1999 California Home Electric Survey

 

PLEASE NOTE: This 1999 publication is not current, and should be used only as historical information.

Table of Contents

About this issue

The restructuring of the electric industry in California brings us new options for purchasing electricity, the possibility of lower rates and opportunities to clean up our environment by influencing the ways that power is produced. As with any fledgling industry, California's competitive electric market is in the process of developing a marketplace vocabulary, standardized disclosures about price and content and protections to help consumers avoid rip-offs and deceptive sales practices.

Recognizing that restructuring has in its early days brought with it a great deal of confusion, Consumer Action took on the task of comparison shopping among the new companies that sell electricity directly to consumers. The information we found on products and pricing is accompanied by a series of articles that we think will help consumers understand the choices, pitfalls and opportunities inherent in restructuring.

Because many states besides California have restructured or are actively considering it, we decided to make this issue available not only to Californians, who are in a position to use its contents immediately, but also to electric consumers in other states, in the hope that they will find answers and guidance from the California restructuring experience.

Funding for printing, distribution and electronic publication of this issue provided by Southern California Edison.

Understanding changes in California's electric industry

For the first time, many Californians can choose where they buy electric service. Until early 1998, power had been provided to homes in each area by a single local utility company, such as Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison. Now customers of these "utility distribution companies" (UDCs) can purchase electricity from any "electric service provider" (ESP), companies that sell electricity directly to consumers.

The electric industry is divided into three parts: generation, transmission and distribution. It is the generation of electricity-and its resale to you, the "end user"-that is open to competition in California.

Despite the changes, you can stay with your present company if you want to. Your utility company, or UDC, will continue to provide your electric service if you decide not to switch providers. Even if you do decide to buy your power from a new ESP, your UDC still will provide you with transmission and distribution services.

For generations, the electric industry was structured around monopoly utilities run under state franchise to provide power to a particular geographic area. It was seen as impractical to have multiple sets of electric transmission and distribution lines in each community. Each utility controlled all aspects of producing and delivering electric power to homes and businesses within its franchise area.

Under this regulated structure, the state had the responsibility to ensure that the industry operated safely, that reasonable controls were placed on rates and that a reliable supply of power was available.

When they built new power plants, the utilities had the right to pass along their costs to ratepayers. In California, these ratepayer-funded investments contributed to some of the highest electric rates in the country-30% higher than the national average.

Lower rates were the major driving force behind the state's move to allow competition among companies providing electric service. But it may take years until home energy users see any significant savings.

As part of restructuring the electric industry, it was determined by the state that ratepayers must reimburse the utilities for financial obligations undertaken by the companies in a regulated environment. These include the cost of outstanding capital improvements and past business investments. To manage this expense over a number of years, the state approved a plan for ratepayers to pay off all outstanding debts to the utilities as well as their costs for entering a competitive market.

State lawmakers sweetened the deal by authorizing that ratepayers' past obligations to the utilities be refinanced, which gives a 10% rate reduction to residential customers (and some small businesses) now served by Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison. You will get this 10% automatic reduction on your total electric bill for at least the next three years, even if you choose another company to supply your electricity.

In a regulated market, ratepayers had the obligation to pay their share of the cost of producing and providing electricity. Under regulation, these charges were rolled into overall electric rates. Customers of UDCs will continue to be responsible for the charges. The difference now is that the charges show up on electric bills each month as the "competitive transition cost" (CTC) and the "trust transfer amount" (TTA).

But beyond the 10% reduction, it is unclear exactly how much the home energy user can save. Nationwide, typical household use is about 836 kiloWatt hours of electricity per month, although this figure varies by region and season. (Many apartment dwellers use 100 kiloWatt hours or less per month.)

Most Californians pay 11¢-13¢ per kiloWatt hour, depending on usage and where they live. Approximately 25% of this amount is for the generation of electricity. (This is the "electric energy charge" on your bill.)

By choosing a discount provider you might be able to save 2%-10%. If you use 300 kiloWatt hours of electricity per month, your savings would range from $3.60 to $18 per year. If you choose a provider that uses enviromentally friendly power sources, such as solar, wind or small hydroelectric, you will pay anywhere from 1¢-3¢ more for each kiloWatt hour-a surcharge of $3 to $9 per month on 300 kiloWatt hours.

image of a hair blowdryer The state Independent System Operator (ISO) manages the power grid that transmits electricity from generators to local utilities and ensures reliable electric service.




About the Electric Service Providers Survey

CA surveys electric service providers on rates and terms

A new survey by Consumer Action (CA) identifies 11 "electric service providers" (ESPs) offering to provide electricity to California residential customers in territories served by the Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison utility companies.

CA also collected information for consumers about current rates from the three utility companies so that consumers could compare ESP offers to what they've been paying. Under restructuring, Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison are now called "utility distribution companies" (UDCs) and provide transmission and distribution services as well as electricity.

CA's ESP research was first conducted during May-August 1998 by Linda Sherry, CA editorial director. The information was reverified during December 1998 by CA staffers Nelson Santiago and Lianni Lee. Most of the original survey information was supplied directly by the ESPs, except for two companies who did not return completed surveys. CA collected information about them (Green Mountain Energy Resources, and Keystone Energy Services) by telephone and from printed materials. The follow-up was conducted by phone and by referencing the companies' latest marketing material and their web sites.

Residential electricity usage is priced by the "kiloWatt hour." (A kiloWatt hour is the amount of electricity it would take to burn ten 100-Watt light bulbs for one hour (10 bulbs x 100 Watts = 1,000 Watts = 1 kiloWatt).)

According to the California Public Utilities Commission, ESPs must provide a standard disclosure of the price, terms and conditions of service, including the price of each kiloWatt hour in cents. ESPs are also required to include an estimated total monthly bill (for example, a current UDC bill of $50) or average kiloWatt hour usage (500 kiloWatt hours is the average used by most companies).

Not all of the ESPs mentioned specific rates. Several ESP owners contended that this pricing requirement is impossible to achieve, since the wholesale cost of power varies by the hour or day.

