You asked what position the American Association of Retired Persons (AARP) took on the 1998 energy restructuring proposal (HB 5005).

SUMMARY

AARP generally supported HB 5005 (later adopted in PA 98-28 and codified at CGS § 16-1 et. seq. ). But it expressed reservations about the execution of three specific provisions: (1) public education and outreach, (2) the format of electrical bills, and (3) telemarketing rules and penalties. The association argued for public outreach, an easy to read bill, and fines and penalties for violations of slamming and federal telemarketing rules. It urged the Energy and Technology Committee to ensure that the bill did not harm consumers. It recommended that the bill ensure affirmative benefits, include a universal commitment to service, and attribute certain costs to utility companies rather than ratepayers.

THE BILL

The Energy and Technology Committee held a public hearing on HB 5005 on February 9, 1998.

The bill opened the generation market to competition beginning in 2000. It required electric companies to provide a 10% reduction of 1996 rates for customers who do not choose a competitive supplier. It also required suppliers to be licensed by the Department of Public Utility Control and meet environmental, consumer protection, and labor provisions. It also established a charge to pay for consumer education, unclear decommissioning, and other expenses. Finally, it provided assistance to municipalities and workers affected by the restructuring of the industry.

AARP's position on the bill was presented by Anthony Ludovico, the representative of AARP's legislative committee. He told the committee that AARP generally supported the bill but had some concerns.

AREAS OF CONCERN

Public Education

Ludovico told the committee that the provision requiring public education and outreach was “critical to the public's understanding and acceptance” of restructuring. He said AARP was willing to serve on the bill's advisory council, which the bill charged with educating the public.

Standard Billing Format

Ludovico also stressed the importance of having a standard bill that was easy to read and understand. Ludovico stated that because electricity is an essential service, it is very important that the public understand why they are getting billed for what they are. Ludovico maintained that even if the law requires full disclosure of all information, it is meaningless if consumers cannot understand the bill.

Telemarketing Violations

AARP supported penalizing violators of the bill. But, Ludovico argued against the violations being treated as unfair trade practices. Instead he favored a simpler way to impose penalties and recommended using fines to fund the consumer education program.

Consumer Protection

In written testimony to the committee, AARP expressed the importance of consumer protection in the restructuring process. It maintained that reorganizing any service provided to consumers can result in confusion, abusive market techniques, and the potential for service interruption. The association further stated that electricity is “crucial to the health and welfare” of the elderly and that “legislation must ensure consumer interests are protected in any industry change affecting such state expenditures” (see attached AARP testimony).

To ensure such protection, the organization recommended that:

1. restructuring should ensure affirmative and perceivable benefits to residential ratepayers (e. g. up-front rate reductions and the ability to participate in reduced rates at the same time as non-residential ratepayers);

2. restructuring should include a strong commitment to universal service with everyone paying reasonable and affordable rates; and

3. ratepayers should not pay for stranded costs that are attributable to a utility company's own imprudent investment decisions, investments that are still capable of accruing some income for the utility, or for investments for which the utility company has already been compensated.

A copy of the testimony is attached.

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