-- to do it. So one issue, whether we like it or not, the way rules are set is that the market is going to provide much of the information. And we can say that the marketers should be doing more on advertising or more on real customer education. That's up to them to do it. They will do it over the longer period of time if the profits are there if they do it. I do think we've seen enough to say that it certain can have an impact. On the environmental side, an average Pennsylvania statewide customer that uses about 770 kilowatt hours, so that would include both people who use electricity for heat as well as not for heating. They currently produce about 11,000 pounds of CO2 a year. That's a tremendous amount, a tremendous impact on the greenhouse gas problems that we've had. They also use about 100 pounds of sulfur dioxide and about 30 pounds of nitrogen oxide. These are all releases from combustion of 82 5/27/99 LAW & GOV'T - RES. 990209 fossil fuels that are devastating our environment right now. If those customers switched to a non-emitting source, such as wind, all of that tonnage of waste dumped into our air is gone. When we say that we're trying to build an opportunity for choice, part of it is to choose to choose the cheapest you can get. And for other people, it's to choose the best that you can get, or some combination of the two that meets somebody's needs. Right now, there are -- I'll simplify it to say three categories of green products on the market. One, which is natural gas, which is dramatically better than anything we have in the old system but still not renewable energy. And at the other extreme, there are companies who are selling 100 percent renewable or 50 percent renewable. Customers can pick the right balance of clean green and cheap that fits their needs. These products are not necessarily more expensive. That's a big misconception that's out there in the market, that you have to give up savings in order to buy clean. If you're comparing it to the way 83 5/27/99 LAW & GOV'T - RES. 990209 regulated rates were, there are many green products out there right now, including the 100 percent green products, which are cheaper than what people have been paying PECO for the last generation, or at least ten years.
I think that's a very important point you make, and I think the Clean Air Council, who's represented here, I'm sure is going to represent at a issue.
And if you take it into consideration of we've got the 8 percent rate production, there are still several green e-certified products that are -- permit some savings, not as much, over the rate that you would be paying to PECO if you continued to be a PECO customer today. All right, the savings are there. There have been other huge changes in the industry that have gone much, much faster than anybody expected. There have been companies who have come in, for example, and bought all of GPU, the company that serves in the area just beyond the Philadelphia region. They've sold all of their power plants. This company has come in and said that they are going to close many of the 84 5/27/99 LAW & GOV'T - RES. 990209 older coal-fired plants completely and that they are going to install significant investment for emissions improvements on others. One company bought a huge plant out in western Pennsylvania, in Homer City, and they have indicated that they are going to spend a huge amount to clean it up. It's a coal plan as well. In addition, there are many companies coming in and building these natural gas plants, which, as I've said, are not renewable, but they are dramatically better than the coal or the nuclear --
And if the Philadelphia Gas Works were to go back and decide to enter the electric energy field, they could serve both the cost as well as an environmental factor. It would be a plus factor.
They really are different issues. For the electric generation from natural gas as a fuel, PGW could be a supplier to those.
Yes. And that's clean. 85 5/27/99 LAW & GOV'T - RES. 990209
Even if they did switch and go into retail, correct. Anyway, my point is that between these kind of items, as well as the opportunity to have really dramatic technological change, wind energy is going to be on the market basically as soon as we can build it. There are right now new technologies for fuel cells -- and I really don't want to go into too much detail right now -- that are only a couple years away from the market if people will buy it, all right? The technology is there. As we've seen in the telephone industry, the amount of new innovation in the telephone industry, after the implementation of choice in 1984, has literally changed not only the telephone industry but our society. The Internet is, at least in part, due to the fact that AT&T no 20 longer had a monopoly on the phone system, all right? I can't predict what the changes are going to be as a result of choice in electric. But at least for the ability to innovate with new technologies to produce cleaner and cheaper 86 5/27/99 LAW & GOV'T - RES. 990209 energy, it's going to happen. It might not happen overnight, it might take a few years, but it will be there. I'm very confident that that will occur.
I am going to ask you to summarize because -- and I'm going to ask all speakers to try to be as brief as they can because the hearing has to end by 4 o'clock, and we have many, many speakers to hear.
I want to focus on a few things that I think the City can do directly.
I think the bill stuffers in PGW and the Water Department envelopes is a very good idea. However, I want us all to acknowledge that people don't always read bill 18 stuffers. All these people have already gotten the bill stuffer in a PECO envelope more than once, and they haven't gotten the message. Some people don't read those. However, if we're going to do it, I do think it should have the information they need to make a decision. It should say the price of each supplier willing to cooperate with the program and 87 5/27/99 LAW & GOV'T - RES. 990209 the phone number or other way to contact them to just simply make the deal. That can transform what is perceived as a complicated buying process to one which is very simple. It's really not that hard. One thing that we are going to do, Penn Future, is to have a Website up and running within probably about two weeks that will have all those prices on it. Obviously, that's not accessible to everybody, but there are other ways in which the City or community organizations can work with that. For example, your Council office, I know that you have tons of things that you're doing, but you could have one person access the Website on a weekly basis or a monthly basis.
I'll tell you why I'm not enthusiastic about the Website. I think it's going to reach the affluent middle class, but if you're talking about bringing, say, these to poor, the Website is still, you know, a distance away.
I absolutely agree. But what your office can do or a MOCS office or a block captain that the City interacts with or any 88 5/27/99 LAW & GOV'T - RES. 990209 community organization in the city is to have one person access the Website and hand out the information to everybody who comes through their door.
Well, I intend to make a real effort to have the Democrat party -- and I hope somebody will to the same in the Republican party -- is not only arm all of the committee people with information and have them go to the greatest extent possible as part of registration campaigns, to go also with information about choice on the electric --
Mm-hmm. Basically, every church, every union, every Lions Club --
-- in the city, if they can get one person who can take the responsibility to find out the basic information and share it --
Well, I think the committee person, whichever party, you know, has direct contact with everybody in an electoral division.
Right. One of the things 89 5/27/99 LAW & GOV'T - RES. 990209 that my organization is going to do, as well as several of the other organizations who are testifying today, is to try to help organize those networks of people to get the word out. In my view, the real answer to your question is to get the word out through groups that are already out there -- apart from addressing them at meetings. Every time I go to a meeting, even if's on another subject, to somehow to get it through, slip it in.
