Retail energy service providers and marketers now have an addedpotential way to reach into California’s mass market residentialand small business customers by buying part of the utility billingenvelope space. Under new state regulatory rules, investor-ownedenergy utilities (IOUs) are opening access to their ubiquitousbills that are mailed regularly to millions of customers.

Southern California Gas Co. in July will be the first ofCalifornia’s monopoly utilities to sell space for promotingenergy-related products and services.

Messing with utility billing historically has been a volatileissue that was originally triggered by consumer groups in the 1980swanting their consumer information carried with the bills tocounter information utilities were providing. Court challenges wentall the way to the U.S. Supreme Court with the utilitiesprevailing. Today, however, the push is for putting salesinformation with the bills, not consumer education pitches.

SoCalGas has broken new ground by allowing one of itsunregulated affiliates to put marketing messages as envelopestuffers with a million of its 5 million monthly bills startingnext month. SoCal’s captive natural gas utility customers willreceive an insert offering earthquake shut-off valves from one ofits affiliates. And later in the summer, the gas utility will alsosell limited access by outside companies to bill customers forenergy-related and safety-related products or services.

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.

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