June 7, 2006 · 2nd Floor, 4595 Canada Way, Burnaby BC, V5G 1J9 p: 604 299-0378 x 862 e: [email protected] lw/usw June 7, 2006 British Columbia Utilities Commission Sixth Floor,

2nd Floor, 4595 Canada Way, Burnaby BC, V5G 1J9 p: 604 299-0378 x 862 e: [email protected]

www.cope378.ca lw/usw

June 7, 2006 British Columbia Utilities Commission Sixth Floor, 900 Howe Street Vancouver, BC V6Z 2N3 Attention: Mr. Rob Pellatt, Commission Secretary Dear Mr. Pellatt, Re: Terasen Gas Inc CPCN Commodity Residential Unbundling Project Please find enclosed Information Request to Terasen Gas submitted by the Canadian Office & Professional Employees Union local 378 (COPE 378). Should you require additional information, please contact the undersigned at 604-299-0378 extension 862. Your truly, Lori Winstanley Communications Director COPE 378

C12-2

bharvey

TGI-CRUP



1.0 Reference: Recovery of program costs from residential customers (p.4, p.6) 1.1 Program implementation costs are to be recovered from residential customers who have access to the program, and ongoing operating costs from Gas Marketers "where possible". Further, residual operating costs are also to be recovered from residential customers eligible to participate in the program. This contradicts the Guiding Principles for Residential Unbundling (p.27), in which it is claimed that "Terasen Gas believes following a cost-causality principle (i.e. user pay system), where program costs are recovered from parties who cause program costs, is warranted. These costs should be recovered where possible from both the Gas Marketer enrolling a customer and the enrolled customer." Is Terasen's general goal to recover costs from all eligible residential customers, or from Gas Marketers and enrolled customers only? 1.2 Does Terasen believe that customer value is added by charging customers for program costs they may not be interested in? 1.3 Under either cost recovery plan, will the program cost surcharges be made clear on bill statements (and, if applicable, on Gas Marketer promotional materials)? 2.0 Reference: Project justification (p.5) 2.1 In regards to achieving improved cost effectiveness with Residential Unbundling than can be achieved under the Commercial Unbundling program, Terasen refers to the use of greater automation. Please provide details on the impact of this automation on Terasen employees and their job functions. 3.0 Reference: Overview of unbundling solutions in other jurisdictions (p.14) Terasen indicates that none of the utilities or regulators’ representatives (of Alberta, Manitoba, Ontario) had undertaken research to measure the success of their retail commodity choice programs from the customer’s perspective. The same representatives are said to believe that customers perceived the primary benefit of Unbundling as providing price stability with the possibility of cost savings. 3.1 Would Terasen then agree that the stated benefits to customers are theoretical, or at best anecdotal? 3.2 Please provide research or studies from non-utility or non-regulator sources in these Canadian jurisdictions, or any source from other jurisdictions, which details the number of customers receiving cost savings due to the introduction of unbundling. If



possible, compare cost savings for commercial and residential customers. 4.0 Reference: Primary customer market research (p.18) 4.1 What effects might the timing of the quantitative phase (“a time when the market for natural gas was experiencing price volatility”) have on the survey results? 5.0 Reference: Customer education (from p.21) 5.1 Please specify how the Stable Rate Option provides educational benefits leading to an increased level of understanding of alternative gas commodity offerings. In a time of market change and customer uncertainty, one might expect a third option to increase confusion and make program comparisons more difficult. 5.2 It seems that Terasen’s variety of rate options will lead to customer education which benefits Terasen by advertising its Stable Rate Option as a benchmark for comparison with Gas Marketers’ offerings. As Terasen is employing the principle of cost-causality, and will benefit competitively from advertising its rate options, how will Terasen calculate its financial contribution to the costs of customer education? 5.3 As an overall guideline, does Terasen believe the costs of advertising its rate options should be borne by eligible customers? 6.0 Reference: Project costs (from p.39) Terasen strongly believes that the time has come with the next phase of Unbundling, where rework and integration of revenue accounting and financial reporting processes is required to ensure the successful implementation of Residential Unbundling. 6.1 What impact will the automation, rework, and integration referred to have on the number of workers currently employed by Terasen and the type of work they do? 6.2 Will the development of proposed process and systems changes have positive effects on Terasen’s profitability apart from the effects of the move to Unbundling? 6.3 If Terasen’s streamlining and systems integration helps its overall business, how does Terasen intend to contribute directly to project costs in line with its stated principle of cost-causality?