To make it easy for somebody who want to do it. For example, if there is a church meeting on a Sunday, there's no reason why people cannot fill out their form and leave it with the church. And three ought to be a way of taking what they've left with the church, maybe at the same time as they make the donation, maybe it will be another hat in which they can put their choice. We've got to find ways to reach the people and make it easy for them to exercise their right.
Well, I certainly agree with that. The line between that is, it's one 90 5/27/99 LAW & GOV'T - RES. 990209 thing to give people information on what you need to do to make your own choice, and it's a second thing to tell them, I've looked through it for you and this is the best deal for you, or this is the best deal that there is, or this is the one that I'm doing. That second level takes not only a level of trust, the listener has to trust the speaker, but at least for public officials, or for that matter, in my role in a nonprofit organization, I try to avoid endorsing a single company.
So it does get a little complicated. But there are other things that can be done. Any leader in the city -- whether it be the committee person or the union member or the church leader -- can go around and try to put together a group of 30 or 50 100 members, parishioners, delegates, whatever the label is, and go to one of the companies and say, All these people have agreed to buy together, give me the best deal that 91 5/27/99 LAW & GOV'T - RES. 990209 you can do.
And then that person goes to a second one and does the exact same thing and does whatever level of shopping he wants -- whether it's ten minutes of research or ten days or week of research. But you can still make it happen. What we need to do is to identify the leaders in the community who are willing to take on that kind of role and to make it a part of the daily practice.
Well, you -- that last suggestion of yours, I think, is excellent for a lot of reasons. I don't want to take the time to -- but I think you offer every neighborhood organization an opportunity to perform a public service by announcing that at the next neighborhood meeting, they will have the opportunity to save money on their electric bill, there will be full information given. And if we can find a way to carry that out, we're going to be trying to do this that in the city. 92 5/27/99 LAW & GOV'T - RES. 990209 Thank you very much for being with us today and for making your contribution. I think we're going to get this where it becomes a visible and discussable area in every living room in the City of Philadelphia. Thank you both very much.
You raised a point earlier that I just wanted to mention without going into detail about assigning customers to a particular supplier.
Under the rules, the decisions, the way it's occurred, there will be process that assigns a portion of the customers to alternative suppliers beginning in 2001. And the rules for that have not been worked out, but that is something which will occur in the future.
Well, if we can move up that timetable, you know, and permit, you know, for people who are interested in the environment, if that's their main consideration, have whatever companies are available in that area, permit some 93 5/27/99 LAW & GOV'T - RES. 990209 committee to, you know, make the choice, I think people would have confidence in a government body that would try to do that. Well, thank you very much. I think it's been very helpful. Liz Robinson, Executive Director of the Energy Coordinating Agency. (Liz Robinson comes forward.)
I'm Liz Robinson. I'm the Director of the Energy Coordinating Agency in Philadelphia, and it's a pleasure to be here. I congratulate Council for having the interest in this subject to hold these hearings, and particularly you as the chairperson of the committee. We appreciate it very much.
I am going to address -- the people who have spoken before me have 94 5/27/99 LAW & GOV'T - RES. 990209 eloquently described much of this, and I'm going to limit my comments and be very focused in the interest of time. The first subject I'm going to address is a subject nearest and dearest to my heart, which is low-income issues, and the second is environment. In the materials that I have submitted to you, our current termination figures in the City of Philadelphia for low-income and other residential households, these figures go back now years. This a record of terminations in the 14 city from 1980 through 1998. 15 And I have the bad news to report that 16 we have now hit a new all-time record in utility 17 terminations in the city. We have hit a number 18 close to 81,000 total residential terminations in 1998. This is gas, electric, and water combined. And this is relevant in this context because you've been acutely pointing to the benefits, the potential benefits to low-income households from reducing their costs by shopping for lower-priced suppliers in electricity. We are seeing not an all-time record for PECO but a very high number of 95 5/27/99 LAW & GOV'T - RES. 990209 terminations for PECO in 1998. The purpose of submitting these termination statistics here is just to simply reinforce and underscore your point and your concern that low-income people really indeed need to be participating in customer choice in order to reduce their bills. There is a lot of confusion in the low-income community about electric choice in addition to the normal confusion that the average customer has about this subject, which is still quite considerable. Low-income customers are often confused about whether they can participate in any of the bill payment assistance plans. PECO has a plan they call Customer Assistance Program, CAP, C-A-P. And there's a myth in the low-income community already very well-established that you can either be in the low-income payment plan or you can change your supplier. But if you want to be in the low-income payment plan, you have to stay with PECO. In fact, that is not true. The benefits are potable; that is, the benefit of shopping are portable. You can carry your CAP benefit with you to your next supplier, but the average low-income 96 5/27/99 LAW & GOV'T - RES. 990209 customer doesn't understand that and doesn't believe it and feels that they will lose their eligibility for CAP if they move to a new supplier. So the -- as difficult as it is to help the average customer understand what's going on, it's more difficult to help the low-income customer understand. So we have our work cut out for us in getting this message across in the low-income community. And I am thrilled to hear City Council describe its willingness and its desire to become actively involved in this process and really communicate to the citizens of Philadelphia how they can benefit immediately.
Don't let me give you the wrong impression. I'm not sure that Councilman Ortiz and I necessarily represent the majority of City Council on this subject matter. I think we do represent the views of a very substantial portion of the membership. But PECO has been the -- has been a very difficult problem. It took us many years before we got the City administration ready to 97 5/27/99 LAW & GOV'T - RES. 990209 even seek renegotiation of an electric contract between the City of Philadelphia and PECO. And when they did, they immediately effectuated a $5 million a year savings; they probably could have gotten double or triple that savings. But PECO has tentacles that reach everywhere. And they've convinced the world -- that is the Philadelphia world -- that their well-being and economic health, meaning their economic excess health is important to the community so that it's difficult for those of us in political life apparently to tangle much with PECO. But there is a strong body grouping within the City Council that feels no private company ought to be immune from the kind of investigation that this committee is carrying on and from the educational efforts that all of you are making to make sure that consumers are treated fairly. And we want to thank you because it's because all of you in the audience who have worked so hard for so many years that make it possible for us in City Council to move forward. So I think today is a very good beginning, but I don't want to overstate it 98 5/27/99 LAW & GOV'T - RES. 990209 because if the Councilmembers were really on your side, you would have seen many more of them flock to participate in these hearings today. So, you know, just be observant as to who's here and who's not here. And from that point on, I think we'll be making progress.