Of the 11 surveyed ESPs, six provide renewable energy-or "green power"-and their power costs more than electricity from the UDCs. The green power providers typically price their power by charging a premium (or "adder") on top of the average monthly kiloWatt hour rate.

All ESPs noted in the CA survey are registered with the the CPUC. (See the story "Your rights as a consumer" and the CPUC web site (www.cpuc.ca.gov) for more information on the state's requirements).

Other information from the survey includes:

  • Deposits. Five ESPs have mandatory deposit requirements for all customers or reserve the right to require a deposit based on the customer's credit history, or if they are unable to positively identify the customer by Social Security number.
  • Switching fees. No ESPs surveyed charge a fee to become a customer, although they are allowed to if the fee is disclosed. (UDCs are not allowed to charge a switching fee when a customer decides to leave an ESP.)
  • Contracts. Four ESPs require that customers commit to contracts of 1-2 years. Of these, three stated that they charge a cancellation fee for early termination. One company will automatically renew the contract if the customer does not notify the company otherwise when the contract is up.
  • Billing. The majority of ESPs surveyed include their charges on customers' utility bills instead of sending out their own bills.
  • Marketing promotions. Current offers to entice new customers include free gifts, donations to environmental or social causes, credits toward products, or "free electricity" offers. In order to get the free power, you must stay with a company for a set term.

How to choose an electric service provider (ESP)

When California restructured the electric industry in March 1998, companies known as "electric service providers" (ESPs) gained the right to sell electricity directly to customers. A few ESPs jumped into the market early in 1998 with direct mail and telemarketing sales campaigns, while others are still planning how and when to enter the market.

Your UDC bill-from Pacific Gas & Electric, Southern California Edison or San Diego Gas & Electric-is a good place to start when shopping for an ESP.

Restructuring law requires that all ESPs serving residential and small business customers must register with the California Public Utilities Commission (CPUC). The CPUC list of registered providers is available on its web site (www.cpuc.ca.gov). However, this list is not particularly helpful for comparison shopping among ESPs, because it does not contain information on pricing, contracts or customer requirements.

Only the generation portion of your electric bill is open to competition under electric industry restructuring. This is a very small portion of your electric bill, averaging about 2.5¢ per kiloWatt hour. (Customers of Pacific Gas & Electric currently pay a total charge of 11.6¢ per kiloWatt hour, Southern California Edison, 12¢ and San Diego Gas & Electric, 10.4¢.)

ESPs who mention prices do so in different ways. (Of 11 ESPs surveyed by Consumer Action, two did not provide specific rates.) Some say they will give customers a discount off the "PX price." This means that the company will give you a discount off the cost it pays to buy wholesale power from the California Power Exchange (PX). Prices there fluctuate, so most companies use what is called an "average PX price"-the average cost per kiloWatt hour of all power purchased during a month.

Your utility distribution company (UDC) uses a PX price to charge you for the "electric service charge"-or cost of generating your electricity-if you have not switched to an ESP.

Start with your bill

Your UDC bill-from Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison-is a good place to start when shopping for an ESP. The bill will list information you need to compare ESPs, including:

  • Your kiloWatt hour usage during the month.
  • The average PX price for your electricity (electric service charge). This is the same service offered by ESPs and is the amount you will be comparing. An ESP's electric service charge may be lower or higher than your UDC's charge.
  • The type of service you have, such as residential or small business. (This is called your "rate schedule.")

A 10% discount

Because of restructuring law, customers of the three large California UDCs receive a 10% rate reduction on their electric account (but not on their gas). The same law also froze your electric rates until the transition to the new market is complete. You will get the 10% discount whether you decide to switch to an ESP or stay with the utility company.

Questions to ask

When you speak with an ESP representative, ask these questions and request some written materials to back up the answers:

  • What is your kiloWatt per hour rate for the electric service charge?
  • What will the total charge for each kiloWatt hour be?
  • Are your rates more or less than my UDC rates?
  • Is the 10% rate reduction separate from or included in your stated discount?
  • Is your savings claim on my entire electric bill or just the electric service charge?
  • Do I have to sign a contract or lock myself into a long-term agreement to get your savings? If so, do you have an early termination or cancellation fee?
  • Do your contracts renew automatically? Will you notify me in advance to let me know if my contract is about to expire?
  • Do you charge a switching fee? (UDCs are currently prohibited from charging a fee if you decide to go back to the utility.)

Glossary of terms used in the survey

  • Adder: Industry term for a premium charged for renewable power. Premium is usually added to the California Power Exchange (PX) price.
  • Alternative payment options: Other ways to pay your bill besides mailing a check or money order or paying with cash.
  • California Energy Commission: The state agency charged with ensuring a reliable and affordable energy supply. Green power companies may register their renewable energy products with the commission.
  • Electric service charge: The portion of your electric bill that is open to competition. Usually represents only 25% of total kiloWatt hour rate.
  • ESPs: Electric service providers-companies that sell electricity directly to consumers.
  • ESP billing: When the ESP bills customers for all electric charges, including UDC charges.
  • Green-e logo: A symbol designed to help consumers quickly identify products that meet an objective standard for renewable energy supply.
  • Green power: Power produced using "renewable resources" that are considered friendly to the environment, including small-scale water projects, solar power, wind power, geothermal (steam from the earth) and biomass (energy generated when organic waste is burned).
  • Contract: A written commitment to remain with an electric service provider. If you cancel the agreement before the term is up, you may be liable for an "early termination" or "cancellation" charge.
  • kiloWatt hour: The amount of energy consumed by burning 1,000 Watts of power for one hour or... 100 Watts for 10 hours or... 10 Watts for 100 hours, etc. It takes 1 kiloWatt hour of energy to light ten 100-Watt light bulbs for an hour.
  • PG&E: Pacific Gas & Electric
  • PX: California Power Exchange-a competitive marketplace similar to a stock market where buyers and sellers of electricity trade via an electronic auction process.
  • SCE: Southern California Edison
  • SDG&E: San Diego Gas & Electric
  • Time-of-day meters: Special meters that will allow consumers to take advantage of lower electric rates at certain times of the year.
  • Marketing promotions: Special offers by ESPs, such as free gifts or a month's worth of free electricity.
  • NRDC: The National Resources Defense Council, an environmental organization, rates renewable products. (See green power story.)
  • Net charge: The overall price of a kiloWatt hour of electricity, after the state-mandated 10% reduction, and including the "electric energy charge" as well as charges for transmission, distribution, low income assistance and weatherization programs, nuclear plant decommissioning, rate reduction bonds and "cost recovery" charges by former monopoly utilities. Third-party verification: A process in which you are contacted by an independent third party to confirm your decision to switch to an ESP.
  • UDCs: Utility distribution companies-the former "investor owned utilities" that served specific franchise areas under a fully regulated system, such as PG&E, SCE and SDG&E.
  • UDC billing: When the UDC performs all billing, including ESP charges.

