Maryland’s experiment with supplier consolidated billing risks being one step forward and one step back
Yet when it comes to electricity, this relationship is obscured. If you live in a state that allows retail electric choice, you likely receive electric services from two different entities: a competitive supplier who is responsible for providing the electricity used by the household, and a local utility that provides delivery services over its poles and wires. Chances are, though, that you only receive one electric bill. In most states, that bill comes from your utility and is called utility consolidated billing (UCB). However, in a handful of cases (such as Texas for electricity and Georgia for natural gas), the bill comes from the electric supplier and is called, unsurprisingly, supplier consolidated billing (SCB).
Supplier consolidated billing has many advantages that can help customers and the retail energy markets. First, it increases brand awareness for the supplier and the customer. In the traditional utility consolidated billing platform, the supplier charges show up as a few lines on the utility bill, most customers pay little attention to this and some don’t even know who their supplier is or even if they are with a competitive supplier. A supplier consolidated bill will clearly show the customer who is supplying their electric service and the charges associated with those services. Supplier consolidated billing also allows a supplier to offer more products and services to customers. A bill that is created by the supplier could offer many line items for products such as loyalty rewards or cash back, value-added services such as home security, more flexible payment options or other new innovations. Supplier consolidated billing can bring these products and services to customers in a simple, concise way.
The status quo reliance on UCB is out of step with what consumers expect when they make purchases in their daily lives—where their chosen service provider bills them for their purchases, including any shipping charges. UCB is akin to having the UPS or FedEx bill customers for the products they buy. SCB is indispensable for a vibrant retail market for energy services.
With any change in the status quo, there needs to be a proper road map to follow and there are states that currently allow supplier consolidated billing, and they should be utilized to realize what is working and what needs to be improved. Supplier consolidated billing needs to be structured properly to maximize the impact. Maryland is currently in the process of expanding the ability of suppliers to bill their customers. While this is a positive step, the current proposal leaves much to be desired. Below are several important issues that need to be addressed so customers can reap the benefits of supplier consolidated billing:
In all utility service territories, there are issues with customers that do not pay their utility bill. The ultimate recourse for non-payment is for the utility to shut off the customers’ utility services. Neither suppliers nor utilities want to shut off a customer, and will often work with customers to find acceptable payment arrangements. The option to disconnect is, however, a necessary incentive to encourage customer payment. In states that offer supplier consolidated billing, the supplier can initiate the shut-off after all required protocols are taken. Under the Maryland proposal, however, suppliers would lack this ability. Instead, the proposal involves a convoluted system whereby suppliers who use SCB could turn the customer back over to the utility and receive reimbursement by the utility for distribution-related charges that remain unpaid but not unpaid supplier-related charges.
Partial Payment Processing
This situation is made worse by the fact that Maryland’s proposal also directs that suppliers be paid last for their costs on any partial payment customers might make. Perversely, this all or nothing approach limits the ability of suppliers to find ways to salvage the relationship with a delinquent customer through a payment plan or other mechanism. As a result, both customers and suppliers would suffer. These rules make it unlikely that suppliers would seek to use SCB in the first place.
Utility Information on Supplier Bill
The Maryland proposal also requires suppliers to provide too much information regarding the utility on the suppliers consolidated bills. It is logical to include the utility emergency number to report outages. But there is no reason to require other utility contact information. If a customer has a billing question, they should contact the entity that created the bill. The supplier has all of the information regarding the billing components and should be the first point of contact for the customer. If there is a question about the utility service that the supplier cannot answer, it can forward the customer to the utility call center. Requiring an excess of utility information muddies the waters of who the bill is actually from and who is responsible for what services.
Utility Bill View Access
The current proposal requires suppliers to provide utilities full electronic access to the detailed information about their products and customers found on each customer’s bill. This requirement is justified on the grounds that the utility needs all information in case a customer calls with questions about a bill. In this instance, the utility already knows the billing components for their charges and can respond to the customers’ questions. If the customer has questions beyond the utility charges, the utility should forward them to the supplier who prepared the bill and has intimate knowledge about all aspects of that bill. Supplier bills contain competitive information and should not be shared with any party including their biggest competitor, the utility. Giving utilities access to the bills would allow them to view prices, products and services offered by suppliers. This type of competitive information should not be shared with utilities. Utility bills are based on publicly available tariffed rates so there is no competitive information being shared; with supplier billing there is trade secret information that should not be required to be shared.
Supplier consolidated billing is an evolution in the retail energy markets. It allows for more brand recognition and a direct relationship between the supplier and the customer. New products and services can be offered including pricing options and products that are not available on utility billing systems. Maryland should be applauded for opening up to this market enhancement. Unfortunately, aspects of the current proposal risk creating customer confusion and may end up discouraging suppliers from participating at all. Maryland needs to make sure it does not overburden the process so as to kill it before it even gets off the ground.
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