I should just also state that the PUC is beginning to get information back about who is switching and who is not and they are finding that at this time, low-income customers are not switching at the same rate as the general population. Apparently, the numbers are slightly lower, so we are --
The Commission is studying -- the Pennsylvania Utility Commission is studying which customers are switching and which are not, and they are finding so far that low-income people are not switching at the same rate; they are switching at a lower rate.
That's what our 99 5/27/99 LAW & GOV'T - RES. 990209 concern is.
Right, right. I have the same solution that you've heard before, which is from the very beginning of this process, it was clear to me that customers wanted not only to know who the companies were but what they were selling and what the prices were. And the Commission made the right decision and required all the companies to use the same unit of measurement, which is a kilowatt hour. So companies must report their fees and their charges in that form. It's very simple for customers to compare prices because it's an apple to an apple. You know, what's the price of your apple? And what the Commission does need to do, though, is require companies to disseminate the information so the customers have the prices in front of them as well the products so that that companies that are selling environmentally-benign energy, those renewable energy sources need to be made clear, and the prices for all of their supplies need to be made clear. Until that material is available in 100 5/27/99 LAW & GOV'T - RES. 990209 print -- not on Websites, but available in print for the average person to lay their hands on in the privacy of their living room, we will not see customer choice penetrate deeply into the residential sector, I'm convinced and have always been convinced of that, that information needs to be in one place, one sheet of paper clearly in front of them, people have it in their hands, and they can take it home and digest it and make a decision that they need to make about their supplier. That is not available yet in Pennsylvania. To its credit, the Energy Cooperative Association of Pennsylvania produces that information in print, in exactly the form that I'm describing. They're the only entity that I'm aware of that's producing that information in print. The problem with Websites is, low-income people don't have them, they don't use them.
Yes, yes. So, you know, 101 5/27/99 LAW & GOV'T - RES. 990209 Websites are nice for you and me, but they are not appropriate for the general person yet.
You're very welcome. I'm going to talk just two seconds about one other subject.
Or five seconds, if you will, on environmental. Councilman Rizzo asked the question earlier, how does the Commission know that these environmental products are really what they say they are? And I'm sorry he's not here to hear the answer. But there is a national certification program for renewable energy called Green E, which the Energy Coordinating Agency is hosting in this region. Green E certifies that the claims made by suppliers are accurate and verifies at the end of the year that those renewable energy supplies have indeed reached the market in which they were sold. So there is no way for a supplier to misrepresent what they are describing to their customers. And Green E was created to build 102 5/27/99 LAW & GOV'T - RES. 990209 confidence in renewable energy. And renewable energy, by the way, is not just good for the environment; it's going to be good for the economy of Pennsylvania. So we're looking forward to job creation, economic development coming through as a result of the expressed interest in improving the environment.
I'll see that Councilman Rizzo gets a copy of your answer.
It will give me a great deal of personal pleasure to be able to reassure him. (Laughter.)
Thank you very much. Andrew Altman, Deputy Director of the Clean Air Council. The sergeant-at-arms will get the material from you and he will do the distribution. Thank you. And if you have copies, more copies for members of the audience, we'll be glad to make them available too. 103 5/27/99 LAW & GOV'T - RES. 990209 It's a pleasure to have you hear, Mr. Altman.
Well, thank you very much, Councilman, and thank you for convening this real important hearing. And I think the timing is just right because as people look at their summer electricity bill, they're going to be wondering how to get rate cuts. But also in September and throughout the summer as the PUC starts their education campaign for the next wave of customers who are allowed to shop around, it's good to be riding that wave and letting people know in as many ways as possible that they can and letting them know how. I am going to skip to the meat of my testimony and let the written record be the full record.
And skip to the meat. My name, for the record, is Andrew Altman. I'm Deputy Director of Clean Air Council, which is a statewide member-supported environmental organization. 104 5/27/99 LAW & GOV'T - RES. 990209 Clean Air Council has been very active the last three years working to infuse environmental concerns into the ongoing implementation of electricity deregulation in Pennsylvania, so we have a long history with this issue. And I'd like to make three quick observations and then give my recommendations for what the City should do to increase the number of customers shopping.
Lost in all the talk about savings is the over-arching issue of public health and the environment, and that needs to be emphasized. Electric power plants pollute, they are the leading industrial cause of air pollution in the country. Millions of children are sent to the hospital emergency room every year with pollution-induced asthma attacks. Meanwhile, nuclear plants and PECO is -- about two-thirds of its energy comes from nuclear, which every day creates deadly radioactive waste, which will remain toxic for tens of thousands of years. Most importantly to most people, though, nuclear plants continue to 105 5/27/99 LAW & GOV'T - RES. 990209 pose an unacceptable risk of accidents. The good news is that consumers are showing a significant interest in using the power of choice to build demand for cleaner electricity products, and you have all of those numbers. The Clean Air Council has a sustainable energy education program which offers free presentations on electricity customer choice and helps consumers made educated purchasing decisions, and we found through those presentations that there's a large interest in choosing based on environmental impact. And I emphasize that this program is ongoing. Clean Air Council offers free presentations to any roomful of people you can put together, so I urge City Council to help us find audiences for this presentation. The Clean Air Council believes the City of Philadelphia should take the following steps: 1. The City should help raise environmental and consumer awareness through PGW and Water Department bill stuffer. 2. City Council members should take Clean Air Council's Clean Power Challenge and 106 5/27/99 LAW & GOV'T - RES. 990209 commit to buying cleaner electricity for their District offices and for their homes, and publicizing those choices will help give confidence to your constituents that it's okay to switch. 3. The City should require a modest level of new clean electricity supply when it shops around for a new supplier, and I'm assuming it will because it's going to save taxpayer money by doing so. With the City's enormous customer load, this commitment will send a signal to renewable energy investors and developers that there is significant customer demand for them to take the risk in building new renewable energy capacity. And, again, by the City shopping around, the public signal sends a message to constituents that it's okay for them too.