7.0 Reference: Customer education (from p.56) 7.1 We agree that finding an alternative, more intuitive term for Unbundling (found to be inherently meaningless and too technical) will benefit all parties concerned. 7.2 No mention is made of customer targeting in the customer education process. An AARP study (attached or available at http://www.aarp.org/research/reference/publicopinions/aresearch-import-185-DD81.html) on utility deregulation found poor customer awareness of deregulation, knowledge of electricity and natural gas rates, and awareness of how to find out electricity and natural gas rates. These problems were more significant among older customers and among lower-income customers. We might expect some of these customers, and also non-English speaking customers, to be less literate, less computer-literate, or more likely to be targeted by gas marketers if insufficiently protected. What efforts to target older, lower-income, and non-English speaking customers are being made in Terasen’s customer education? 8.0 Reference: Residential unbundling – building on the commercial unbundling program The residential unbundling design is to have a greater degree of automation in the processing of enrollments, and an increased amount of data per enrollment that will be tracked. 8.1 What assurances can Terasen make about the protection of private data being transferred between Terasen and marketers? 8.2 Who will be directly responsible for the oversight of privacy concerns that emerge? 8.3 Terasen’s implementation and ongoing services contractor, Accenture Inc. (or ABSU) has been implicated in BC privacy act violations both as a management business practise and as a result of security problems (see attached documents). Under the Freedom of Information and Protection of Privacy Act, which applies to Accenture’s work for BC Hydro, Accenture may be fined up to $500 000 per violation. What will Terasen’s liability be, and what are its potential effects on customer rates, in the event of contractor privacy violations of Terasen customer data?

http://www.aarp.org/research/reference/publicopinions/aresearch-import-185-DD81.html

http://www.aarp.org/research/reference/publicopinions/aresearch-import-185-DD81.html



9.0 Reference: Nature of the commodity unbundling service (p.34) 9.1 Terasen will be responsible for midstream resources including contracting and managing transportation and storage requirements and providing balancing and peaking services. Does Terasen then hold all responsibility for customer-level emergency system failure? 9.2 In the event of an emergency (i.e., an area loses gas service), how will customer service restoration be prioritized? Will Terasen customers have their service restored before marketer customers?

Public Opinions Understanding Household Energy Use: Consumer Awareness and Knowledge of Electric Utility Restructuring Research Report Kellie Kim-Sung, AARP Public Policy Institute Christopher Baker, AARP Public Policy Institute November 2002

Table of Contents:

Introduction

Methodology

Findings and Results

Non-participants

Summary

Introduction Historically, electric utilities have had exclusive control of the generation, transmission, and distribution of the nation's electricity. That is, the utilities have provided the power generated at the plant and the transmission or delivery of that power to community wires and poles that distribute or carry the electricity to a customer's home. Under this monopoly system, utilities have been obligated to provide all interested customers with reliable service at terms, conditions, and prices established by government regulators.

In the hope of encouraging lower prices, higher service quality, and greater innovation, some policymakers have sought to restructure the utility industry by moving away from the traditional

regulated monopoly model.1 A primary goal of electric restructuring, also known as electric deregulation, is to give consumers the opportunity and responsibility to select their suppliers of electricity from a range of competing, unregulated suppliers. This change opens the generation of electricity to competition but leaves the transmission and distribution of electric power under regulatory control.

