BACKGROUND
The purpose of ALs 152-G/2269-E and 67-W is to request approval of SCE's Credit/Debit Card Bill Payment Option pursuant to Public Utilities (PU) Code Section 755. Additionally, SCE proposes to discontinue its Pay-by-Phone Option. SCE states that discontinuance of the free pay by phone option is necessary to comply with Visa contract requirements.
PU Code Section 755 allows electric, gas, and water utilities to charge a convenience fee for credit and debit card payments that recover the transaction costs from those customers who choose to pay their utility service bill by credit or debit card. PU code 755 requires that only those customers choosing to use the credit or debit card payment option shall incur the convenience fee, unless the Commission determines that the credit card payment option results in savings to ratepayers that exceed the net cost of accepting those cards. SCE proposes a convenience fee applicable to participating customers based on its agreement with the vendor who will process these credit card payments.
There is no significant difference between AL's 152-G/2269-E and 67-W.
SCE proposes to file, upon approval of these advice letters, a supplemental compliance advice letter revising numerous energy statements, deposit notices, and collection/disconnection notices and a withdrawal of one filed form as a result of this credit/debit card bill option.
Description of SCE's Proposed Credit/Debit Card Payment Option
SCE seeks authority to assess a convenience fee of $3.50 per transaction to those residential customers who choose the option to pay their monthly bill and/or pay their deposit for electric, gas, and water service (utility service) through use of a credit or debit card. Under this payment option, SCE will outsource the acceptance of Visa and MasterCard credit and debit cards and pinless debit cards (ATM cards) for payments using JP Morgan Chase (JPMC) as the vendor. This payment option will be available to customers taking utility service under SCE's residential rate schedules and is available to residential customers including those scheduled for disconnection or who have already been disconnected for nonpayment of their bills. Once a credit/debit card payment has been made, SCE will receive immediate notification from JPMC and a memo will be posted to the customer's account regarding receipt of his/her payment.
SCE's credit and debit card payment option will be available to the approximately 74 percent of SCE's residential customers who have either a Visa or MasterCard.1 SCE stated that those utilities which accept multiple credit cards (including Visa) charge convenience fees ranging from $3.50 to $5.95 placing SCE's convenience fee at the lower end of the range. Customers using the credit/debit card option will pay the convenience fee directly to JPMC. SCE will not receive any portion of the convenience fee revenue.
Description of Credit Card Payment Option Process
Customers choosing to pay their utility service bills with a credit/debit card will call the vendor's Voice Response Unit (VRU) to make a credit/debit card or Automatic Teller Machine (ATM) debit card payment. Customers will be informed of the transaction fee as one of the initial steps in the payment process. At any time during the call, the customer can request the assistance of a JPMC English or Spanish-speaking customer service representative. JPMC would assess the $3.50 convenience fee for each transaction (each time a credit or debit card is used to make a payment). If a residential customer has more than one customer account and desires to pay by credit or debit card, the customer must make a separate card transaction for each account. A separate convenience fee will be assessed for each transaction. The vendor will accept the customer's account information, validate data/customer eligibility, and provide customers with their current SCE account balances including any past due amounts. Upon completion of each payment transaction, the vendor will provide a confirmation number to the customer. Successful customers' payments will then be immediately noted on the customers' accounts and posted nightly (except for weekends and Federal holidays) to the customers' account(s) in SCE's Customer Service System.
SCE said in a data response that it would update costs of its payment options in each general rate case. SCE would also regularly monitor the performance of the credit card payment option to determine its effectiveness and to what extent the program should be enhanced to improve customer service.
SCE said it would make its residential customers aware of the new credit card and debit card payment option through the following means: bill statement, the SCE.com website, printed materials describing payment options, and through SCE's Call Centers.
Discontinuance of SCE's Pay-By-Phone Option
SCE established its Pay-By-Phone option in 1995. This option allows customers to pay their bills from their checking account using a touch tone telephone. Customers call an 800 number which dials into a Voice Response Unit (VRU) where the transaction is ultimately handled by a third-party vendor. SCE does not assess a convenience fee for this payment option. SCE reports 11,000 customers enrolled and active in the Pay-By-Phone program and SCE processes approximately 8,200 transactions per month, representing about 0.2 percent of the residential bills SCE renders each month. SCE said that at least 50 percent of the customers currently enrolled in Pay-By-Phone use other payment options at least once or more each year.
According to SCE, if Pay-By-Phone option were to be retained, JPMC the vendor who currently processes the free Pay-By-Phone payment option will need a new platform which would require a new contract and six to nine months to test and develop bill presentation. JPMC provided SCE notification of a change in the IT system platform used to handle Pay-By-Phone calls estimated to cost $1 million plus $1,200 per month for maintenance.2 SCE stated in a data response that JPMC, the payment processing vendor, will retire the existing platform on February 28, 2009 and SCE is unable to get an extension for the current system.
SCE explained that the JPMC Visa and MasterCard contracts require that the convenience fee for other payment options in the same payment channel (such as phone and Internet) should be no lower than the fee charged Visa and MasterCard users. To comply with these contract terms, SCE would have to either: 1) decommission Pay-By-Phone altogether, or 2) charge a convenience fee of $3.50 or more for Pay-By-Phone transactions which are currently free.
In a data response Edison cited its Quickcheck payment option as an alternative to Pay-by-Phone which would allow the customer to pay via the telephone from their checking account. However, the Quickcheck payment option is not free. The charge for Quickcheck is $5.00 per transaction.
To comply with the Visa and MasterCard contract requirement, SCE has elected to discontinue enrollment in the Pay-By-Phone program and plans to decommission the Pay-By-Phone program contingent upon the Commission's approval of the credit and debit card payment option. SCE said it will work with the existing Pay-By-Phone customers to make them aware of alternative payment options.
Tariff Changes
SCE proposes to revise electric Rule 9, gas Rule 9 and water Rule 9 Rendering and Payment of Bills, to include credit/debit and "pinless" card transactions as an accepted method of payment. SCE also proposes to add a new section entitled Credit/Debit Card Payment Option which provides the terms and conditions of use and the $3.50 per transaction fee. SCE's Energy Statements and Deposit and Collection/Disconnection Notices will be modified in a subsequent compliance filing to include JPMC's toll-free telephone number on the second page of the customers' bills/notices under the heading "Options for Paying Your Bill."
1 In its advice letter, SCE implied that about 90% of its customers have either a Visa or MasterCard. In its Reply to DRA's protest, SCE clarified that it estimates about 74% of its residential customers have either a MasterCard or Visa card.
2 In its advice letter, SCE stated that the cost would be $250,000 to $500,000. In a subsequent estimate provided to the Energy Division, SCE indicated that the cost could be as much as $1 Million.