And if I may insert at that point, I think the City has a second responsibility. The City almost always--- by "the City," I mean the City administration headed by the mayor, whoever the mayor is, kind of looks at its obligation being soley that of the budget. It 107 5/27/99 LAW & GOV'T - RES. 990209 seems to me that City government has a representative role and the City government ought to be, when it is contracting for itself, ought to be also contracting on behalf of the residents. It ought to say to any company it deals with, We also represent some 500,000 households that use electric energy. We are prepared to make a recommendation, you know, to these people and put it in all of our mailings to the people of Philadelphia that we recommend. And we want that consideration both in the price and in the environmental aspect to enure not only to the benefit of the City government as fiscal unit but to the benefit of all the people. It seems to me that if the City of Philadelphia took its role properly, it would act as a bargaining agent on behalf of all the residents of the City of Philadelphia. It could not compel them to go to any particular supplier, but it would certainly play a large role if the City of Philadelphia said, You know what, because we're in a position to influence so many, we're going to get the rate down to 4 cents a kilowatt hour as a result of our negotiations in 108 5/27/99 LAW & GOV'T - RES. 990209 guaranteeing that we're going to bring with us, you know, or make our best efforts to bring with us large numbers of City residents. And it seems to me that's the appropriate role. We're elected by the residents of Philadelphia not just to worry about the City budget but to also worry about the budget of the people, you know, that have elected us to the office. And whatever we can do to make low-income people live a little bit better with their limited income, I think that's our responsibility to achieve. So I'd just like to add that to your role of what the role of the City ought to be.
I appreciate that. And in fact, I'll jump ahead because this is a point I was going to make later on, that there is a role for the City to do what's called aggregation. Take your idea of recommending a supplier to its residents and actually aggregate the residents, put them in a pool and go out and shop with this large aggregate pool so that residents will be able to get a price that's better, lower than what they can get on their own. Because with the 109 5/27/99 LAW & GOV'T - RES. 990209 increased capacity together, they'll be able to get, through the City, a better price and probably a better environmental benefit.
And the Clean Air Council firmly believes that the City should look at aggregating residents. The City should also look at doing mailings on its own through whatever means that you find appropriate, through constituency mailing lists from City Council or tax lists or mailings or what have you. And put in the type of information that people have been talking about earlier -- comparison of price, a comparison of fuel mix, a comparison of which suppliers are Green E-certified and which are not, and other ways of finding out more information. And I would suggest again that if you'd like information from Clean Air Council on these free presentations that we offer to community groups, we'd be glad to provide you with that type of information to put in a mailing to your constituents. There's one more observation I'd like 110 5/27/99 LAW & GOV'T - RES. 990209 to make, and it refers to some of the issues you brought up about PECO's standing in Philadelphia. Clearly, PECO is a good corporate citizen, as the term goes. But some people might ask if encouraging consumers to switch from PECO would hurt PECO, its employees, or its shareholders. And in the company's own press release of April 27, 1999, just a few days ago, it strongly contradicts that notion. And I'd like to read into the record just some of the highlights, a couple of the sentences from their own press release that show that encouraging customers to switch from PECO really isn't hurting PECO so far, and probably won't. These are quotes. PECO benefits from, quote, a well- balanced settlement, enabling the company to recover more than $5 billion -- that's $5 billion -- in stranded cost.
I think it was an unconscionable decision that was made to compensate PECO for that amount of stranded costs. I'm just inserting that.
It's a done matter, 111 5/27/99 LAW & GOV'T - RES. 990209 but I thought the folks in Pennsylvania were hurt badly by that decision.
And it was a negotiated settlement, and I'm reading it in so that it shows that PECO thought it was a very good beneficial settlement.
Sure. They were only asking for about 7.5 billion. Everybody knew that was inflated maybe a hundred times more than what it ought to have been.
Another quote. A total annual return on common stock of 78 percent, the highest total shareholder return among the nation's largest investor-owned utilities. So 16 that shows that shareholders are doing very well. 17 Quote, new plant acquisition could add 18 3200 megawatts of generating capacity to the 9200 19 the company already owns. So they're doing well, 20 and they're out to expand their generation 21 capacity. 22 Quote, PECO Energy distribution has 23 retained approximately 87 percent of its customers 24 as competition began in Pennsylvania. 25 And, finally, Exelon Energy -- and this 112 5/27/99 LAW & GOV'T - RES. 990209 is very important. Exelon Energy, the company's unregulated affiliate, is now the largest alternative supplier in the state, end quote. So even when customers are switching from PECO, the distribution company, a lot of them are switching to PECO's unregulated affiliate, Exelon. And so -- one more thing about whether or not PECO's being hurt. In an attempt to retain market share, PECO has engaged in questionable ad campaign tactics. Last week, the PUC determined that one particular PECO message violated the PUC's requirements that PECO's message not be in conflict with the PUC's public education message. And in addition, the PUC determined that PECO had not given consumers full and complete information regarding their opportunity to switch suppliers. In the PUC's own words, quote, PECO, in its advertising campaign, has created confusion regarding customer choice. PECO's advertising sent mixed signals concerning customer choice, end quote. Now, unfortunately, the PUC refused to take any action to correct the misinformation widely disseminated by PECO, and so the City of 113 5/27/99 LAW & GOV'T - RES. 990209 Philadelphia would be doing its residents and businesses a service by helping to provide them with accurate information to let them know that, in fact, switching is okay and that they can reap environmental and economic benefits from switching.
In conclusion, the Council strongly urges the City of Philadelphia to actively promote customer choice by helping to raise public awareness of the economic and environmental benefits of shopping and by entering the marketplace for its own electricity needs as well as those of the residents. And Cleaner Air Council is more than willing to help in any way that we can in working with the City.
We appreciate it and I hope we're going to be in a position to take advantage of that offer. Thank you very much.