The extent to which individual consumers will benefit from restructuring depends, in large measure, on their awareness of the

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changing regulatory environment, their knowledge of essential information such as price per kilowatt-hour, their understanding of

how to use the information available to them,2 and, of course, the actual availability of alternative electricity providers. The findings from a national survey of adult energy bill payers commissioned by the AARP Public Policy Institute provide some insight into consumer awareness and knowledge of these issues.

Respondents to the survey were asked an array of questions related to their use of energy, household energy expenditures, and awareness of and participation in restructured utility markets. This data digest is the first in a series of reports on household energy use based on the results of AARP's national survey of energy bill payers.

Methodology A nationally representative sample of 3,076 respondents participated in the survey from the population of adult energy bill payers living in households in the continental United States. The interview questionnaire was developed by AARP and revised by Princeton Survey Research Associates based on the pre-test results in collaboration with AARP. Telephone interviews were conducted in English by Princeton Data Sources, LLC from October 23 to November 29, 2001.

All statistical results were weighted to correct for the disproportionate sampling design and for any systematic non-

response that could bias results.3 The margin of sampling error for the complete set of weighted data was ± two percent.

Top of Page Findings and Results Awareness of Electric Deregulation4

Nearly three out of four electricity bill payers (74 percent) living in

restructuring active5 and restructuring suspended6 states (hereafter known as restructuring states) reported that they had heard about electric deregulation, compared to 61 percent of all electricity bill payers in the nation. Of those bill payers in restructuring states who had heard about deregulation in general, 81 percent were aware that deregulation was taking place in their own states of residence.

Age. In restructuring states, bill payers over 65 years of age were the least likely to have heard about deregulation. Sixty-seven percent of bill payers age 65 and older, compared to 78 percent of bill payers between ages 35 and 49 and 81 percent of bill payers

ages 50 through 64, had heard about deregulation7 (see Figure 1).



Income. Disparities in electric deregulation awareness were

statistically significant between low- and high-income8 bill payers living in restructuring states. Low-income bill payers (52 percent) were four times more likely than high-income bill payers (13 percent) to report that they had never heard of electric

deregulation9 (see Figure 2).

Top of Page



Knowledge of Per Unit Price for Energy10 One of the most important factors that consumers consider in choosing an energy supplier is price. Standardized price information (for example, price per kilowatt-hour for electricity) is critical to making accurate cost comparisons and deciding between an established company and a new one.

Among electricity and natural gas bill payers in all states, just one in 10 reported that they knew how much they paid per kilowatt-hour for electricity (nine percent) or per therm for natural gas (10 percent). In contrast, respondents who used heating oil as the primary fuel to heat their homes displayed a much higher degree of knowledge on this question. More than 70 percent of all heating oil users said that they knew how much they had paid per gallon for heating oil (see Figure 3).

In restructuring states, only one in 10 bill payers (10 percent) knew how much they had paid per kilowatt-hour for electricity. However, 80 percent of those who did not know reported that they knew how to find out the unit price.

Age. In restructuring states, bill payers age 65 and older (nine percent) were less likely to report knowing their per kilowatt-hour price than bill payers between ages 35 and 49 (11 percent) or

those between ages 18 through 34 (13 percent).11 Disparities in knowledge of how to find out the per-unit price of electricity were even more significantly associated with age. Older bill payers (11 percent) were almost twice as likely as bill payers between ages 35 and 49 (six percent) or those between ages 50 through 64 (six percent) to report that they did not know how to find out their per-

unit price for electricity.12

Income. In restructuring states, nearly twice as many high-



income bill payers (13 percent) as low-income bill payers (seven percent) reported that they knew the per kilowatt-hour price they

paid for electricity.13 Although more than 90 percent of bill payers reported that they knew how to find out the per-unit electricity price, low-income bill payers (19 percent) were about four times more likely than high-income bill payers (five percent) to say that they did not know how to find out their per kilowatt-hour electricity

price14 (see Figure 4).

Top of Page Participation in Restructured Utility Markets15 Only six percent of all electricity bill payers living in states where

they were permitted to choose their own electricity providers16 reported that they had actually chosen a provider other than their local utility. And 12 percent reported that they had thought about switching to other providers, although they had not actually done so.