Electric Service Providers Rates & Terms Survey

PLEASE NOTE: This survey below is not current, and should be used only as historical information.

BBoss LLC

Los Angeles, CA
(562) 693-6934
Hours: 8 a.m.-5 p.m. (Answering machine may pick up calls.)
Languages spoken: English, Spanish

(BBoss told CA that it is accepting calls from potential customers, but will not switch new customers immediately.)

Service area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power.
Cost: BBoss does not quote specific rates. It promises to "stay competitive with utility distribution companies" (UDCs).
Contracts: Customers may cancel at any time. No contract is required.
Customer requirements/billing: Customers are asked to provide a copy of current utility bill. UDC billing only.
Future plans: Green power. Time-of-day meters.

Cleen 'n Green Energy

San Jose, CA
(888) 4CLEEN1 or (408) 360-9356
Languages spoken: English
Internet: www.go-green.com

Service Area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power only. Offers large hydro or natural gas generated power as its "cleen" product and green power (hydroelectric, wind, biomass and geothermal generated). Cleen 'n Green products are registered with the California Energy Commission.
Cost: Company estimates that UDC customers who pay $50 for their total electric bill would pay from $54.17-$62.54 per month, depending on the product they choose. This includes a 13.9¢ per day charge on all accounts. Three energy services or products are offered:

  • Cleen 100 (100% from large hydro and natural gas). PX price with no adder.
  • Green 100 (all green power). PX price plus 1.86¢ per kiloWatt hour.
  • Green 50 (50% green power). PX price plus adder of approximately one cent (.9¢) per kiloWatt hour.

Current marketing promotions: $25 rebate in 13th month of service. Company has pledged a percentage of its profits to California environmental causes.
Contracts: No contract required.
Customer requirements/billing: UDC account and meter number 1.5¢ per kWh rebate by the California Energy Commission. (See story 'What it means to be green' for more information on the credit.)

Commonwealth Energy Corp.

Costa Mesa, CA
800-CALIFORNIA (225-4367)
Hours: 8 a.m.-8 p.m.
Languages spoken: English, Spanish

Service Area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power.
Cost: Commonwealth offers guaranteed savings of 5% off UDC rates. (With state-mandated savings of 10%, this would be a savings of 15%.) The pricing varies with PX prices. The company estimates that PG&E customers would pay a net charge of 10.4¢ per kiloWatt hour, SCE customers 10.5¢, and SDG&E customers 9.9¢. (See story 'Your utility distribution company' for utility rates comparison.)
Contracts: No contract required.
Customer requirements/billing: UDC account and meter number required. UDC billing only. No credit screening. No deposit required.
Future plans: Time-of-day meters in 1999.

EdisonSource

Walnut, CA
888-93EARTH (933-2784)
Hours: 8 a.m.-8 p.m.
Languages spoken: English

Service area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power generated using environmentally friendly methods.
Company uses the Green-e logo and meets criteria set by the NRDC for "environmentally preferred" green power.
Cost: EdisonSource offers three renewable energy products:

  • Earthsource 2000 (directs 10% of energy dollars to new wind generation sources and the remaining 90% to existing renewable power generation sources). Based on a usage of 500 kiloWatt hours of electricity per month, the company states that Earthsource 2000 will cost customers approximately $15.99 to $17.76 more per month than they are currently paying, depending on the UDC territory.
  • Earthsource 100 (directs all energy dollars to the generation of renewable power). Based on a usage of 500 kiloWatt hours of electricity per month, the company states that Earthsource 100 will cost customers approximately $13.98 to $15.76 more per month than they are currently paying, depending on the UDC territory.
  • Earthsource 50 (directs half of energy dollars to the generation of renewable power). Based on a usage of 500 kiloWatt hours of electricity per month, the company states that Earthsource 50 will cost customers approximately $6.36 to $7.38 more per month than they are currently paying, depending on the UDC territory.

Current marketing promotions: Cash bonuses, free electric service and gifts. At presstime, the company offered a $50 rebate payable at $5 per month after the first month to new Earthsource 100 customers.
Contracts: No contract. Customers must remain with company to continue to be eligible for $50 rebate program.
Customer requirements/billing: UDC billing information requested but not required. ESP billing. Customers' credit is screened through Equifax. Some customers may be required to pay a deposit ranging from $145-$195. Deposit is returned after 12 months of timely payments.
Future plans: Will have installment or averaged bill programs to help customers deal with seasonal fluctuations in usage.

Green Mountain Energy Resources

South Burlington, VT
(888) 246-6730
Languages spoken: English, Spanish

Information about Green Mountain was collected by Consumer Action by telephone and from printed materials after requests that the company return a completed survey form were unsuccessful.