Delaware Clean Air Council has been very active in all the 114 5/27/99 LAW & GOV'T - RES. 990209 environmental campaigns that I've participated in in the last years, and they've done a fabulous 4 job. 5 The other Andrew, Andrew Park, is he 6 here? 7 (Andrew Park comes forward.) 8
Would you be good 9 enough to identify yourself for the record and 10 proceed. 11
Welcome to you to too. It's 14 nice to see you again. 15 My name is Andrew Park. I'm the 16 Executive Director of the Center for Lesbians and 17 Gay Civil Rights. 18 I've given you my written testimony and 19 at this point, all the offices have it, so I'm 20 just going to dispense with it, which will cut my time in half hopefully, and get to the point of why I'm here. What I want to do is tell you why we are here to testify on behalf of the lesbian and gay community, why this issue is important to us 115 5/27/99 LAW & GOV'T - RES. 990209 and why we want to see effective implementation of the Electric Choice Program. Each year, Philadelphia celebrates the Gay Pride Festival in June and the National Coming-Out Festival in August. These are two of the largest festivals in the city, and indeed, each of these festivals are celebrated in every major city in this country and in this state. PECO owns the crown lights on top of its corporate headquarters. And this year, the Center for Lesbian and Gay Civil Rights made a request to PECO to announce these events, along with 2,000 other events that they publicize at the top of the crown lights, including mayoral candidates' forums, political issues, National Prayer Week, social issues. PECO said that they would not advertise these events because the word "gay" was too controversial and the words "coming out" were too controversial. Now, many consider this somewhat a trivial issue. But let me tell you why it's an important issue to the lesbian and gay community. Being able to say the word "gay" is an integral part of our identity. For communities of 116 5/27/99 LAW & GOV'T - RES. 990209 color, sometimes your identity is defined in part by the color of your skin. For religious communities, it's defined by maybe conduct of worship. " Coming out is part of the essence of being a gay person in Philadelphia, and the ability to say the word "gay" and to have that word accepted equally is part of achieving equality in the City. So having the word "gay" on the crown lights is a vitally important part to our community and to the individual identities of the people within it. Now, a few years ago, before electric choice, we wouldn't have had many options. But because of electric choice, what we can do is switch power companies. What I'm not talking about is a boycott; what I am talking about is individual lesbian and gay people being able to place their dollar -- and the gay dollar has just as many cents in it as a straight dollar. Being 117 5/27/99 LAW & GOV'T - RES. 990209 able to please that dollar where they want to go. And so we've launched a campaign to inform people that companies like Green Mountain Energy, like Edison Source offer domestic partnership benefits to their employees nationwide; PECO does not. In fact, PECO's nondiscrimination policy does not protect gay people outside the limits of Philadelphia. Therefore, the Power Team Division, located in King of Prussia, does not have a requirement that prohibits it from firing its employees if they're gay. We are asking individual members of the lesbian and gay community to consider switching away from PECO because each of them can decide how they want to associate their dollars. We couldn't have done this now but the Pennsylvania Electric Choice Program is now our method of protest. And an effective electric choice program will be able to allow people to respond to this electric company in doing what electric companies rarely do: decide whether a gay dollar is more or less valuable than a straight dollar. It's an unusual thing for a corporation 118 5/27/99 LAW & GOV'T - RES. 990209 to do that, and it makes no sense, but the Electric Choice Program allows individual lesbian and gay consumers and their supporters to respond in kind. One of the things we have heard are difficulties in switching. We have had people call particularly Edison Source to switch from PECO to Edison Source, and PECO not release the customers to Edison Source.
And we'll be pursuing these kinds complaints through Edison Source and any electric company that comes to us through our constituents through complaint to the Pennsylvania Utility Commission. But the bottom line is, we are here to urge you and applaud your efforts and everybody's efforts in this room to strengthen the Pennsylvania Electric Choice Program to give the true power back to the consumers. Thank you.
Thank you very much. I think that gives everybody a very interesting insight, and economic dollars and economic boycotts are certainly one method that has been in existence for a long time to right 119 5/27/99 LAW & GOV'T - RES. 990209 wrongs. And we applaud what you're doing and the activities of your group, and we wish them well.
Since we're creating a record here, I just wanted to add that the Energy Cooperative does offer domestic partner benefits to its employees as well. Is there anybody else that I need to correct the record for? (No response.)
Thank you very much for bringing this important issue to our attention. Stephen Huntoon, Director of Business Development for Connectiv Energy.
Would you be able to answer the question raised by the speaker before us? Connectiv is a utility, is it not?
Does it have a 120 5/27/99 LAW & GOV'T - RES. 990209 policy that includes recognition of domestic partnerships?
We'd be very appreciative if could you could inform us of that. Because, you know, the City has such a policy currently in effect, both as a result of executive order and as a result of an ordinance 11 that was passed by City Council. So that is a matter that this body is concerned with.
And identify yourself for the record, please, and then proceed.
My name is Stephen Huntoon, I'm the Director of Business Development and Regulatory Affairs for Connectiv Energy. We appreciate the opportunity to appear before you all this afternoon. I have a power point presentation that I can make available for Council that summarizes 121 5/27/99 LAW & GOV'T - RES. 990209 the key points of my testimony today. I thought I'd take a quick look back to why choice for customers, and in the case of Southeastern Pennsylvania for the last ten years, that PECO Energy's rates have been above the national average.
Excuse me, would you hold it just a minute. Could the voice be made louder? (Addressing sergeants-at-arms.)
Okay, thanks. For about the last ten years, PECO Energy's rates have been above the national average in an amount that's about $1 billion a year. And most of that extra $1 billion has left the region. PECO has, of course, in its role as a utility, contributed dollars in the form of sponsorships and local projects and other initiatives. But when you add up all of those 122 5/27/99 LAW & GOV'T - RES. 990209 amounts, it doesn't get to 1 percent of that $1 billion that leaves the region in extra costs. So looking back -- and I think Sonny Popowski has alluded to this. In looking over the record and whether regulation has really done a good job for consumers here, the decision was made a couple years ago to try competition.
Let me just ask you about that $1 billion 'cause I must have missed something. Could you just explain how you arrive at that $1 billion figure.
Yeah. The trade association for the electric utility industry in this country, the Edison Electric Institute, provides rate surveys of all of its members. And they calculate average residential rates and they present the average rate paid by a residential customer in each of the utility service territories across the country. You'd make that calculation for each rate class -- residential, commercial, and industrial -- and add up the total, compare it to what the total would be if these classes were paying the national averages, and the difference 123 5/27/99 LAW & GOV'T - RES. 990209 is a billion a year.
No, that's in PECO's service territory. It was $1 billion a year. Now, that was before the 8 percent rate cut that we just got so it's not as much as $1 billion, but for the last 10 years, it has been about $1 billion a year.