Age. Electricity bill payers age 65 and older (18 percent) were less likely to report that they had either switched to other providers or at least thought about selecting other providers, compared to 23 percent of bill payers between ages 50 and 64 and 20 percent of

bill payers between ages 35 through 49.17

Income. Bill payers from high-income households (22 percent) were about 1.4 times more likely than their counterparts from low-income households (16 percent) to say that they had either chosen

or thought about selecting other electricity providers.18

Non-participants



More than eight in 10 energy bill payers (82 percent) in restructuring active states reported that they neither had chosen nor thought about choosing an alternative electricity provider. The responses of these non-participating bill payers, however, revealed inherent differences with regard to their awareness of options to choose their own providers of electricity.

Among the bill payers who reported that they neither had chosen nor had thought about choosing other electricity providers, almost three in four (72 percent) said that they had no alternative to their local utility provider or were not sure of any alternatives (see Figure 5).

Summary The extent to which consumers benefit from competition in the electric utility industry depends significantly on whether they are aware of the restructuring process, have options among electricity providers from which to choose, and know basic information about the price of their electricity.

Findings from this survey suggest that in restructuring states:

Most consumers, and particularly high-income consumers, have heard about deregulation. More than half of low-income consumers have never heard of electricity deregulation.



Most consumers have neither chosen nor thought about choosing another electricity provider. Among these non-participants, most say they have no alternative to their local utility provider or are not sure of any alternatives. The vast majority of consumers do not know how much they pay per kilowatt-hour for electricity, information that is critical to making accurate cost comparisons and deciding between an established company and a new one. Older and low-income consumers are the least likely to know how to find out their per kilowatt-hour electricity price.

Top of Page

Footnotes

1 Since 1996, 24 states and the District of Columbia have either enacted enabling legislation or issued regulatory orders to implement electric restructuring. In 16 of these states and the District of Columbia, some or all residential consumers are permitted to choose among suppliers of electricity (sometimes referred to as "retail access"). The eight remaining states do not currently allow consumers to choose their own supplier of generation energy services. Seven of these eight states have decided to delay the restructuring process or the implementation of their retail access programs, while California has suspended its retail access program. 2 See Iowa Utilities Board, Docket No. NOI-95-1, Customer Education: Emerging Competition in the Electric Industry, a staff report filed March 1999. 3 Weights were computed through a two-stage procedure, which corrected for the oversampling of older bill payer households and aligned demographic characteristics of samples with those of the population, respectively. The weighted total, on which all statistical analyses were based, is 6,036. 4 Awareness of electric deregulation includes all electricity bill payers living in restructuring active states as defined in Footnote 5 (N=3,163). 5 "Restructuring active states" refers to states that have either enacted enabling legislation or issued a regulatory order to implement retail access, which allows customers to choose their own suppliers of generation energy services (N=3,163). See the Energy Information Administration's (EIA) Status of State Electric Industry Restructuring Activity for a list of active states, available at http://www.eia.doe.gov/cneaf/electricity/chg_str/regmap.html (accessed June 3, 2002). Note: Oregon is listed on EIA's website as active, but is not included here because the law only allows access



for non-residential customers. 6 California suspended retail access on September 20, 2001 (N=643). 7 x2 (6, N=3,019)=61.16, p <.001

