utility that is authorized and engaged in the business of distributing electricity to retail electric customers in the state.

(6) "Electricity supplier" means a person or entity that sells electricity directly to more than one retail electric customer, including, but not limited to, electric utilities, aggregators, marketers, brokers, or independent power producers to be distributed by the customer's electricity distribution utility. Electricity suppliers do not include electricity distribution utilities unless the utilities are authorized to sell electricity to retail electric customers who are served by another electricity distribution utility.

(7) "Governing body" means the council of a city or town, the commissioners of an irrigation district, municipal electric utility, or public utility district, or the board of directors of an electric cooperative or mutual association that has the authority to set and approve rates.

(8) "Investor-owned distribution utility" means an electricity distribution utility owned by investors that meets the definition of an electrical company as defined in RCW 80.04.010.

(9) "Proprietary customer information" means (a) information that relates to the source and amount of electricity used by a customer, a customer's payment history, and household data that is made available by the customer solely by virtue of the utility-customer or supplier-customer relationship; and (b) information contained in a customer's bill.

(10) "Retail electric customer" means a person or entity that purchases electricity for ultimate consumption and not for resale.

NEW SECTION. Sec. 3. Each retail electric customer in this state has the right to receive the following disclosures from the electricity distribution utility that provides electricity service to the customer:

(1) An explanation of any applicable credit and deposit requirements, including the means by which credit may be established, the conditions under which a deposit may be required, the amount of any deposit, interest paid on the deposit, and the circumstances under which the deposit will be returned or forfeited.

(2) A complete, itemized listing of all rates and charges for which the customer is responsible, including charges, if any, to terminate service.

(3) An explanation of the metering or measurement policies and procedures, including the process for verifying the reliability of the meters or measurements and adjusting bills upon discovery of errors in the meters or measurements.

(4) An explanation of bill payment policies and procedures, including due dates and applicable late fees.

(5) An explanation of the payment arrangement options available to customers, including budget payment plans and the availability of home heating assistance from government and private sector organizations.

(6) An explanation of the method by which customers must give notice of their intent to discontinue service, the circumstances under which service may be discontinued by the utility, the conditions that must be met by the utility prior to discontinuing service, and how to avoid disconnection.

(7) An explanation of the utility's policies governing the confidentiality of proprietary customer information, including the circumstances under which the information may be disclosed and ways in which customers can control access to the information.

(8) An explanation of the methods by which customers may make inquiries to and file complaints with the utility, and the utility's procedures for responding to and resolving complaints and disputes, including a customer's right to appeal a decision by an investor-owned distribution utility to the commission and a decision by a consumer-owned utility to the governing body of the consumer-owned utility.

NEW SECTION. Sec. 4. (1) An electricity distribution utility shall provide the disclosures required in section 3 of this act to retail electric customers at the following times:

(a) At the time service is established;

(b) At least thirty days prior to the effective date of any changes to the policies and procedures adopted by the utility under section 5 or 6 of this act;

(c) At least once a year after the adoption of the policies and procedures by the utility under section 5 or 6 of this act; and

(d) At any time upon request of the customer.

(2) Required disclosures shall be provided in writing using plain language that is understandable to an ordinary customer and presented in a form that is clear and conspicuous.

NEW SECTION. Sec. 5. (1) Not later than December 1, 1998, each investor-owned distribution utility shall adopt consumer protection policies and procedures to implement the disclosure requirements of this chapter and any related commission rules, whether the rules are currently existing or adopted under this section. An investor-owned distribution utility shall file its policies and procedures with the commission and may modify the policies and procedures from time to time, subject to the approval of the commission.

(2) Not later than October 1, 1998, the commission shall adopt rules necessary for investor-owned distribution utilities to comply with the requirements of this chapter.

NEW SECTION. Sec. 6. (1) Not later than December 1, 1998, the governing body of each consumer-owned distribution utility shall adopt consumer protection policies and procedures to implement the disclosure requirements of this chapter. The policies and procedures shall be adopted only after one or more public meetings on the matter have been held. A consumer-owned distribution utility shall file its policies and procedures with the department along with a summary of the public meetings held on the policies and procedures. A consumer-owned distribution utility may modify the policies and procedures from time to time, subject to the approval of the utility's governing body after a public meeting on the matter.

(2) Upon request of the governing body of a consumer-owned distribution utility, the department, the attorney general, and the commission shall provide technical assistance to a consumer-owned distribution utility in the development of its policies and procedures.

NEW SECTION. Sec. 7. Not later than December 1, 1998, the department shall report to the legislature on the consumer protection policies and procedures adopted by consumer-owned distribution utilities under this chapter. The report shall summarize the policies and procedures adopted, including areas where the policies and procedures were consistent among the consumer-owned distribution utilities and areas where the policies and procedures were inconsistent among the consumer-owned distribution utilities. The report shall also summarize the level of public participation reported by the consumer-owned distribution utilities during the development of the policies and procedures.