Service Area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power generated from renewable resources. Its renewable products carry the Green-e logo.
Cost: The company offers three products: "Water Power," "75% Renewable Power" and "Wind for the Future." (Wind product is rated "environmentally preferred" by the NDRC.) It estimates that households that pay the UDC $50 for electricity will pay from $54.40 to $59.50, depending on the product and UDC territory.
Current Marketing Promotions: Kenny Loggins' CD; "EcoCredits" good for discounts on "environmentally responsible" products.
Contracts: No contract or lock-in required for "Water Power" or "75% Renewable." "Wind for the Future" requires a three-year contract and carries an early termination charge of $25 for anyone who cancels before that time.
Customer requirements/billing: Customers receive two bills, one from their UDC and another from Green Mountain. No switching fee. Customers can arrange to pay through automatic deductions from their bank accounts. Late charge.
Future plans: For every 3,000 people who enroll in the "Wind for the Future" program, the company will build a wind turbine. (The company announced in late 1998 that the first of three tubines had been funded under the program.)

ITT Powercom

City of Industry, CA
(626) 968-0488
Hours: 7 a.m.-7 p.m.
Languages spoken: English, Chinese

Service area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power (100% hydroelectric) and long distance and local phone service.
Cost: Company quotes a rate of 4.8¢ per kiloWatt hour for generation (electric service charge) only.
Current marketing promotions: One month's free electricity every 18 months. Rates guaranteed through June 2002.
Contracts: Contracts not required. $6 service cancellation charge.
Customer requirements/billing: UDC billing only. Initial deposit required (deposit varies by usage from $80-$2,165). Late fee on overdue accounts is 1.5% of overdue amounts after 20 days.
Future plans: Will offer time-of-day meters in 1999. If demand is great enough, company will add customer service representatives who speak other languages.

Keystone Energy

Services Inc.
Los Angeles, CA
(888) 8POWER1 or (877) 937-4733
Languages spoken: English

Information about Keystone Energy Services was collected by Consumer Action by telephone and from printed materials after requests that the company return a completed survey form were unsuccessful.

Service area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power. Keystone's green products carry the Green-e logo.
Cost: The Keystone Energy Alliance, or "shared savings plan," uses the buying power of a large customer base to negotiate lower rates. The company promises savings "above mandatory 10% from current electricity provider." The company estimates that for an average user (500 kiloWatt hours per month), the net monthly charge for electricity would be about $52.15 (10.4¢ per kiloWatt hour).

The company's green power products include:

  • Earthchoice 100-100% renewable power. PX price plus an adder of 1.7¢ per kiloWatt hour.
  • Earthchoice 50-50% renewable power. PX price plus an adder of about one cent (.9¢) per kiloWatt hour.

A monthly service charge of $2.95 is added to Earthchoice accounts. On its green products, the company estimates that based on a 500 kiloWatt hour per month usage, the monthly net charge would range from $57.60 to $65.95, depending on the UDC service area and product choice.
Contracts: Shared savings program has a mandatory 24-month contract which renews automatically unless canceled. Green power programs (Earthchoice 100 and 50) require a year-long contract, also automatically renewed unless cancelled. No switching fee.
Customer requirements/billing: Copy of UDC bill required with application. UDC billing only.
Future plans: The company will offer long distance and other telecommunications services.

New West Energy

Tempe, AZ
(888) 639-9674
Hours: 8 a.m.-5 p.m., Mountain Time
Languages spoken: English, Spanish
Internet: www.newwestenergy.com

Service area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power.
Cost: Based on 500 kWh usage, the company estimates that monthly electricity bills would range from $56.34-$65.31, depending on UDC territory. The company estimates that its variable electric energy charge will be 2¢-4¢ per kWh.
Contract: One-year contract required. Deposit may be required.
Customer requirements/billing: One-time access charge of $20. Application form asks for Social Security number for use in checking applicants' credit history. Copy of UDC bill required with application. ESP billing only.

PG&E Energy Services

San Francisco, CA
(888) 743-1700
Languages spoken: English, Chinese

Service area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power. (PG&E Energy Services, a national electric service provider (ESP), is a separate subsidiary of PG&E Co., the California utility.) The company's "Clean Choice 50" and "Clean Choice 100" (see below) meet criteria set by the NRDC for "environmentally preferred" green power and carry the Green-e logo.
Cost: PG&E Energy Services offers three residential electricity programs. Company states that 5% of its renewable energy will come from new renewable energy project development. All products are priced by paying a premium (adder) above the average PX power price.

  • Clean Choice-20% renewable power. Customers will pay a premium (or adder) of .0017¢ per kiloWatt hour (or 17¢ per 100 kiloWatt hours). Based on an average 500 kiloWatt hour usage, customers will pay about $3-$4 more per month than customers are currently paying their UDC, including monthly service fee of $2.95.
  • Clean Choice 50-50% renewable power. Adder: .0109¢ per kiloWatt hour, or $1.09 per 100 kiloWatt hours. Based on an average 500 kiloWatt hour usage, Clean Choice 50 will cost $8-$9 more per month than customers are currently paying their UDC, including monthly service fee of $2.95.
  • Clean Choice 100-100% from sources such as wind, solar and geothermal generation. Adder: .0175¢ per kiloWatt hour or $1.75 per 100 kiloWatt hours. Based on an average 500 kiloWatt hour usage, Clean Choice 100 will cost $11-$12 more per month than they are currently paying their UDC, including monthly service fee of $2.95.

Contracts: No contract or lock-in required; customers may cancel at any time. No switching fee.
Customer requirements/billing: Company requests information on current UDC account as well as your Social Security number for use in performing a credit check. ESP billing. Deposit may be required, depending on credit history.

PowerCom Energy & Communications Access

Harbor City, CA
(310) 325-9861
Hours: 8 a.m.-5 p.m.
Languages spoken: English, Spanish, Tagalog

Service area: PG&E, SCE, SDG&E territories.
Utilities offered: Electric power from renewable resources.
Cost: Company did not quote rates, but states that its "renewable" energy products carry a 10%-15% premium above PX price.
Contracts: One-year contract and a new meter are required. One month's service fee will be charged to customers who terminate contracts early.
Customer requirements/billing: Applicants are asked for a copy of current UDC bill. Deposit equal to one month's service required. No interest is paid on deposit. UDC billing only. Late fee of 1.5% of overdue amount is charged one day after due date.
Future plans: Customer service in additional languages will be added if there is sufficient demand.