The probability that the disparities could have occurred by chance, as noted with p-value, is less than 0.001, or 0.1 percent (p<.001). This p-value, or probability, is less than the significance level (or alpha level) of .001, which is far more conservative than the commonly used alpha level of .05. 8 This report defines households with incomes at or below $20,000 before taxes for 2000 as low income, and households with incomes at or above $75,000 before taxes for 2000 as high income. Income was reported in ranges rather than in discrete dollar amounts for this survey. These definitions of low and high income were selected because respondents with annual incomes of less than $20,000 (19 percent) and those with annual incomes of more than $75,000 (22 percent) accounted for comparable shares of respondents at opposite ends of the income distribution. 9 x2 (2, N=1,073)=196.87, p <.001 10 In this report, knowledge refers to knowing how to find out per unit price as well as actually knowing per unit price. Respondents living in all restructuring states, as defined by this report, were included in this analysis (N=3,163). 11 x2 (3, N=3,028)=10.51, p <.05 12 x2 (3, N=2,728)=60.97, p <.001 13 x2 (1, N=1,071)=8.76, p <.01 14 x2 (1, N=962)=44.57, p <.001 15 Only the bill payers living in states where deregulation was currently active at the time of the survey were included in this analysis of participation (see Footnote 16). Although questions on participation were asked only of those who reported that they were aware of the options to select their own utility providers (n=900) during actual interviews, this report includes respondents who were not aware of such options (n=903) and who were not sure about such options (n=389) in this analysis in an attempt to incorporate all respondents (N=2,191) who could have participated in the restructured utility market had they known the availability of such options. 16 Restructuring became effective as of January 2002 in three states—Michigan, Texas, and Virginia—and as of May 2002 in the state of Illinois. Since the survey was conducted from October 23 to November 29, 2001, bill payers from these four states were excluded from the analysis of participation (N=2,191). 17 x2 (12, N=2,137)=50.53, p <.001 18 x2 (4, N=771)=20.64, p <.001

Acknowledgments

The authors would like to thank Meg Power of Economic Opportunity Studies for her very helpful comments on this paper.



The authors also thank the staff from AARP's Knowledge Management, including Jeffrey Love, Anita Ritter, and Catherine Steele, for their assistance in developing the survey questionnaire.

Written by Kellie K. Kim-Sung and Christopher A. Baker, AARP Public Policy Institute November 2002 ©2002 AARP May be copied only for noncommercial purposes and with attribution; permission required for all other purposes. Public Policy Institute, AARP, 601 E Street, NW, Washington, DC 20049

Pub ID: DD81

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Our File No. ABSBC/GREV/06-0031 BCH/GREV/06-0046

May 10, 2006 Via Fax: 604-623-4283 Mr. Bob Elton CEO & President BC Hydro and Power Authority 18th Fl., 333 Dunsmuir Street Vancouver, BC V6B 5R3 Dear Mr. Elton: We write regarding our concerns about alleged failures by Accenture Business Services of BC LLP and/or Accenture Business Services General Partnership Inc. (“Accenture”) to protect information belonging to the BC Hydro and Power Authority (“BC Hydro”) and in particular, to protect information regarding BC Hydro employees who were transferred to Accenture under its contract to perform services for Hydro. These allegations include:

• An allegation that Accenture maintains lax privacy standards, such as those which allowed personal employee information to be stored in a non-encrypted format on a portable laptop computer, which was subsequently stolen from Accenture’s Vancouver offices.

• Accenture’s own admission that it stores employee information outside of

Canada and its assertion that it intends to continue to do so.

• Concerns expressed by employees that Accenture has no policies in place for the protection of privacy, or that if it does, neither management or employees have any familiarity with those policies.

• Concerns raised by Accenture employees that BC Hydro data is frequently

released outside of Canada, without safeguards to ensure compliance with BC privacy legislation.

BC Hydro has made it clear that they are concerned about Accenture’s alleged failure to protect information belonging to them. This includes information regarding BC Hydro employees who were transferred to Accenture as well as the most recent complaint to the Privacy Commissioner concerning BC Hydro data being frequently released outside of Canada. BC Hydro is committed to working with the Office of the Information and Privacy Commissioner to resolve these problems and COPE is encouraged by BC Hydro’s approach thus far.