NEW SECTION. Sec. 8. (1) The commission shall study the current and potential future impacts on the issues of cost shifting, system reliability, and service quality that Washington consumers will or may face as a result of the restructuring of the wholesale and retail electricity markets. The study shall analyze the following issues and, where appropriate, identify issues where the model of potential retail restructuring results in a significantly different analysis:

(a) The types of cost-shifting by electricity distribution utilities and electricity suppliers from which consumers will need protection, including ways to define, measure, detect, control, deter, and sanction the cost-shifting;

(b) The types of system reliability issues related to electricity distribution utilities from which consumers and electricity distribution utilities will need protection, including ways to maintain the integrity of the state's distribution systems and protect the safety of the maintenance and operation workers of the systems; and

(c) The types of service quality problems related to electricity distribution utilities and electricity suppliers from which consumers will need protection, including ways to define, measure, detect, control, deter, and sanction the service quality problems.

(2) The commission shall submit its report to the governor and the legislature by December 1, 1998.

NEW SECTION. Sec. 9. Sections 10 through 16 of this act apply to electricity suppliers that are authorized to market, promote, sell, or provide electricity to retail electric customers as a product separate from the distribution services provided by the customers' electricity distribution utilities. However, nothing in this chapter shall be construed to provide electricity suppliers the authority to market, promote, sell, or provide electricity to retail electric customers as products separate from the distribution services provided by electricity distribution utilities.

NEW SECTION. Sec. 10. (1) An electricity supplier that makes an oral solicitation to sell electricity directly to a retail electric customer for distribution by the customer's electricity distribution utility shall disclose as part of the oral solicitation the following information:

(a) The average price for various usage patterns, based on regional load profiles;

(b) Notice that the price is for generation only and that additional rates and charges will apply from the customer's electricity distribution utility;

(d) The fuel mix used to supply the product and the air emissions of sulfur dioxide, nitrogen oxide, and carbon dioxide per kilowatt hour for each source of generation in the fuel mix, except that when the electricity will be supplied without regard to a particular source of generation, then that fact shall be disclosed; and

(e) Any other material terms or conditions of the sale.

(2) Prior to selling electricity to a retail electric customer for distribution by the customer's electricity distribution utility, an electricity supplier shall disclose the following information in writing to the customer:

(a) The electricity supplier's policies and procedures regarding the consumer protection issues for which disclosure is required under section 3 of this act;

(b) The terms and conditions for which disclosure is required under subsection (1) of this section;

(c)(i) The fuel mix used to supply the product, shown as a pie chart where each resource comprising five percent or more of the total fuel mix is separately listed; and

(ii) The air emissions of sulfur dioxide, nitrogen oxide, and carbon dioxide per kilowatt hour for each source of generation in the fuel mix, relative to the regional average emissions per kilowatt hour for each resource, except that when the electricity will be supplied without regard to a particular source of generation, then that fact shall be disclosed;

(d) An explanation of whether the rates or charges are fixed or variable and, if variable, a description of the formula by which those rates or charges may change; and

(e) A description of any other products or services to be provided by the electricity supplier, if any, other than electricity.

(3) Required disclosures under this section shall be provided using plain language that is understandable to ordinary customers and presented in a form that is clear and conspicuous.

NEW SECTION. Sec. 11. (1) Prior to engaging in the business of selling or advertising to sell electricity directly to a retail electric customer for distribution by the customer's electricity distribution utility, an electricity supplier shall establish a customer service facility or other means to receive and respond to customer complaints and inquiries regarding service. The facility shall be adequately staffed from at least 7 a.m. until 7 p.m. and be reachable by a toll-free number.

(2) The customer service facility or other means shall, at a minimum, receive and respond to:

(a) Reports of interruption of service at any time of day;

(b) Inquiries from customers regarding billing amounts and practices;

(c) Requests for information regarding the price, product information, and terms of service provided by the electricity supplier;

(d) Inquiries regarding conservation efforts, if any, made by the electricity supplier;

(e) Requests for appealing a decision of the electricity supplier.

(3) There shall be no charge for use of the facility or other means by any person.

NEW SECTION. Sec. 12. (1) An agreement between an electricity supplier and a retail electric customer for the purchase and sale of electricity may only be made in writing.

(2) No electricity supplier shall change, or request or authorize any other entity to change, a retail electric customer's electricity product or supplier unless and until the submitting electricity supplier has obtained the customer's written or electronic authorization and provided verification of the authorization to the current electricity supplier and electricity distribution utility.

(3) Retail electric customers are not obligated for unauthorized charges resulting from an unwritten purchase and sale agreement or an unlawful charge, and electricity suppliers may not bill customers for the charges.

(4) An electricity supplier is liable to a retail electric customer for liquidated damages in the amount of one hundred dollars for each unauthorized change.

NEW SECTION. Sec. 13. It is an unfair or deceptive act or practice and a violation of this section for any electricity supplier to place a commercial telephone solicitation to any residence that will be received before 8:00 a.m. or after 5:00 p.m. at the retail electric customer's local time, notwithstanding the provisions of RCW 19.158.040(2).

NEW SECTION. Sec. 14. (1) Any person making an express or implied claim concerning an electricity product must, at the time the claim is made, possess and rely upon a reasonable basis substantiating the claim.