United Gas Management Inc.

Daly City, CA
(888) 427-4872
Hours: 8 a.m.-5 p.m.
Languages spoken: English

Service area: PG&E territory.
Utilities offered: Electric power and natural gas.
Cost: Company will charge same rates as PG&E, less the 10% mandated reduction. Savings occurs after one year, when you receive one free week of electricity generation. Based on 500 kWh of usage, the company estimates that the total electricity charge will be $62.50, or 12.5¢ per kWh. United also offers a 5% discount off PG&E's "natural gas commodity costs."
Contracts: Month-by-month contracts for electric service; one-year contract required for gas service. No early termination fee.
Customer requirements/billing: Company requires the customer's PG&E electricity and natural gas account numbers. No deposit required. UDC billing only.
Future plans: Currently running pilot program in San Francisco only. May expand to other UDC territories.

Your utility distribution company

Pacific Gas & Electric Co.

San Francisco, CA
(800) PGE-5000 (743-5000)
Languages spoken: English
(800) 660-6789    Spanish
(800) 893-9555    Chinese
(800) 298-8438    Vietnamese
(800) 652-4712    TTD/TTY
Internet: www.pge.com
Utilities Offered: Electric power and gas service.
Cost: Baseline usage: 11.6¢ per kiloWatt hour. Over baseline: 13.3¢ per kiloWatt hour. (Rates are frozen through 2001.)
Customer Requirements: Credit screening through Equifax and Experian credit reporting bureaus.
Alternative payment options: "Pay-by-Phone" (service provided by independent firm, Telepay, and carries a transaction fee of $5.50 for credit card payments and $1.50 for ATM/debit card payments). Payments can be deducted automatically from your checking account (no fee). "Balanced Payment Plan" helps manage high seasonal use for cooling or heating your home by averaging payments out over the year.

San Diego Gas & Electric

San Diego, CA
(619) 696-2000
Languages spoken: English, Spanish
(619) 235-0497    TTD/TTY
Internet: www.sdge.com
Utilities Offered: Electric power and gas service.
Cost: Baseline usage: 10.4¢ per kiloWatt hour. Above baseline: 12.4¢ per kiloWatt hour. (Rates are frozen through 2001.) Customer Requirements: No credit screening. No late fees.
Payment options: Payments can be deducted from your checking account automatically or using a touch-tone phone (no fee). "Levelized Payment Plan" helps manage high seasonal use by averaging payments out over the year.

Southern California Edison

Rosemead, CA
(800) 655-4555
Languages spoken: English
(800) 441-2233    Spanish
(800) 843-1309    Cambodian
(800) 843-8343    Chinese (Cantonese and Mandarin)
(800) 628-3061    Korean
(800) 327-3031    Vietnamese
(800) 352-8580    TTD/TTY
Internet: www.sce.com
Utilities Offered: Electric power and gas service.
Cost: Baseline usage: 12¢ per kiloWatt hour. Above baseline: 14.2¢ per kiloWatt hour. (Rates are frozen through 2001.)
Customer Requirements: Screening by "positive identification" of Social Security number. Deposits, if required, are regulated at twice your average monthly bill. Interest is paid on deposits. Deposit returned after 12 months of timely payments. No late fees.
Payment options: "Pay-by-Phone" and "Pay-by-Internet" options allow you to authorize payments from your checking account, "Direct Payment" automatically deducts payments from your checking account. "Level Pay Plan" helps manage high seasonal use for cooling or heating your home by averaging payments out over the year.

Anatomy of an electric bill

As a customer of one of the three large California utilities-Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison-you were paying "bundled" electric rates before the state opened the electric industry to competition in early 1998. A bundled rate includes all the aspects of bringing you power within the rate charged for each "kiloWatt hour" of use. (A kiloWatt hour is the measure of your household's electricity use.)

Utility customers now get an 'unbundled' bill, which breaks down the separate charges that go into the kiloWatt hour rate.

In the summer of 1998, utility customers began to receive an "unbundled" bill, which breaks down all the separate charges that go into the kiloWatt hour rate. Electric restructuring gives you the right to buy your electricity from an electric service provider (ESP), but you will still be billed by your utility-now called a utility distribution company (UDC)-for transmission and distribution (as well as other costs).

When you talk to ESPs, you may be offered a choice of billing options. Depending on the company, you could have:

  • One bill from the UDC and another from the ESP.
  • All charges listed on your UDC bill.
  • All charges billed by your ESP.

In its survey of ESPs, Consumer Action found that the majority of ESPs are billing through the UDCs. If you receive only one bill, whether from your ESP or your UDC, your "electric account detail" will include the following breakdown of charges:

Total charges: your kiloWatt hour usage (the difference between your current and prior meter readings) multiplied by the regulated kiloWatt hour rate. By law, these rates cannot go up until 2001. As a residential customer, you are given an allowance-a "baseline"-of kiloWatt hours that will be billed at a lower price, so some of your usage may be figured at the baseline rate and some at the "over baseline" rate. Baseline quantities vary by season, the type of climate you live in and if you use electric heat. (See story 'Your utility distribution company' for your UDC's rates.)

State-mandated 10% reduction: The State Legislature and the California Public Utilities Commission mandated that all residential and small commercial customers receive a 10% rate reduction. This was accomplished by selling rate reduction bonds-a form of securities-to raise money to replace the UDC's lost income. The 10% reduction lowers your total charges by 10%.

Net charges: Your total charges minus 10%. If you have not switched to a new energy provider, the net charges should be equal to the sum of the seven items below:

Electric energy charge: The UDC's average cost for buying electricity from the California Power Exchange (PX) during the billing period. This is the only charge on your bill that is affected by electric industry competition-you can choose another company to provide your electricity if you want. If you do, you will receive an "energy credit" for this amount from the UDC and pay an "ESP electric energy charge" instead. Depending on which ESP you chose, the charge could be the same, lower or higher than what the UDC charges.

