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Retail Supplier: UCB With POR Has Resulted In "Empowering Of Bad Actors"

December 21,2018



In comments to the Arizona Corporation Commission concerning the ACC's review of electric choice, Just Energy said that UCB with purchase of receivables has resulted in the "empowering of bad actors" who may, "take advantage of consumers."

"A critical element of the best functioning Choice markets is the institution of Supplier Consolidated Billing ('SCB'). Too many Choice jurisdictions adopted a Utility Consolidated Billing ('UCB') model with Purchase of Receivables ('POR') upon restructuring, a decision that seemed like a good one at the time, and which jumpstarted Choice by making it easier for Suppliers to enter the market (as they did not have to develop their own billing platforms), but it is a choice which in retrospect has resulted both in limitations on innovation and in the empowering of bad actors in the Supplier community," Just Energy said in the filed comments

"Responsible Suppliers lament this construct, as it relegates them to a mere line item on 'the electric company' bill, and limits their ability to develop a meaningful relationship with their Supply customers (and the attendant opportunity to deepen that relationship and to offer value-added products and other benefits). But in many ways more importantly, UCB/POR enables less scrupulous Suppliers to take advantage of consumers," Just Energy said in the filed comments

"[T]here are, regrettably, some bad actors in the Supplier community who have a business model which relies upon POR as a backstop, enabling them to target less-sophisticated customers and/or at-risk communities. These Suppliers will often offer teaser rates, subsequently raising commodity rates to a level at which they have no reasonable expectation that the customer could pay (sometimes 150% or more of the going market rate), secure in the knowledge that default on the part of the customers they had duped would nevertheless result in them realizing 95%-97% of the profits, depending upon the POR discount rate," Just Energy said in the filed comments

"This irresponsible, sometimes predatory behavior is only possible due to UCB/POR. It is also only possible because when a consumer in a UCB/POR market signs up for service with a Supplier, from their perspective nothing changes. They still receive their bill from 'the electric company': their local IOU. Thus, bad actor Suppliers are able to utilize misleading marketing tactics such as teaser rates and the like and when their Supply charges balloon after the expiration of such rates, they only manifest as a line item on 'the electric company' bill," Just Energy said in the filed comments

"Consider, instead, a construct under which a Supplier would have to emblazon their name on the bill that said customer received. Consider whether the bad actor Suppliers would be as successful in their exploitative business model. Responsible Suppliers believe otherwise, and as a result have been advocating for a change in the regulations in Choice jurisdictions to require Suppliers to put their name on the envelope and invoice that their customers receive every month. Yes, SCB enables Suppliers to offer more products and services to their customers than they could in the highly constrained UCB/POR model, and it enables Suppliers to deepen and strengthen their relationships with their customers by owning the billing relationship; but it also has the salutary effect of limiting the ability of bad actors in the industry to take advantage of consumers by hiding on a UCB," Just Energy said in the filed comments

Tags:
Arizona   Electric Choice   Deregulation   POR   Purchase of Receivables  

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