Retail energy service providers and marketers in California havea new way of reaching California’s massive collection ofresidential and small business customers. They can buy space onutility billing envelopes.

Under new state regulatory rules, investor-owned energyutilities (IOUs) are opening access to their ubiquitous bills thatare mailed regularly to millions of customers. Southern CaliforniaGas in July will be the first of California’s monopoly utilities tosell space for promoting energy-related products and services.

Messing with utility billing historically has been a contentiousissue. A utility dispute with consumer groups in the 1980s over thebilling space went all the way to the U.S. Supreme Court with theutilities prevailing.

State regulators earlier this year gave the okay for this newuse of the regulated utility billing process, but SoCalGas is thefirst of the major investor-owned utilities to implement a program.SoCalGas is offering these direct mail opportunities on acompetitive bid basis to its unregulated energy companies,following an agreement with the California Public UtilitiesCommission. Eligible bidders will include qualified energy servicescompanies, home safety product companies, home appliancemanufacturers/retailers, commercial/industrial suppliers andcompeting utilities.

“There is supposed to be a process of offering (the space) on anondiscriminatory basis,” said a California Public UtilitiesCommission staff analyst familiar with the issue, noting he wasn’tsurprised the first bid winner was a SoCal affiliate. “It doesn’tsurprise me that SoCal is the first utility to follow through withthis because this was one of their pet issues. They believe theenvelope space belongs to shareholders, and they basically lost onthat issue, but they are jumping on the competitive process.Eventually, the utility will have to make a report (to the CPUC) onwhat they are doing.”

The CPUC staff member said it is likely the other IOUs willoffer the same service under competitive bidding, too.

The first nonutility to submit a winning bid was SoCalGas’affiliate Sempra Energy Solutions, a certified energy serviceprovider, which outbid two other unaffiliated rivals, according toSoCalGas officials. The two competitors were both advertisingagencies representing clients whose products were not appropriatefor the program, said SoCalGas’ Rick Hobbs, consumer marketsmanager.

Bids can be rejected because of either their dollar amount orbecause the type of product or services (the bidders) provide donot meet “the minimum standards” of the gas utility’s CPUC-approvedprogram, said Hobbs, adding that the utility has received “morethan 100 inquiries so far” about possible bidding in the program.

“We expect even more interest as businesses become aware of ourprogram and can include this opportunity in their futureadvertising plans.”

Bidding is conducted three months in advance, so in June, thegas utility was accepting bids for the September billing envelopespace. SoCalGas currently plans to allocate space for at least oneoutside advertiser insert in each of its monthly billings, and itis prepared to offer additional space if it becomes available,depending on utility needs.

In the line-item billing program, commercialbusinesses-including SoCalGas affiliates-selling energy-related orhome safety-related products or services can bill SoCalGascustomers directly with a separate line item on the gas utilitybill. The bidding process for this service began earlier thisspring, and the first line-item billing is expected to begin latethis summer. SoCalGas has committed to only one bid winner eachyear in this program, although there could be more at a later time,Hobbs said.

Only companies already holding billing accounts with SoCalGascustomers are eligible and the billing charge must be a fixedamount due either on a one-time or monthly basis. SoCalGas will notinclude charges that vary from month-to-month except for a finalsettlement. Along with the line item, SoCalGas also will processcustomer payments, telephone calls regarding the line item chargeand remit the funds collected to the business.

“Customers will have the convenience of handling several chargeswith one payment and will only write one check,” Hobbs said. “If acustomer’s payment does not cover the entire amount due, anypartial payment will go first to all gas utility charges, with anybalance prorated on an equal basis between the outside businesses,including the utility affiliates.”

Richard Nemec, Los Angeles

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