Even if you have switched to a new electric service provider, you have to pay the following UDC and mandatory charges:

Transmission: The cost of bringing your electricity over high voltage lines and towers to the distribution system.

Distribution: The cost of using the low voltage system of power lines, poles, substations and transformers that bring power to homes and businesses.

Public purpose programs: This money goes to fund low income ratepayer assistance programs-such as the California Alternative Rates for Energy program (CARE)-and the development of more efficient and cost-effective energy sources.

Nuclear decommissioning: These funds will be used to dismantle nuclear power plants, dispose of dangerous radioactive waste and restore the sites at ratepayer expense.

Competitive transition charge (CTC): This is not a new charge. Under the former monopoly utility system, ratepayers were liable for the utilities' investments in power plants and power contracts and the amounts-authorized by the CPUC-were included in the kiloWatt hour rate.

Trust transfer amount (TTA): Ratepayer debt dating to when the electric industry was regulated has been refinanced at better terms. This refinancing gives California UDC customers the current 10% electric rate reduction. The CPUC says that the TTA does not affect the 10% rate reduction, nor does it increase the total amount customers would have paid otherwise.

How to avoid frauds and rip-offs

In California, it is illegal for any electric service provider (ESP) to change your electric service unless you have called the company yourself, given written approval or a "third party verification" has taken place. Verification means that you have been contacted by your UDC or someone not associated with the ESP you are switching to, in order to confirm your decision to change providers.

The industry usings the term "slamming" to denote illegal switching-a term borrowed from the long distance industry. But there are other perils besides slamming to watch out for in a competitive marketplace:

  • Review your electric bill carefully to make sure you are not being billed for additional services you did not ask for-a practice called "cramming."
  • Make sure you get the type of service you asked for and that the company does not make one offer just to attract you and then give you another-more expensive-service. (This is called "bait and switch.")
  • High pressure sales tactics can be used to give a false sense of urgency about the deal being offered. Any legitimate company will gladly give you a few days or longer to consider its offer.
  • You may be asked to sign a contract or commit to service of a year or more with an ESP. The electric industry is changing rapidly, and you may find a better deal in a month or two elsewhere.
  • ESPs now may sell "time of use" meters, which will allow you to take advantage of hourly fluctuations in the price of electricity. But an ESP cannot force you to buy a meter. So don't be taken in by anyone who says that a long contract is needed to cover the cost of installing a meter.

Telemarketing offers

Unsolicited calls from a company telling you about its services can be more than just annoying. You can be tricked into accepting a service you don't want. The company may even record your responses to prove you said yes, but the problem is, you may have been answering yes to a different question.

California law gives you the right to place your name on a "Don't Call Me" list to avoid unwanted phone calls from electric service providers. The list is kept by the California Public Utilities Commission (CPUC). You must put your request in writing and send it to the CPUC, 505 Van Ness Ave., San Francisco, CA 94102.

If you decide to listen to a telemarketer's sales presentation, be careful of what you say in response to questions and do not give the caller any personal information. Ask to have information sent in writing. If you would like to switch to the company, ask for a phone number you can use to apply for service.

Scam artists have jumped into the competitive electric market. "Our fear is that ingenuity will run rampant in this area," Chuck Gray of the National Association of Regulatory Utility Commissioners told USA Today last year.

ESP's registration revoked

In March 1998, the CPUC revoked the registration of Boston-Finney, a Pennsylvania-based ESP, after finding it was in violation of a state statute requiring ESPs to be "able administratively and financially to provide electric service." In June, the CPUC obtained a preliminary injunction against the company, which began marketing under the name Enersys. The state Attorney General has charged Boston-Finney with running an illegal pyramid scheme and making false and misleading claims. The state said that about 8,000 Californians paid the company $300 each to become sales representatives.

In April 1998, the operators of FutureNet of Valencia, CA, agreed to pay $1 million to settle charges brought by the Federal Trade Commission that it had operated a pyramid scheme on the Internet. Among the charges were allegations that FutureNet attempted to recruit people to sell power for a fee even before the power industry had been deregulated.

How to complain

If you suspect fraud or any deceptive sales or billing practices by an ESP, write to the CPUC's Consumer Affairs Division, 505 Van Ness Ave., San Francisco, CA 94102. You can call the Consumer Affairs Branch at (800) 649-7570 on weekdays between 10 a.m.-3 p.m.

Your rights as a consumer

California law gives electric customers the following protections:

  • A three-day "cooling-off period" to change your mind. If you sign a contract to switch to a new electric service provider (ESP), you may cancel the contract within three days of signing it. This is called your "right of recission."
  • Your electric service cannot be switched without your permission. ESPs must confirm your decision to change providers through an independent third-party verification service.
  • ESPs must provide you with a written notice of price, terms and conditions.
  • ESPs and UDCs must adopt a standardized bill format.
  • ESPs must disclose the sources of the electricity they are selling using a uniform format that allows consumers to compare the variety of electricity offers. At the minimum, they must describe what sources comprise the statewide power mix. Current electricity in California comes from 11% renewable (from wind, solar, geothermal, biomass and small hydroelectric), 21% coal, 23% large hydroelectric, 15% nuclear and 30% natural gas.
  • In order to provide power to consumers, ESPs must register with the CPUC and sign a service agreement with the utility distribution company (UDC)-Pacific Gas & Electric, San Diego Gas & Electric and/or Southern California Edison-that transmits power within the service area where the ESP's customers are located.
  • If an ESP accepts residential customers, it must provide service to any customer in the territory it signed a service agreement for and may not "cherry pick" the best residential customers based on how much electricity they use.
  • ESPs are required to use a uniform "power content label" designed to disclose the fuel sources and technologies used to create the electricity they sell.
  • If you don't want receive calls from ESP telemarketers, you can write to the CPUC and ask that your name be put on its "Don't Call Me" list. (See story "How to avoid frauds".)
  • Your customer and billing information, including credit and usage information, must be treated confidentially by the ESP.
  • You can turn to the CPUC to resolve complaints against an ESP or UDC. The CPUC may revoke, suspend, or deny ESP registration for criminal acts, misconduct or failure to comply with registration requirements.

