S-4652

AN ACT Relating to retail electrical customers; adding a new section to chapter 80.28 RCW; adding a new chapter to Title 19 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 the restructuring of the retail electricity industry 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 the restructuring of the retail 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 restructured 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) "Conservation" means an increase in efficiency in the use of energy use that yields a decrease in energy consumption while providing the same or higher levels of service. Conservation includes low-income weatherization programs.

(3) "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.

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

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

(6) "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.

(7) "Electricity supplier" means a person or entity, including but not limited to, electricity distribution utilities, aggregators, marketers, brokers, or independent power producers that sells electricity directly to more than one retail electric customer in the state, for distribution by the customer's electricity distribution utility. "Electricity supplier" does not include an electricity distribution utility unless it sells electricity to retail electric customers who are interconnected to another electricity distribution utility.

(8) "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.

(9) "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.

(10) "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.

(11) "Renewable resources" means electricity generation facilities fueled by: (a) Water; (b) wind; (c) solar energy; (d) geothermal energy; or (e) low-emission organic nontoxic biomass energy based on solid organic fuels from wood, forest, and field residues, or dedicated energy crops available on a renewable basis.

(12) "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, the identity of the entity responsible for setting rates, and an explanation of how to receive notice of public hearings where changes in rates will be considered or approved.

(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, applicable late fees, and the interest rate charged, if any, on unpaid balances.

(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 complain about an investor-owned distribution utility to the commission and appeal a decision by a consumer-owned utility to the governing body of the consumer-owned utility.

(9) An annual report containing the following information for the previous calendar year:

(a) A general description of the electricity distribution utility's customers, including the number of residential, commercial, and industrial customers served by the electric distribution utility, and the amount of electricity consumed by each customer class stated as a percentage of the total utility load;

(b) A summary of the average electricity rates for each customer class stated in cents per kilowatt hour, the date of the electricity distribution utility's last general rate increase or decrease, the identity of the entity responsible for setting rates, and an explanation of how to receive notice of public hearings where changes in rates will be considered or approved;

(c) An explanation of the fuel mix used by the electricity distribution utility to serve its retail electric customers, shown as a pie chart where each resource comprising five percent or more of the total fuel mix is separately listed, and including the air emissions of sulfur dioxide, nitrogen oxide, and carbon dioxide per kilowatt hour, shown as a bar chart, for each source of generation in the fuel mix, relative to the regional average emissions per kilowatt hour for each resource. The fuel mix and emission characteristics associated with the portion of power bought on the market may be estimated using the western systems coordinating council average for the previous year as a default;

(d) An explanation of the amount invested by the electricity distribution utility in conservation, nonhydrorenewable resources, and low-income energy assistance programs, and the source of funding for the investments; and

(e) An explanation of the amount of federal, state, and local taxes collected and paid by the electricity distribution utility, including the amounts collected by the electricity distribution utility but paid directly by retail electric customers.

(10) A prominent disclosure of the following statement: "YOUR BILL INCLUDES CHARGES FOR ELECTRICITY, DELIVERY SERVICES, GENERAL ADMINISTRATION AND OVERHEAD, METERING, TAXES, CONSERVATION EXPENSES, AND OTHER ITEMS."

NEW SECTION. Sec. 4. (1) An electricity distribution utility shall provide notice to all of its retail electric customers that the disclosures required in section 3 (1) through (9) of this act are available upon request. Such notice shall be provided at the time service is established and included as a prominent part of each customer's bill at least once a year thereafter.

(2) The disclosures required in section 3(10) of this act shall be displayed in a prominent location on all billing statements sent to retail electric customers.

(3) 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. A new section is added to chapter 80.28 RCW to read as follows:

(1) Not later than October 1, 1998, each investor-owned distribution utility shall adopt consumer protection policies and procedures as may be necessary to implement the requirements of sections 3, 4, and 15 of this act 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) The commission may adopt rules as necessary to ensure compliance by investor-owned distribution utilities with the requirements of sections 3, 4, and 15 of this act.

NEW SECTION. Sec. 6. (1) Except as provided in subsection (3) of this section, not later than October 1, 1998, the governing body of each consumer-owned distribution utility shall adopt consumer protection policies and procedures to implement the requirements of sections 3, 4, and 15 of this act. 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.

(3) For the purposes of this subsection (3), "small utility" means a cooperative formed under chapter 23.86 RCW or a mutual corporation or association formed under chapter 24.06 RCW. Upon the request of the governing body of a small utility, the department may review the small utility's consumer protection policies and procedures to determine if they meet the intent of sections 3, 4, and 15 of this act. Small utilities shall be allowed flexibility in meeting the basic requirements of sections 3, 4, and 15 of this act and, if found to meet the intent of such sections, are not required to change existing policies and procedures or implement additional policies and procedures unless the small utility elects to act as an electricity supplier to retail electric customers interconnected to another electricity distribution utility.