I also want to reinforce the point that Andrew Altman alluded to earlier about whether PECO's really hurt by customers that exercise the right to choose and the right to save money. As you all know, PECO was awarded $5 billion in stranded costs allowance. And that 124 5/27/99 LAW & GOV'T - RES. 990209 $5 billion covered them as if every customer of theirs was lost as a sales customer. So to the extent customers do not switch, PECO is actually receiving more money over and above the basis for awarding them stranded costs that made them whole in the first place. So this is not a question about whether PECO's going to be hurt in any way. It's whether customers are going to avail themselves of the opportunity to save the tens of millions or hundreds of millions of dollars that are available for them. I just want to take a quick look at how we've done so far with electric choice but I won't -- don't want to repeat too much of what anyone has said previously so well. Choice is going well in Pennsylvania as a whole, and a lot of people are saving an awful lot of money. But I do I think it's fair to say, as this hearing today illustrates, that residential participation in choice has been disappointing. And I have presented a chart that shows how across the Commonwealth, residential participation is not anywhere near the level the 125 5/27/99 LAW & GOV'T - RES. 990209 participation that it is for the larger customers and that's, I think, is what has been a disappointment for those of us that have been involved in this project for the last couple of years. The other problem I think that we've had has been that wholesale prices have gone up considerably from the time that the stranded costs awards were made. And that's made the available savings less than they otherwise would be, even though the savings are still very significant for customers that wish to choose. I also think that there are a couple of perception issues that have been discussed that I just agree with. I think, to some extent, there's a perception that people have that the time to enroll may have expired; some others that may have the perception that the time to choose a supplier may have expired. Whereas, in fact, everything continues to be open and customers can choose at anytime. And it's also been talked about previously that the marketing campaign that PECO conducted led some people to think that in 126 5/27/99 LAW & GOV'T - RES. 990209 choosing, customers would not get the benefit of the percent rate cut. And they also, the 4 marketing campaign, the safe thing to do was not 5 to do anything, for customers not to save money 6 that was available the them. 7 What are we doing about it? Well, 8 customer and supplier groups are trying to reform the wholesale energy market and also to bring new electric generation into the Mid-Atlantic region that would tend to reduce wholesale prices and increase the amount of savings that will be available to choosing customers. And as you know from earlier today from Commissioner Brownell and from Mr. Cadden, the Commission is continuing its public education campaign, and we strongly support that. Customer and supplier groups have been trying to stop misleading marketing by PECO, but we have been unsuccessful in that regard to date. The Commission recently decided that it did not have jurisdiction to remedy misleading marketing by PECO, which creates an ironic situation where competing suppliers are subject to Commission oversight for misleading information, but the 127 5/27/99 LAW & GOV'T - RES. 990209 incumbent monopoly ironically is not. On the positive side of what's recently happened, the Commission has decided to make the process for next year relatively hassle-free for customers. Customers will not have to do anything, starting this fall and going into next year, if they want the right to choose. And we do view that as a positive. That's going to help.
As far as what the City can do, I would second what's been said by your witnesses already. I think the City can support any or all of the efforts that I've already talked about and helped its citizens save ten of millions of dollars. And, in particular, I agree with what's been said previously that the City can use it's utility bills to educate customers and to make savings information available to its citizens each and every month. So that any time someone has the spirit and moved to choose, they'll have that information readily available or it's going to be in their mailbox within the next couple of weeks and they'll know where to look for it and act on it. So I know the time is short. I really 128 5/27/99 LAW & GOV'T - RES. 990209 appreciate the opportunity to appear before you. And what you can do for your citizens I think would be a great boon for them.
Well, we appreciate your being here. We also think that you ought to take to heart the message from the State representatives from the PUC about increased marketing. You're one of the competing companies, right?
We have invested more to marketing to small customers in the PECO service territory than any other company -- besides the PECO affiliate.
All right. I don't know whether there would be any antitrust implications if the smaller companies got together and decided on a joint marketing campaign. But if your attorneys say that's all right, I think that might be one approach 'cause I just think it's important to see to it that the main supplier, PECO, is not permitted to continue to mislead the people into believing that loyalty to PECO as a company is worth the amount of savings that people are losing. 129 5/27/99 LAW & GOV'T - RES. 990209
Well, there's customers groups and the supplier groups which I can say in that regard, Councilman, are working together to try to stem that problem.
And you'll get us that information on the domestic partnership situation?
Because -- since this matter concerns Philadelphia residents, we're very much interested. Thank you. Chris van de Velde, Manager of the Energy Cooperative Association of Pennsylvania. (Chris van de Velde comes forward.)
Are you a competing company or are you an association? 130 5/27/99 LAW & GOV'T - RES. 990209
We are a competing company. We are an electric supplier and licensed by the Public Utility Commission. And we are at this point the most successful of the aggregation efforts probably in the country.
We are not quite as cheap as Exelon. When they saw our price, they decided to lower theirs yet another mill, which is fine. If we drive them out of business, oh, so be it. It won't happen, of course. They have the deep pockets.
Since I asked the last witness about the domestic partnership policy of their company, could you tell us whether your company has such a policy. That relates to the obtaining of medical benefits.
We are still in the formation stage. I will assure you that as we put our benefits package together for employees, it will have total choice for all members of the workforce. It is, however, a very small workforce but it will not be exclusionary in any respect. 131 5/27/99 LAW & GOV'T - RES. 990209
I'm not going to go back over all of the parts that you've heard already this afternoon. Much of my testimony would have touched on some of that. I want to thank you also for your perseverance here by the hour this afternoon and also your understanding of the importance of this issue to the citizen of Philadelphia. The Philadelphia Inquirer did an editorial, a lead editorial Sunday, I guess, about a month, a month and a half ago pointing out how much effort you at City Council and City leadership have made to reduce the wage tax in this city. And it's a very symbolic and important piece to be doing.
As I said before, we have to end by no later than 4 o'clock. And, therefore, I understand people have been told, properly so, as to the amount of time they would have, but we've really got to reduce the time per 132 5/27/99 LAW & GOV'T - RES. 990209 witness. We'd appreciate it if witnesses would do what this witness said what he's going to do, not repeat points made before.
But I would urge that a witness confine themselves to no more than three to five minutes so that we can hear from everybody that took the time off to be here today.
I'll probably be out of here in about minute and a half.
