Our core principles are:
Competition, not regulation, is the most effective means for efficiently allocating resources. This is as true in the retail energy markets as it is in the markets for other goods and services. Thus, we believe that electricity and natural gas should be provided by competitive entities rather than by price-regulated utilities.
Competition among retail companies brings benefits to consumers that are not readily provided through traditional utility regulation. These benefits include the setting of efficient prices, the development of innovative products and services, and the ability to efficiently meet clean energy policy objectives.
For competition to be effective, all consumers must be afforded the right to shop for competitively priced energy products and services, just as they shop for other products and services. The benefits of competition should be available to all retail customers, including those on low-income and other assistance programs.
The exercise of customer choice is essential for competitive markets to thrive as consumers best express and protect their interests through their individual energy purchasing choices. Thus, we believe that customer choice should be subject to the absolute minimum amount of constraint that is consistent with the operation of a well-ordered market.
The key features of a competitive market:
Putting the RESA principles into effect requires that a market have certain key features that will allow the benefits of competition to take hold. Those key features include the following:
DEFAULT SERVICE (also known as Standard Offer Service, Provider of Last Resort Service, or Basic Generation Service), which is available to customers who do not exercise their right to shop for energy, should not interfere with the proper functioning of the competitive market. This requires that default service have the following characteristics:
- Default service should be an undifferentiated backstop service that is viewed as transitional, with a date certain set to achieve full retail energy competition where all customers are served by competitive suppliers and local distribution utilities are not involved in retail supply. This can be accomplished by having another entity, such as competitive retail suppliers, provide a form of default service.
- Default service prices should reflect a market-based retail price and should be adjusted as frequently as necessary to appropriately reflect changes in the underlying wholesale market.
- Default service pricing should cover all retail risks and costs, including the risks of migration to and from default service to competitive service, which should not be limited by exit fees, minimum stay periods, or other artificial barriers.
- Until such time as the transitioning of the default service role to competitive retail suppliers occurs, or full retail energy competition is instituted, default service policy should deemphasize price comparisons relative to a regulated, utility-provided default service. One mechanism to accomplish this is to base default service price(s) on transparent wholesale market indices such as the hourly RTO/ISO market price for electricity default service, or the monthly variable price for natural gas default service.
AN APPROPRIATE ROLE FOR THE REGULATED DISTRIBUTION UTILITY that does not bring it into conflict with competitive retailer suppliers. Such a role can best be achieved through these means:
- Regulated distribution utility default rates should be unbundled into individual components so that any costs the distribution utility incurs in providing electric commodity service are transparent and not disguised as part of regulated distribution rates.
- Any rate changes, charges, refunds, rebates or waivers should reflect cost causation and should not be implemented in a manner that shifts costs between customers obtaining their electricity competitively and those who choose to receive the distribution utility’s default service.
- Effective codes of conduct should be implemented to prevent anti-competitive behavior and to protect consumers.
- Recovery of prudently incurred and fully mitigated stranded costs or deferrals, if any, should be implemented in a non-discriminatory, competitively neutral manner.
EFFECTIVE CONSUMER PROTECTIONS that give customers sufficient trust in the retail market so that they shop freely and with confidence for the products and services that best meet their needs. As such, RESA members hereby commit to undertaking and promoting the following practices:
- Not engaging in unfair, deceptive, or misleading conduct as defined by applicable state and federal statutes and regulations.
- Not making false or misleading representations of competitive products and services, including misrepresenting rates, prices, or customer savings.
- Using plain language, including words and images that facilitate customer understanding of competitive products and services.
- Providing customers with written information, upon request, or with a link to a website at which information can be obtained, in response to all customer inquiries.
- Using reasonable efforts to provide accurate and timely information about products, services, and customers’ cancellation rights.
- Ensuring that any product or service offering made by a competitive retail electric provider contains information designed to be understood by the customer, including but not limited to providing any written information to customers in the language used during a sales call or on-site visit or negotiation of the contract.
- Ensuring prompt and fair investigations of all customer inquiries and complaints concerning a competitive supplier’s service and/or marketing practices.
- Cooperating fully with the appropriate state regulatory authorities, state consumer agencies, and local law enforcement in investigations concerning unfair, deceptive and/or misleading marketing practices prohibited by state law or regulation.
- Applying all of the above principles and practices in:
1. Training of marketing representatives.
2. In-person and telephone contact with customers.
3. Dispute resolution of customer complaints and disputes.
UNIFORM BUSINESS RULES for the following market elements that promote efficient market development and operation:
- Standardized electronic data interchange/electronic business transaction (EDI/EBT).
- Readily available customer data.
- Simple and timely enrollment and switching processes.
- Equivalent treatment of competitively supplied and utility-provided services with respect to service terminations and recovery of bad debt expenses associated with the generation portion of customer bills.
- Retail consumers should have a full range of competitive billing options.
- Where distribution utility consolidated billing exists, especially in underserved, transitioning markets, and for mass market consumers, retail suppliers should be able to sell their receivables to the utility to mitigate consumer credit and collections-related costs and the supplier’s uncollectibles risk.
The most effective means to encourage true customer engagement
RESA aims to create a robust energy market in which deeply engaged customers are able to modify their behavior in a way that reflects their underlying needs and values, thereby allowing consumer behavior to drive the achievement of important public policy goals. Gaining this level of customer engagement requires a particular focus on technological innovation and measures that encourage it. The means that encourage this innovation include the following:
CLEAR AND CURRENT PRICE SIGNALS. Sending accurate near-term price signals encourages customers to engage in demand response while enabling development of technological solutions that allow customers to react to prices signals more easily and efficiently.
RELIANCE ON COMPETITIVE SOLUTIONS FOR CLEAN ENERGY GOALS. Clean energy alternatives such as energy efficiency, demand response, and renewables are best delivered by competitive retail suppliers offering market-based solutions rather than through regulated distribution companies. The regulated distribution companies should be a competitively neutral conduit for the provision of these value-added services by the competitive market.
ADVANCED METERING INFRASTRUCTURE (AMI)/SMART GRID. Advanced meters and other smart grid technologies are critical tools in achieving an optimal level of customer engagement. The key elements of an effective policy for deploying AMI and other smart grid technologies include:
- ELIGIBILITY. Competitively offered programs using AMI should be eligible for any available utility energy efficiency program funding on a non-discriminatory basis.
- TECHNICAL STANDARDS AND ACCESS TO CUSTOMER DATA. Communications protocols, utility databases, and system interfaces should be subject to uniform technical standards that allow competitive smart energy product offerings on a nondiscriminatory basis. Such current and uniform technical standards should also allow both consumers, their suppliers, and curtailment service providers non-proprietary two-way access to send/receive information to and from in-home meters or similar energy recording devices, and distribution utility databases.
- COST-EFFECTIVENESS. Cost-effective third-party programs to encourage the implementation of new and more efficient equipment and technology for all customer classes, including the mass market, should be implemented.
- CONSUMER EDUCATION. Programs to educate and empower consumers to use available technology to control their energy usage should be implemented and should include education on competitive service offerings.
- COMPETITIVE NEUTRALITY. Regulated electric distribution company-specific energy efficiency and demand response programs, and any government programs promoting and implementing advanced metering and other smart grid technologies, should be administered in a competitively neutral fashion and must be accessible to all consumers regardless of whether they are customers of the regulated distribution company or a competitive retail supplier.
PREVENTION OF BARRIERS. Public policy regarding demand response and energy efficiency should encourage the elimination of barriers to participation of such demand-side resources in organized retail markets.