7. Adopted Practices to Reduce Customer Disconnections

7.1. Bill Payment Extensions

R.10-02-005 directs CSRs to inform any customer that owes an arrearage on a utility bill that puts them at risk of disconnection that the customer has a right to arrange a bill payment plan extending for a minimum of three months the period in which to repay the arrearage. CSRs may work with customers to extend this payment period for up 12 months.¹⁰

DRA recommends extending this interim practice through April 2011, and that thereafter companies be required to disclose the availability of the 12-month term.¹¹ NCLC offers that even a three to twelve month repayment period may be unreasonable, and that the Commission should specify how CSRs should extend payment plans by adopting a reasonableness standard.¹²

In response, PG&E points out that the greater the number of payments, the more likely it is that a customer will default on a payment plan.¹³ Joint Utilities note a similar correlation between broken or cancelled payment plans and the length of the payment period.¹⁴ SCE argues that payment plan periods should not be mandated but that CSRs should continue to have discretion over this period.¹⁵

Providing customers with a longer period to repay an arrearage provides a financial alternative to immediate payment and potential disconnection. However, data collected by the utilities show that customers are more likely to break or cancel a payment agreement with longer payment periods, particularly beyond the three-month period. At this time, the information is inconclusive regarding our interim practice of offering a three-month payment period. As the utilities continue to gather and report disconnections, we will gain additional understanding regarding this interim practice. Therefore, we agree with DRA and will continue this practice of providing customers that are at risk of disconnection the right to arrange a bill payment plan extending for a minimum of three months the period in which to repay the arrearage.

Although it appears from the information provided that longer payment periods result in an increased likelihood that payment plans will be broken, there may be other variables affecting these payment agreements. Therefore, we do not require CSRs to provide extensions beyond three months. Instead, we expect that CSRs will utilize discretion to extend payment periods when such an extended period may help a customer to successfully pay an arrearage.

7.2. Customer Deposits

7.2.1. Reestablishment of Credit Deposits (CARE and FERA customers)

The second interim measure adopted by R.10-02-005 directs that utilities not require customers to pay additional reestablishment of credit deposits for slow payment or no payment of bills. Continuation of this measure is supported by TURN, DisabRA, DRA and Greenlining.

TURN and DisabRA¹⁶ propose that disconnected customers not be required to provide a separate deposit in order to be reconnected and also propose a ban on post-shutoff deposits for CARE customers. Greenlining recommends that all customer deposits should be eliminated as this will help customers maintain timely payments and avoid disconnection.¹⁷

DRA provides three alternative deposit recommendations. First, DRA recommends continuation of the policy adopted in R.10-02-005 regarding additional reestablishment of credit deposits. Second, DRA recommends collection of 1.5 months deposit rather than the two months deposit, and return a portion of the deposit as an incentive to complete a payment plan. Third, DRA recommends using the deposit to avert a service disconnection.¹⁸

The Joint Utilities contend that the purpose of customer deposits is to protect utilities from bad debt expenses due to a customer who does not pay for services they use. Further, the Joint Utilities claim that the additional costs of not collecting deposits from customers who fail to pay their bills ultimately falls to bill-paying customers. The utilities state this practice is in contradiction to the Commission's stated goal that decreasing the number of disconnections should not shift the burden to other ratepayers.¹⁹ PG&E contends discontinuation of reestablishment of credit deposits would not help struggling customers and places a further uncollectible burden on other customers.²⁰ SCE recommends ending this measure entirely.²¹

While we are concerned for all customers with financial hardships, the ability of CARE and FERA customers to provide utility deposits following a disconnection is especially problematic since these are the lowest income residential customers. Continuation of this measure for all customers is estimated to have a significant cost on other customers. PG&E estimates the cost is $11 million annually,²² while SCE estimates the cost at $6-7 million annually.²³ Given these competing concerns, we will modify this requirement to apply to CARE and FERA customers only.²⁴ However, we will reduce the burden of the reestablishment of service deposit required for non-CARE customers by reducing the deposit amount as discussed below.

7.2.2. Reestablishment of Credit Deposits (Non-CARE Customers)

Tariff Rule 7 provides that the four utilities may collect establishment of credit deposits equal to twice the average monthly bill. In addition, Tariff Rule 7 for PG&E, SCE and SDG&E provides reestablishment of credit deposits equal to twice the maximum monthly bill for disconnections. SoCalGas requires reestablishment of credit deposits for disconnections equal to twice the average bill.