Programs for low income households and people with special medical conditions

California has ensured that its low income ratepayer assistance program will continue in a competitive marketplace by mandating a "public purpose" charge on all electric bills. These funds, collected by utility distribution companies (UDCs) and/or electric service providers, help low income people afford energy through the CARE (California Alternative Rates for Energy) program. (See story "Anatomy of an electric bill".)

image of an elderly woman in a wheelchair

The CARE program provides a 15% monthly discount on gas and electric rates to low income households. To qualify, applicants must have incomes lower than 150% of federally established poverty guidelines.

Under the 1998 income guidelines, your household's annual gross income (before you pay taxes) must be no more than $17,400 if there are one or two people in your household. If you have three people in your household, the income limit is $20,500. If there are more than three people, add $4,100 for each additional person to calculate the income limit. (These guidelines are revised in March of each year.)

Medical baseline allowance

If you use extra energy to operate life-support equipment or have special heating or cooling needs because of a medical condition, you may be eligible to receive extra baseline quantities of electricity from your UDC. (Baseline quantities are the limited amounts of gas and electricity that all residential customers can buy each month at the lowest cost.) To receive a medical baseline quantity, you may have to certify that you are full-time resident of your home and provide a doctor's confirmation of your medical condition.

Let your UDC know if you depend on life-support equipment, so it can give your account special consideration if there's a need to interrupt utility service for repair, temporary power loss, or non-payment of the bill.

To apply for the CARE program or medical baseline quantities, contact your utility distribution company-Pacific Gas & Electric, San Diego Gas & Electric or Southern California Edison. Two of the three California UDC's have web pages with more information about the CARE program: Pacific Gas & Electric's CARE and Southern California Edison's CARE Rate Discount Program.

Consumer Action interviews....
The staff of the California Public Utilities Commission

Several key questions about the electric industry, posed by Consumer Action (CA), were answered by California Public Utilities Commission (CPUC) staff members in August 1998.

The CPUC is the agency responsible for ensuring that California's electric customers are provided with sufficient information to make informed decisions about buying electricity and are protected from unfair or abusive marketing practices.

The CPUC oversees the Electric Education Call Center (800-253-0500), an information resource for consumers; registers electric service providers (ESPs); enforces the requirement that ESPs must provide written notice of price, terms and conditions; and maintains the "Don't Call Me" list of consumers who do not want to receive sales calls from ESPs.

Consumers may contact the CPUC's Consumer Affairs Branch at 800-649-7570 to discuss specific problems and concerns about their electricity service. If the CPUC finds reason to suspect a pattern of customer abuses, it can initiate investigations into the ESP's business activities.

Residential and small business customers have the option of proceeding with a complaint against a registered ESP through the legal system or through the Commission.

CA would like to thank Valerie Beck of the CPUC for her help with this interview.

Are ESPs required to file any rate information with the CPUC?
Yes. ESPs must file their standard plan service offering with the Commission on a bi-annual basis.

What does the law require of ESPs on pricing information?
State law requires all ESPs to provide potential customers with a written notice of its prices, terms and conditions. If an ESP does not provide this information, don't buy from it. ESPs may use an indexed pricing offer that can be readily verified. Many are using the PX energy credit, plus or minus cents or [a given] percentage, such as the PX energy credit plus or minus 10%, or plus or minus 1 cent.

A number of ESPs listed on the CPUC's "List of Certified ESPs" told Consumer Action that they were on "inactive status" with the CPUC. How long can a company remain on the inactive list without losing its right to sell electricity?
ESPs on the inactive list may not sell electricity. ESPs with inactive status must submit the required items by July 1999 or lose their registration.

It's obviously important to ask if an ESP is registered with the CPUC. But how can consumers be sure that the ESP they are considering is solvent and will honor contract terms?
Registered active ESPs must provide proof of financial, technical and operational viability to the Commission before they are allowed to solicit customers.

Is there any way that consumers can be sure that a "green power" company is really using its revenues to indirectly or directly build green power generating plants or encourage more green power generation by purchasing power from existing green power sources?
Yes, although ESPs selling green power do not have to own or build generation facilities. The California Energy Commission registers green power generators. Additionally, a private, non-profit entity, the Center For Resource Solutions, operates a program that provides a "Green-e" advertising logo that helps consumers identify providers of verifiably green electricity products.

image of a hand holding a plug near a power socket Even if your electric service provider (ESP) goes out of business, you will still have power.

What will happen to consumers if their ESP goes out of business?
The Independent System Operator (ISO) will still provide electricity to customers to give those customers time to make new arrangements with the UDC or another ESP. (The ISO was set up to provide nondiscriminatory transmission access to ensure that owners of the transmission system would not favor their own generation facilities over non-utility facilities in providing access to the transmission lines.)

Consumers are told to compare offers from ESPs using the "Power Exchange (PX) price" or "weighted average costs for purchase through the PX." How can consumers find out if the PX price they are using is a valid one?
California consumers have two choices: to purchase power from an ESP, or to have the Utility Distribution Company (UDC) purchase power for them from the Power Exchange (PX).

Consumers should compare any ESP's offer with the Power Exchange "energy charge" or "energy credit" on their bill. The PX energy charge/credit is calculated by the UDCs using a method approved by the CPUC. If an ESP's offer is lower than the PX energy charge/credit, the customer will save money.

If consumers think there is something strange about one of the registered ESPs, such as not calling back, refusing to answer questions or getting irritated at callers, should they report this to anyone at the CPUC or elsewhere?
Consumers should use common sense when shopping for electricity or any other consumer goods or services. If a potential seller of any product is evasive or unpleasant, the consumer should probably take his/her business elsewhere. If a consumer wishes to complain about a registered ESP or regulated utility company, he/she may contact the CPUC's Consumer Affairs Branch at 800-649-7570 or online (.(JavaScript must be enabled to view this email address)).