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. The utilities and transportation commission and the department of community, trade, and economic development shall jointly study the following issues:

(1) The current and potential future impacts on wholesale and retail electricity prices in Washington resulting from the enactment of the federal energy policy act of 1992, P.L. 102-486, and from the implementation of federal energy regulatory commission rule no. 888;

(2) The impact on the following if state legislation allowing retail electric customers in the state to have choices among electricity suppliers is not enacted:

(a) The prices of retail electricity for residential, commercial, and industrial customers in the state, including the likely extent, if any, of cost-shifting by electricity distribution utilities between and among customer classes;

(b) The reliability and service quality of electricity service in the state;

(d) The level of investment by state agencies and electricity distribution utilities in conservation, nonhydrorenewable resources, and low-income energy assistance programs in the state, including the administrative costs to state agencies and electricity distribution utilities associated with these programs; and

(3) The impact on the following of enacting state electricity legislation assuming that it allows residential and small commercial customers access to a portfolio of electricity options from their electric distribution utility, and large commercial and industrial customers with individual or aggregated loads of one average megawatt or larger direct access to electricity offered by electricity suppliers:

(a) The prices of retail electricity in the state for residential, commercial, and industrial customers, including the likely extent, if any, of cost-shifting that may occur by electricity distribution utilities between and among customer classes;

(b) The reliability and service quality of electricity service in the state;

(d) The level of investment by state agencies and electricity distribution utilities in conservation, nonhydrorenewable resources, and low-income energy assistance programs in the state.

(4) The utilities and transportation commission and the department of community, trade, and economic development shall also make recommendations regarding the following matters, and explain how adoption of each recommendation in legislation would affect the study results provided under subsection (3) of this section:

(a) Ways to define, measure, detect, control, deter, and sanction cost-shifting by electricity distribution utilities;

(b) Ways to maintain the integrity of the state's distribution systems and protect the safety of maintenance and operation workers of the systems;

(d) Ways to fairly, efficiently, and effectively maintain support for conservation, renewable resources, and low-income energy assistance programs in the state.

(5) The utilities and transportation commission and the department of community, trade, and economic development shall consult with the chair and ranking minority member of the senate and house of representatives energy and utilities committees, electricity distribution utilities, electricity suppliers, and other interested parties throughout the course of the study and shall report the results of this study to the legislature and the governor no later than November 15, 1998.

NEW SECTION. Sec. 9. Nothing in this chapter shall be construed to authorize electricity suppliers to market, promote, sell, or provide electricity to retail electric customers separate from the distribution services provided by the customers' 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 with a load of less than one average megawatt shall disclose as part of the oral solicitation the following information:

(a) The average price for various levels of consumption, including residential customers with and without electric heat, based on regional load profiles;

(b) Notice that the price is for generation and, if applicable, other specified services and that additional rates and charges will apply from the customer's electricity distribution utility;

(d) The fuel mix used to supply the product, except that when the electricity will be supplied without regard to a particular source of generation, then the fuel mix may be estimated using the western systems coordinating council average for the previous year as a default; 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, shown as a bar chart, for each source of generation in the fuel mix, relative to the regional average emissions per kilowatt hour for each resource.

When the electricity will be supplied without regard to a particular source of generation, then the fuel mix and emission characteristics associated with the portion of power bought on the market may be estimated using the western systems coordinating council average for the previous year as a default;

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

(e) A description of any 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 customers with loads of one less than one average megawatt, 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 weekdays from at least 7 a.m. until 7 p.m. Pacific standard time 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) Inquiries from customers regarding billing amounts and practices;

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

(d) Requests for information about how to appeal a decision of the electricity supplier.

(3) There shall be no direct service charge for use of the customer service functions of an electricity supplier.

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. (1) The commission shall maintain a public listing, available for inspection by the public in written and electronic form, of any retail electric customer that chooses not to receive commercial telephone solicitations from electricity suppliers or electricity distribution utilities at the retail electric customer's residence.

(2) It is an unfair and deceptive act and a violation of this section for an electricity supplier or an electricity distribution utility to place a commercial telephone solicitation to the residence of any retail electric customer if such a customer is listed by the commission under the provisions of subsection (1) of this section and the customer has been on such a list for at least ten business days prior to the placing of the commercial telephone solicitation.

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 electricity sales 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 electricity 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 as necessary to 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 served by an electricity distribution utility other than the electricity supplier 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.

NEW SECTION. Sec. 18. The utilities and transportation commission shall exercise its best efforts to reach agreement with the federal energy regulatory commission as to the respective jurisdiction of the utilities and transportation commission and the federal energy regulatory commission regarding the transmission and distribution of electricity in Washington state. By December 1, 1998, the commission shall report to the legislature on the results of such efforts.

NEW SECTION. Sec. 19. Sections 1 through 4, 6, 7, and 9 through 17 of this act constitute a new chapter in Title 19 RCW.

NEW SECTION. Sec. 20. 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.