I just want to draw your attention back to the juxtaposition of the efforts that Council has made in the last few years to try and reduce taxes, particularly the wage tax in this town. And the interesting contrast or reference to that that the Inquirer editorial made pointed out that the amount of savings that the average person in Philadelphia can get is substantially greater out of the electric choice than just out of the wage tax.
So it's very easy. 133 5/27/99 LAW & GOV'T - RES. 990209 If you want to help every constituent you have save $67 a year tomorrow morning, give them one of our contracts.
That's so incredible, you know. That's the message that really has to get out, you know? It's the mayor, the -- all of the mayoral candidates made a huge issue out of lowering a minuscule, a minuscule percentage of the wage tax that does not amount to the amount of money that people would be able to save if they just switched their electrical supplier.
And that's, you know, the Inquirer boards and the Daily News and all of the pundits continuously would say, That's a great thing. This really is an economic benefit, not only for people, but also for business and people who want to come in to the business into the city. And we keep emphasizing the wrong things at times when we try to educate the mass of people in our city, but that's. . .
The second piece. 134 5/27/99 LAW & GOV'T - RES. 990209 There are two things. There would, one, be a bit of advice or a suggestion to the PUC and its representatives that are here today that go to the simplification of the process. They've touched on it, they've made some headway, they've clearly recognized that some of the pieces that were put together last year can be simpler in this coming year. And I love their ads that said, "Where do you think you are, Pennsylvania?" I thought it was very clever. Except that they didn't tell anybody anything. They didn't say what you'd save if you changed or shopped or, you know, found another supplier. They didn't tell you how to go about doing it. They just led you to believe that it was wonderful to live in Pennsylvania, and I agree, but it doesn't get to the issue that we're talking about. So I would urge that the PUC make two specific changes in the ads and in the material they're going to put out in the coming months. First, get specific, put a price list together. Tell people what is happening and where the prices are. PUC can order all of the suppliers to give 135 5/27/99 LAW & GOV'T - RES. 990209 them that data on a monthly basis. They can post that on a Website, they can put it in printed material and make it available on telephone calls, you know. The customer, as you suggested, Councilman Cohen, ought to be able to just sit down for 30 seconds and say, Okay, here's my prices, here's my choices, here's what I want to do. I also agree with the idea that you threw out this afternoon, that it ought to be possible to do it when you get your local bill 14 from your local distribution company, be it PECO, PP&L, GPU, or anybody. I don't think that there's so much load shift, particularly for residential customers, that the suppliers can't keep up with it. The second thing that I would suggest goes to the City and the City Council's opportunity. The City will go out for bid again on its electric. You know, if I really want to be outrageous, I would urge you that you say to somebody, including PECO, If you can't stops false and misleading ads, you can't qualify to bid on 136 5/27/99 LAW & GOV'T - RES. 990209 our supply. That obviously isn't going to happen in the real world. But I would urge that this committee particularly put together a negotiation strategy hearing for City agencies. You do over $80 million worth of buy a year in terms of electricity between the School District, the City, some of the major authorities of this city, and you have a great deal of buying leverage when you go to the marketplace. It seems to me you ought to be able to put together a strategy session before the bidding negotiations process starts that says, What do we want to get out of it, what are the range of things? Are there some environmental issues we'd like to see the bidders address?
May I make a public offer to you and to all companies that are seeking a share of the market?
This committee, address it to me, Councilman David Cohen, Chairman of Law and Government Committee, City Hall, Philadelphia. 137 5/27/99 LAW & GOV'T - RES. 990209 Give me your ideas on what you think ought to be that kind of a strategy. We will study them. I'm suggesting that for all companies, we will try to influence the approach of the City. That may be one method of overcoming the long-standing position that PECO has had. They've always been the big one; everybody else has been a midget when there's been competitive bidding. We'd like to equalize the playing field. And we think that the City might well do better by dealing with some other company than by dealing with PECO. Or if PECO wins, let them win fairly and squarely. I think the point you made about putting an end to their deceptive advertising is also well-placed. And if that's a conclusion that other companies have reached, they also ought to include those kinds of suggestions as well. We thank you very much.
Thank you. Is George DePasquale, President of Action Alliance here? Is there any other 138 5/27/99 LAW & GOV'T - RES. 990209 representative of Action Alliance here? (No response.)
Seeing none. They do a great job. And I would urge everybody to make a special effort to be in touch with that organization because they reach more senior citizens than any other group. Alec Meltzer, Pennsylvania Consumer Action Network, is he here?.
He told he wasn't going to be here, that it was going to be submitted.
There's no one in person. Roger Clark? Is he here? (No response.)
Andrew Frishkoff, Executive Director of Pennsylvania Low-Income Housing Coalition.
Why don't you come 139 5/27/99 LAW & GOV'T - RES. 990209 forward too 'cause you're going to be the next speaker. The time limitation remains, but they're the only speakers I have on my schedule list. If there's anyone else who is not on my list who wishes to be heard, please come and join at the table so that you will follow these two speakers. If not, we'll consider them as the final two speakers today. All right Mr. Frishkoff why don't you go ahead.
Thank you. My name is Andrew Frishkoff. I'm the Executive Director of the Pennsylvania Low-Income Housing Coalition and also a cofounder of our Community Power Program. I'll also try to limit the remarks beyond what we have in writing. Thank you for the opportunity to speak here today on behalf of the Low-Income Housing Coalition, which is the State's largest affordable housing organization, advocacy organization in the state, and also for our Community Power Program. When we saw what was happening with the electric deregulation, we believed that low-income 140 5/27/99 LAW & GOV'T - RES. 990209 people would be excluded for many of the reasons that we heard today -- lack of marketing, lack of information. We created the Community Power Program to try to be an expert shopper.
Could you take the microphone and hold it much closer to you.