Considering that BC Hydro has been fully apprised of these concerns, we urge it to take immediate and effective action to assert its rights and to protect those of its former employees transferred to Accenture under the contracting out agreement. Accordingly, we ask that BC Hydro consider taking the following steps: 1. Initiate formal dispute resolution proceedings against Accenture under the

Master Services Agreement and/or initiate proceedings against Accenture in BC Supreme Court for breach of contract;

2. Ask for the return of its records until such time that Accenture can ensure

compliance with the FOIPPA; 3. Seek prosecution of Accenture and its Directors under the Offence Act for

offences committed under the FOIPPA; and 4. Seek an injunction to return the information in question to Canada and ensure

that there are no further breaches of the FOIPPA while those that have already occurred are being investigated, prosecuted, and arbitrated.

1. Initiate formal dispute resolution proceedings against Accenture under the Master Services Agreement and/or initiate proceedings against Accenture in BC Supreme Court for breach of contract.

In Article IV.4.12(c)(vi) of the Master Services Agreement, Accenture agreed to:

... comply with all requirements of the Freedom of Information Legislation and any applicable policies and directives, and in particular the Guidelines for Data Service Contracts, all to the extent applicable to BCH and to the extent such requirements are made known to ABS Partnership by BCH.

Since Accenture may have breached this provision of the Agreement, we ask that BC Hydro initiate formal dispute resolution proceedings against Accenture, as set out in Schedule 18.2 of that Agreement. (This request is made subject to BC Hydro making a complete unredacted copy of Schedule 18.2 available to COPE forthwith, and COPE agreeing that this is a proper way to proceed.) We also ask that BC Hydro initiate proceedings against Accenture in the BC Supreme Court for breach of contract. 2. Ask for the return of BC Hydro records until Accenture can ensure compliance

with the FOIPPA. We note that under Article IV.4.14(c)(vi) of the Master Services Agreement that although BC Hydro has given custody of its records to Accenture, it has in fact retained control of those records, including control of any personal information regarding customers or BCH employees and their employment with BCH. We further note that under Article 4.11(a) of the Master Transfer Agreement, BC Hydro has retained ownership of the records of its former employees who now work for Accenture, and

that under Article 4.11(c) of that Agreement, Accenture must, upon request, return to BC Hydro all of the records of those employees. Accordingly we ask that BC Hydro request the return of all of the information it has provided to Accenture until Accenture proves that it will take, store, disclose, and access information only in accordance with the FOIPPA.

3. Seek prosecution of Accenture and its Directors under the Offence Act for their breaches of the FOIPPA.

Since Accenture may have contravened the FOIPPA, including Sections 30.1 and 30.4 of that Act, by disclosing, storing, accessing and allowing access to employee information outside of Canada, and would thereby have committed offences under Section 74.1(1) and 74.1(2) of the FOIPPA, we ask that BC Hydro initiate proceedings against Accenture and its Directors under the Offence Act so that the Crown may review Accenture’s conduct.

4. Seek an injunction to return the information in question to Canada and ensure that there are no further breaches of the FOIPPA while those that have already occurred are being investigated, prosecuted, and arbitrated.

Finally, while the alleged offences are being prosecuted, litigation is initiated, the dispute resolution mechanism is being pursued, and other attempts at resolution are being canvassed, we ask that BC Hydro apply for an injunction to ensure the protection of BC Hydro’s records, and the personal information of its customers and former employees in the interim. The injunction sought by BC Hydro should contain the following requirements:

• That all records in Accenture’s possession by virtue of its Service Agreement with Hydro that Accenture has disclosed, or stored outside of Canada, and all duplicates of the same be returned to Canada and stored, accessed and disclosed only in accordance with the FOIPPA pending the outcome of this dispute;

• That Accenture cease and desist immediately from disclosing, storing, accessing or allowing access to any further such information outside of Canada.

We ask that Hydro seek this injunction immediately in order to protect the information at issue while litigation, prosecution and/or arbitration is underway. Yours truly, Gwenne Farrell Acting President, COPE Local 378

GF:kc

Documents

June 7, 2006 · 2nd Floor, 4595 Canada Way, Burnaby BC, V5G 1J9 p: 604 299-0378 x 862 e: [email protected] lw/usw June 7, 2006 British Columbia Utilities Commission Sixth Floor,