PG&E and SCE do not require a credit deposit for late-payment of bills while the Joint Utilities require a credit deposit for late-payment of bills.

Application of Tariff Rule 7 to non-CARE customers should be uniform for the four utilities. Therefore, we will limit reestablishment of credit deposits to twice the average monthly bill for disconnections only, a change that only impacts PG&E, SCE and SDG&E. Also, we will waive the reestablishment of credit deposits for late-payment of bills, a change that only impacts the Joint Utilities. These changes will reduce the financial effects on non-CARE customers, provide more uniform tariff practices and provide a balance between the concerns of parties requesting no deposit requirements, and the needs of the utilities and other customers for a showing of security.

7.2.3. Automated Payment Service (APS)

PG&E states that, in December 2009, it initiated APS which provides that new customers who elect to use the APS option may do so in lieu of cash deposits.²⁵ PG&E also states that it has taken several steps to improve notification and education of this deposit option to customers, and one notable impact has been that applications for APS are up over 145% in the first quarter of 2010 compared to the first quarter 2009.²⁶ PG&E notes that while many customers have taken advantage of this option, PG&E believes that it is too early to determine the efficacy of the program.

SCE indicates that it offers a similar program (DirectPay), although it is too early to evaluate the effectiveness of the program. SCE's DirectPay program is offered on an ad hoc basis by CSRs. SCE states that although this program may cause increased operational costs, SCE considers it a viable alternative to cash deposits.²⁷

While it is too soon to know whether PG&E's APS or SCE's DirectPay programs are valuable in reducing disconnections, such programs appear to provide a worthwhile alternative to cash deposits for some customers. Given the apparent growth of this program reported by PG&E, such a utility program may be one method for assisting customers who have difficulty in providing a cash deposit. Therefore, we will require that PG&E maintain its APS program, that the Joint Utilities implement a similar program, and the SCE's DirectPay program be modified to offer this program to all new utility customers, and to those customers requesting reestablishment of credit after being disconnected, rather than on an ad hoc basis. Although we will not direct the specific elements of the program, the Joint Utilities' program should provide that enrollment in the program is in lieu of cash deposits for reestablished service and is offered to all new customers and existing customers that are required to post a reestablishment of credit deposit after being disconnected.

We also direct all of the utilities to provide clear language to customers explaining the limitations and requirements of automatic bill pay programs.

7.2.4. Alternate Language Services
Offered to All Customers

Greenlining/DisabRA point out that many customers who do not speak English have difficulties in understanding utility communications and therefore need alternate language options.²⁸ A similar experience is reported by TURN as a result of work with a Chinese focus group. TURN reports that Chinese customers experience problems with utility communications, and that warning notices and information about payment plans are not effective when communicated only in English. TURN also notes the need for phone calls in the language of the customer.²⁹

SCE states that in 2010 it is focusing on its ability to reach customers by expanding communication efforts to provide customers relevant information in their preferred language. Once information is available regarding language preference, SCE provides its future communications in the indicated language.³⁰ PG&E states that it currently does not have any practical means to determine language preference options. PG&E uses the AT&T language line to provide third party translation services in virtually any language, and provides some communications in Spanish, Chinese, Vietnamese, Hmong, Russian and Korean.³¹ The Joint Utilities indicate their CSRs utilize language line services.³²

We agree that many important communications may not be received when there is a language barrier. Consequently, communications directed at some customers faced with potential disconnection may be either ignored or not understood. We applaud SCE's efforts to identify a preferred language for its customers, and encourage the Joint Utilities and PG&E to determine the language preference of customers at the first opportunity and then use that language preference in their communications. Determination of language choice may be accomplished through indication of a language choice on the bill, as suggested by TURN,³³ or in some other manner. As discussed below, a topic of the next workshop in this proceeding will be identification of language choice by the customer. We expect that all of the utilities will continue to utilize their alternative language procedures in a greater effort to reach customers who are not proficient in English.

In order to further the concept of using alternative language communications, we direct the utilities to investigate the use of a single third- party language service entity for outsourced language reference services. This matter will be considered in a workshop to be held in the next phase of this proceeding. The use of a single third-party language service would only be used if it would result in overall lower costs, service parity, and is effective.