(2) An electricity supplier making an expressed or implied claim relating to any aspect of an electricity product included in the disclosures required under section 10 of this act may substantiate the claims with the information required to be disclosed under those sections.

(3) Electricity suppliers may make express or implied marketing claims relating to their projected performance if, at the time the claim is made, they possess and rely upon a reasonable basis for substantiating the claim. If the actual performance differs from the projected performance in a material way during any six-month period that an agreement is in effect, the electricity service provider shall provide the retail electric customer, in a timely manner, with a brief, written explanation for the difference and a notice that as a result of the difference, the customer has the right to change suppliers without incurring any transfer charge.

NEW SECTION. Sec. 15. (1) All electricity distribution utilities and electricity suppliers shall protect the confidentiality of proprietary information of, and relating to, retail electric customers. An electricity distribution utility or electricity supplier that receives or obtains proprietary customer information from another electricity distribution utility or electricity supplier for the purposes of providing retail electric service shall use the information only for such a purpose, and shall not use the information for its own marketing efforts.

(2) Except as required by law or with the approval of the customer, an electricity distribution utility or electricity supplier that receives or obtains proprietary customer information by virtue of its provision of electricity or related services shall only use, disclose, or permit access to individually identifiable proprietary customer information in its provision of electricity from which the information is derived or services necessary to, or used in, the provision of electricity service. Nothing in this subsection shall be construed to prohibit an electricity distribution utility or electricity supplier from using, disclosing, or permitting access to proprietary customer information obtained from its customers to initiate, render, bill, or collect for electricity and related services.

(3) An electricity distribution utility or electricity supplier shall disclose proprietary customer information, upon affirmative written request by the customer, to any person designated by the customer.

(4) An electricity distribution utility or electricity supplier that receives or obtains proprietary customer information by virtue of its provision of electricity or related services may use, disclose, or permit access to aggregate customer information other than for the purposes described in subsection (2) of this section. An electricity distribution utility may use, disclose, or permit access to aggregate customer information other than for the purposes described in subsection (2) of this section only if it provides the information to other electricity suppliers on reasonable and nondiscriminatory terms and conditions upon reasonable request of the suppliers. For the purposes of this subsection, "aggregate information" means collective data that relates to a group or category of services or customers, from which individual customer identities and characteristics have been removed. Aggregate information shall not be released without permission of the affected customers when the information concerns a group of customers that is small enough to reveal the probable usage, billing, or payment behavior of any individual members of the customer group. There is a rebuttable presumption that a customer group with less than twenty-five members meets this criteria.

NEW SECTION. Sec. 16. (1) It is an unfair or deceptive act or practice and a violation of this section for any electricity supplier to engage in the following conduct:

(a) Failing to disclose in a clear and conspicuous manner, before a retail electric customer authorizes payment for an electricity product offered:

(i) The information required in section 10 of this act;

(ii) All material restrictions, limitations, or conditions to purchase, receive, or use the products or services that are the subject of the sales offer; and

(iii) In any one-time price inducements, all material restrictions, limitations, or conditions to receive or redeem the inducement that is the subject of the sales offer;

(b) Misrepresenting, directly or by implication, any of the following:

(i) The information required in section 10 of this act;

(ii) All material restrictions, limitations, or conditions to purchase, receive, or use the products or services that are the subject of the sales offer;

(iii) In any one-time price inducements, all material restrictions, limitations, or conditions to receive or redeem the inducement that is the subject of the sales offer; or

(iv) An electricity supplier's affiliation with, or endorsement by, any government or third-party organization; or

(2) For the purposes of this section, an electricity supplier includes any person authorized by the electricity supplier to market, promote, or sell electricity or other related services.

NEW SECTION. Sec. 17. (1) The acts and practices covered by sections 10 through 16 of this act vitally affect the public interest, the electricity bills of consumers, and the competitive positions of businesses and industries for the purposes of applying chapter 19.86 RCW, the consumer protection act. Unfair or deceptive methods of marketing, promoting, selling, and providing electricity and ancillary services are unreasonable in relation to the development of competitive markets for power and are injurious to the public interest.

(2) Every electricity supplier that markets, promotes, sells, or provides electricity directly to retail electric customers for delivery by the customer's electricity distribution utility must comply with the requirements of sections 10 through 16 of this act. Failure to comply with these sections constitutes an unfair or deceptive act or practice for the purposes of applying chapter 19.86 RCW, the consumer protection act.

(3) Any actions or transactions after the effective date of this act, related to the marketing, promoting, selling, or the provision of electricity directly to retail electric customers for delivery by the customer's electricity distribution utility shall not be deemed otherwise permitted, prohibited, or regulated by the commission for the purposes of establishing an exemption under RCW 19.86.170, and shall be deemed to be acting in trade or commerce for the purposes of applying chapter 19.86 RCW, the consumer protection act.

NEW SECTION. Sec. 18. Sections 1 through 6 and 9 through 12 of this act constitute a new chapter in Title 18 RCW.

NEW SECTION. Sec. 19. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.