If ESPs registered in California also sell other utility services, such as long distance telephone or pager services, are the other services regulated in any way by the state?
Pager services are not regulated. Long distance companies must register with and file their intrastate rates with the Commission.

Are there any rules or limits on "switching fees" charged by ESPs?
Yes. ESPs may charge a switching fee, but the fee must be clearly stated in writing prior to signing up the customer.

Are there any rules or limits on the amount of deposit that an ESP or UDC can ask for or how long the deposit can be held?
Yes. A deposit can be held for as long as the customer takes service. A UDC may charge a new customer twice the "average" estimated bill. An ESP may require three times the estimated bill. It is important to understand that an ESP sells energy only; the UDC provides transmission and distribution, or delivery services.

What it means to be green

Power is produced in many ways. When power is generated by burning fossil fuels such as coal or oil, it causes air pollution. Large dams producing hydroelectricity change the natural landscape forever and harm wildlife habitats. Nuclear power leaves dangerous radioactive byproducts that are difficult and expensive to dispose of safely.

In California, as well as other states and countries around the world, there is a growing interest in generating power in more environmentally friendly ways, by using "renewable" energy from the sun and wind, gas from landfills, burning waste products (biomass), steam from the earth (geothermal) or small hydroelectric projects. This energy is called "green power."

Green costs more

Because green power is generated on a relatively small scale using new technologies, it costs more. The renewable power industry hopes that environmentally conscious consumers will pay a few more dollars each month to encourage more companies to explore cleaner generation methods. While the type of green power you prefer cannot be delivered directly to your home, the money you spend with a green power provider will increase the use of environmentally friendly power statewide and fund new green power plants.

Because green power is generated on a relatively small scale using new technologies, it costs more.

Currently, electricity in California comes from 11% renewable from wind, solar, geothermal, bio-mass and small hydroelectric, 21% coal, 23% large hydroelectric, 15% nuclear and 30% natural gas.

"By choosing their electric supplier wisely, Californians can help ensure cleaner air, reduce carbon dioxide emissions, create new jobs and make our state a world leader and exporter of renewable energy technologies," said William J. Keese of the California Energy Commission (CEC).

The CEC is the state's primary energy policy and planning agency, charged with ensuring a reliable and affordable energy supply. Its responsibilities include developing energy technologies and supporting renewable energy.

Green power companies may register their renewable energy products with the CEC. The registration process is self-certifying and excludes "large hydroelectric" power generated using dams. The CEC provides registration information to consumers on its web site (www.energy.ca.gov) or by phone at its Energy Call Center at (800) 555-7794.

Choosing content

Renewable energy "products" are "mixes" of power from different sources, such as 50% green power and 50% traditional power. While a 50% product will cost less than electricity that is generated 100% from green power, it means that only half of your energy dollars are being spent to encourage renewable technologies.

Other ways to identify renewable power products are to look for the Green-e logo on brochures or customer information materials and to check out companies rated as "environmentally preferred" by the National Resources Defense Council (NRDC).

green-e logo Green-e (www.green-e.org or 888-63-GREEN) is a program of the Center for Resource Solutions, designed to help consumers quickly identify products that meet an objective standard for renewable energy supply. Companies that display the logo are certifying that:

At least 50% of the electricity is generated using renewable resources. Any non-renewable part of the product has lower air emissions than the traditional mix of electricity.

The company agrees to undergo an annual audit to verify its purchases of renewable energy.

Sheryl Carter of the NRDC said that while the NRDC supports the Green-e program, its own guidelines are more stringent and call for "sustainable biomass" and "environmentally sound hydro." Carter said that the NRDC guidelines exclude biomass energy produced by burning municipal waste and old tires, or hydroelectric power produced at the expense of wildlife, water quality and indigenous people. More on the program can be found on the group's web site ([url=http://www.nrdc.org]http://www.nrdc.org[/url]).

Green power rebate

If your electric service provider is registered with the CEC and/or Green-e certified, and sells non-utility power generated in California, you may be eligible for a CEC rebate.

To qualify, you must live in a territory served by Pacific Gas & Electric, San Diego Gas & Electric or Southern California Edison. The program will return 1.5¢ per kiloWatt hour to the customers of eligible companies. In order to find out if a provider is eligible for the credit, ask these questions:

  • Are you registered with the California Energy Commission?
  • Do any of your products qualify for the Green-e program?
  • Will I be eligible for the 1.5¢ per kiloWatt hour customer rebate for renewable energy generated in California?
  • Will I receive the rebate as a separate credit on my bill or is the rebate reflected in your price?

Rooftop generation

Under a separate program, the state Legislature put aside $54 million to help install "emerging renewable technologies" in the service areas of Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. The program underwrites part of the cost of installing generation facilities in homes and businesses.

Rooftop systems can easily power a home, and the U.S. Department of Energy has set a goal of installing solar cell panels on one million roofs across the U.S. by 2010.

Of the four types of generation facilities that would qualify, photovoltaic cells (PVs) are the most likely to benefit homeowners and small business owners. PVs directly convert sunlight to electricity. Small PVs power pocket calculators and remote telephones along highways. Rooftop systems can easily power a home, and the Federal Department of Energy has set a goal of installing the solar cell panels on one million roofs across the U.S. by 2010.

Unlike the solar panels prevalent in the 1960s and '70s, useful only for heating water for heating and other home uses, the new PV systems generate power and return it to the "grid"-the linking system of regional and local transmission lines.

California allows "net metering," which means that solar customers' electric bills will be reduced by the full value of the electricity generated by their PV systems.

Half the cost paid

image of a person on a telephone poleThe state program-known as the The Emerging Renewables Program (formerly called the "Emerging Renewables Buydown Program")-will initially pay half the cost of installing a system.

According to Claudia Chandler of the CEC, the rebate makes installing a PV system when you are building a new home or replacing your roof especially cost effective.

For more information, call the CEC at (800) 555-7794.

For repairs, call your utility distribution company (UDC)-the former monopoly utility company.

 

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