7.2.5. Notices to Customers (Non-Sensitive)³⁴

The four utilities have each developed notice procedures prior to disconnecting a customer. After a 42-day delay from the issuance of the bill, PG&E provides customers with a 15-day notice, a 48-hour mailing, a 48-hour outbound call and an additional outbound call prior to disconnection.³⁵ SCE delivers an outbound call notice approximately 41-46 days after initial bill presentation, and a final call notice prior to disconnection.³⁶ SCE follows this with a 48-hour notice, and a courtesy call as a further attempt to prevent disconnection.³⁷ SDG&E provides a 48-hour notice in person, and a 48-hour notice and phone call to CARE customers after delivery of the 48-hour notice. SoCalGas provides 48-hour notices to seniors and special needs customers, and two attempts to contact the customer prior to disconnection.³⁸

Non-utility parties generally agree with the current notice practices to non-sensitive customers, but recommend some changes including allowing customers to choose their billing date and language preference, an issue discussed above.

It is not clear which of these notice procedures, if any, is the most effective in preventing customer disconnections. At the January 5, 2010 workshop, utilities explained their customer disconnection practices; however, there was no agreement on a specific means of notifying customers that disconnection was imminent.³⁹ Although we could mandate uniform specific notice requirements, we do not yet have sufficient information to make that choice. There is value, however, in having a single set of notification procedures among the four utilities, particularly for customers who move from one service territory to another and to assist Commission consumer representatives responding to disconnection questions. Therefore, we direct the four investor-owned utilities (IOUs) to confer and jointly recommend, by October 1, 2010, best practice notice procedures that can be uniformly applied to these four IOUs. In addition, the IOUs should provide estimates of the costs and time necessary to implement uniform notice procedures.

7.2.6. Notices to Customers (Sensitive)⁴⁰

Communicating with sensitive customers who have disabilities is a challenge for all utilities. Greenlining/DisabRA explain why many customers who are deaf, hard of hearing, blind or sight impaired, may not receive a utility's communications regarding the potential for disconnections.⁴¹

Currently, utility notices provided to sensitive customers such as those on medical baseline and life support are more detailed, and most importantly, provide actual in-person visits prior to disconnection. PG&E provides an outbound call including an opportunity to speak with a CSR, a phone attempt, a certified letter notifying the customer of the date of service disconnection, and a phone attempt and/or letter from the Customer Relations Department for a final pay plan. PG&E also states it provides an in-field visit prior to disconnection of medical baseline and life support customers.⁴² SCE states that it also employs additional measures for disabled customers, including an urgent notice as well as a written final call notice and two outbound call attempts. As a final measure, SCE indicates it attempts to reach these customers through phone calls, third-party contact, a field delivered notice and a certified letter. The Joint Utilities similarly provide additional notices to senior citizens and special needs customers including a 48-hour notice in person, and a minimum of two attempts by phone, mail or in person. Although all of the utilities provide additional communication and notices and an in-person visit before disconnection occurs, only the Joint Utilities provide a field collector who can take a payment so the customer can avoid disconnection.⁴³

We are mindful that customers on medical baseline or who are on life support may not respond to the utilities' various notices, letters, or phone calls. Furthermore, this vulnerable customer group represents a very small portion of all residential customers. Therefore, we will require that as an interim practice, all utilities must provide a field representative who can collect a payment in-person or make arrangements for payment from those customers who are on medical baseline or life-support prior to any disconnection.⁴⁴ Utilities may determine how to implement this practice most efficiently, but a final in-person visit for customers on medical baseline or who are on life support is reasonable for this vulnerable customer group because it provides an opportunity for bill collection prior to disconnection.

7.2.7. Remote Disconnections

Non-utility parties, including NCLC and Greenlining/DisabRA, oppose remote disconnection of customers.⁴⁵ TURN and DRA contend remote disconnections should be prohibited while PG&E's Smart Meter program is being investigated. TURN recommends that if remote disconnections are permitted, customers should not be charged for disconnection activities and that remote shutoffs should not be permitted for customers vulnerable to health and safety risks.⁴⁶ The City recommends more study of remote disconnections and associated costs.⁴⁷

In addition to its recommendation to prohibit remote shutoffs while the PG&E Smart Meter program is being investigated, DRA offers other proposals regarding remote shutoffs. DRA recommends that the Commission establish consumer protections to offset the potential harm and hardship of remote disconnections, and that restoration charges and deposit requirements be waived during a 12-month grace period for all customers after remote shutoff is functional at the customer premise. DRA also proposes a complete waiver of restoration charges for CARE customers who are remotely shutoff, lowering of restoration charges for non-CARE customers and utility justification, including cost effectiveness of remote disconnections.⁴⁸