We created the Community Power Program to be an expert shopper specifically for residents and owners of subsidized housing, public housing, Section 8 and others who we believed would be the last ones marketed to by any utility companies. But we also opened up the program to CDCs and residential consumers and small businesses who wanted to participate. Unlike the aggregation, which others have talked about, we've tried to do more on a bidding and shopping basis where people don't commit themselves to us but we go out and try to find the best price in all parts of the State. We're statewide. And then allow people to 141 5/27/99 LAW & GOV'T - RES. 990209 participate through our program that way. In this case, our last bidding round targeted Exelon as offering the best prices statewide so that's where we went with last year. And we market their prices to our consumers with our name at the top so they know that we've done a good shopping service. They trust us as a brand. And I want to talk a little bit about that brand piece very briefly. We think that in addition to all of the public service information that we've heard talked about -- stuffers, bill stuffers -- there really needs to be a State effort to require more marketing and participation by the suppliers. We do a fair amount of work in the banking world with the Community Reinvestment Act, and we think there should be a parallel program for electricity deregulation in Pennsylvania where the PUC would require that all participants, suppliers, and generators would need to have a marketing plan that includes geographic and prevents redlining, prevents exclusion of certain customers simply by lack of effort. What we see right now is that while 142 5/27/99 LAW & GOV'T - RES. 990209 some people are worried that every night they're going to have the phone ring with a new electricity offer, low-income people will never have the phone ring. The marketing efforts are, for the most part, going to bypass low-income people and what we need to see is that all suppliers are (unintelligible) for their fair share of the low-income residential market as well as the small-business market. This would, again, parallel the Community Reinvestment Act for banks where banks are required to lend in low- and mod-income neighborhoods and are required to publicly disclose where they've made their loans. We think that that needs to be the second component for State policy.
Disclose where they've made their loans. Every year, banks must disclose that they've made, say, five loans in your census tract, for instance, to various classes of bank customers. And we would like to see the same for 143 5/27/99 LAW & GOV'T - RES. 990209 electricity, that suppliers would have to disclose where they've picked up customers.
Other than the breakdown, which I have trouble with, but I understand that some companies only deal with commercial and/or industrial, maybe some only deal with industrial, I don't know. That there's some companies that exclude residential.
I think that clearly ought to be off-limits. Any that excludes residential, I see no justification for their being able to come in and skim off maybe the cream of the crop as far as heavy users of electric energy are concerned. Are there companies that are excluding residential?
How many of the 88? Do you have any information on that?
I'm not sure if anyone from ECA knows. I believe that it's --
All right. You can come back on at the very end, and I would like you 144 5/27/99 LAW & GOV'T - RES. 990209 to deal with that. It sounds like a very fair proposal that you're making.
And the other piece. You had requested information, what's the rate of participation in Philadelphia, for instance?
Right now, that's not required that utilities disclose that publicly. We would like that information disclosed publicly, not just by service area, but by zip cope, municipality.
Well, I would appreciate it if you would make that request specifically to the Public Utility Commission and send me a copy of your request so that we will know it and we will follow up with the Public Utility Commission to find out what their disposition is. It just always -- we found it always misleading to include statistics for a five-county area. We think Philadelphia's different. No 23 other area has anywhere near the size of low-income families that we have. And frequently, we get a totally wrong picture. I don't know 145 5/27/99 LAW & GOV'T - RES. 990209 whether that applies here or not, but the only way to be sure is to get that information.
I think that's correct. We would also like to echo previous statements supporting the City's exploration of aggregation. New Jersey's deregulation law really encourages municipal aggregation. And there's nothing prohibiting Philadelphia from engaging in some sort of aggregation progress with Philadelphia residents.
Well, we would like to have any knowledge that anyone has of the use of this aggregation principal. I call it "representation," but I kind of like aggregation; it sounds more impressive.
And finally, I think Philadelphia has won additional opportunity. That's problematic but should be explored again. We're one of the few parts of the state where there are two utility brand names that are etched in people's minds -- PECO and PGW. While PGW's first experiment in the electric deregulation seems to have been a failure, they 146 5/27/99 LAW & GOV'T - RES. 990209 really have an opportunity, I think, to attract a large customer base because many people do associate their name with energy. And despite their problems, many people use them if they had a good price. And, secondly, PGW's future clearly is in jeopardy in the long term. If the State deregulates the gas industry, then we will see some subsidies disappear that are currently in place. And if PGW were able to actually generate income for itself on the electricity side in addition to saving customers money, it would be money that could go back into their current subsidy program for low-income and elderly customers. My written testimony goes into more detail, but most of the people made other good points. Thanks.
Mr. Small, move the microphone as closely to you as possible, and identify yourself for the record.
My name's Robert Small, and 147 5/27/99 LAW & GOV'T - RES. 990209 I'm not with any organization, okay? I'm just testifying as a consumer.
Well, okay, I don't actually live in the city; I live in Delaware County, but I work in the city.
This is about PECO. I began what I call the long tortuous journey to what's becoming PECO-free as soon as it was announced so that I could apply for it. Through January and February of 1998, I happened to be home on medical leave, so I would call PECO every day to find out what was happening with my application. Eventually, I realized I needed to contact the PUC, which I did, which led to this decision in March of '98. However, even after the decision, it had little effect. And after almost a year, a number of phone calls, letters, whatever, which I didn't bring all of them -- just these. 148 5/27/99 LAW & GOV'T - RES. 990209 Finally, in January of 1999, the issue was finally resolved. But it took me almost a year and a half from the time I first inquired. And at that point, I began to wonder whether the issue would ever be resolved and whether a person who couldn't call in on a daily basis, which is a lot of working people, etc., and wasn't fully obsessional could ever change electric suppliers. You have to really be obsessed and keep calling. I should also add that if most of the people involved with PECO whom I happened to deal with on this, and I called people both in my area and in Philadelphia and in Harrisburg. If most of the people have any contact with nuclear items, I'm scared -- really, seriously. And I felt that when I finally left PECO, I had completed a major life victory. In other words, it took me a year and a half from the time I initially applied and having plenty of time to make phone calls. Now, the other part of this is where I work. I work for the state of the Pennsylvania in the Welfare Department. A number of my clients who have gone through the same thing have just 149 5/27/99 LAW & GOV'T - RES. 990209 given up. In other words, most people are not going to call every day, write letters, do faxes, etc., go to the Public Utility Commission after a couple of months. Most people are just going to say, Well, I tried and that's it. So I think that part of doing the outreach is you need to make it -- not just explain to people, Okay, this is how you do it, but you may have to explain to people, Okay, if you apply and three months later, nothing's happened, then you need to go to the PUC.
I had gone through PECO and I had applied through Connectiv at the time.
Right. In other words, they had said, You're in a group that can transfer. We were in --