PG&E is the only respondent utility with remote shutoff capability through the use of SMART Meters, and it has installed over 5.2 million SMART Meters. PG&E contends that its SMART Meters are accurate and that using Smart Meters to remotely shutoff or restore service provides significant cost savings. PG&E states that the cost of restoring a disconnection using Smart Meter technology is about $8, while the cost of physically restoring a disconnected customer is about $66.50, during regular working hours. PG&E states that it ensures vulnerable customers including those on life support and medical baseline, are protected by in-field visits before any disconnection.⁴⁹ While Joint Utilities do not have remote shutoff capability, they support the concept and "obvious benefits of this technology."⁵⁰

At this time, we will not prohibit the use of remote shutoff technology to disconnect customers, except those who are on medical baseline or life support. The reasons for disconnection remain the same regardless of the disconnection technology employed. PG&E points out that its disconnection policy remains the same regardless of the type of meter installed.⁵¹ In addition, customers who have been remotely disconnected can have service restored more quickly than restoration through field personnel which is a benefit during periods, such as the winter season, when service staff are likely to be very busy. Finally, the significant cost savings that PG&E estimates are available through employing remote shutoff technology as discussed above. Using PG&E's estimates, the cost of restoring a disconnection using remote technology is only about 12% of the cost of using field personnel. These savings will accrue to all PG&E ratepayers through increased efficiencies. As an additional protection to inadvertent remote shutoff, we are reviewing the adoption of uniform notice procedures, as discussed above, which should provide ample warning to all customers facing the potential for disconnection.

¹⁰ Each utility may implement a plan schedule that exceeds 12 months, but no utility is required to extend the schedule beyond three months.

¹¹ Opening Comment of DRA at 7.

¹² Opening Comments of NCLC at 2-4.

¹³ PG&E Reply Comments at 6-7.

¹⁴ Response of Joint Utilities at 28-29.

¹⁵ SCE Reply Comments at 4.

¹⁶ Reply Comments of TURN, at 7-8; Reply comments of DisabRA at 19.

¹⁷ Reply Comments of Greenlining at 6.

¹⁸ Opening Comments of DRA at 4-7.

¹⁹ Reply Comments of Joint Utilities at 11-12.

²⁰ PG&E Reply Comments at 6.

²¹ SCE Reply Comments at 2.

²² PG&E Response to Ruling at 7

²³ SCE Response to Ruling at A-6.

²⁴ Prohibiting a deposit requirement for CARE customers is consistent with the Commission's California LifeLine Telephone program whereby General Order 153 [section 7.4] prohibits companies from requiring a LifeLine customer to post a deposit once the Customer is deemed eligible for LifeLine.

²⁵ PG&E Response to ALJ Ruling at 8.

²⁶ PG&E Reply Comments at 10.

²⁷ SCE Response to Ruling at 7.

²⁸ Joint Opening Comments of Greenlining/DisabRA at 8-11.

²⁹ Opening Comments of TURN at 6-7.

³⁰ SCE Opening Comments at 9.

³¹ PG&E Response to Questions at 12-13.

³² Joint Utilities's Response to Ruling at 6.

³³ Opening Comments of TURN at 6.

³⁴ "Non-Sensitive" customers are all other customers who are not sensitive as identified below.

³⁵ PG&E Response to Ruling at 2-14.

³⁶ SCE Response to Ruling at A-13.

³⁷ SCE Opening Comments at 6.

³⁸ Joint Utilities Response to Ruling at 10.

³⁹ As a related matter, Greenlining commends the Joint Utilities for their program to reach out to the newly unemployed by working with various companies, associations, and employment agencies to target their outreach efforts.

⁴⁰ Sensitive customers are those who are on medical baseline or life support as these customers are currently identified on utilities' billing systems. We will consider the definition of sensitive customers in Phase 2 of this proceeding.

⁴¹ Joint Opening Comments of Greenlining and DisabRA at 2-8 and 18-24.

⁴² PG&E Reply Comments at 13.

⁴³ Joint Utilities Opening Comments at 4.

⁴⁴ We do not require utility field employees to collect cash as this may result in safety and security problems. However utilities should develop procedures which allow collection of non-cash payments by utility field employees.

⁴⁵ Opening Comment of NCLC at 15; Joint Opening Comments of Greenlining/DisabRA at 31.