BEFORE THE PUBLIC
SERVICE COMMISSION
OF THE STATE OF MISSOURI
Staff of the Missouri
Public Service )
Commission )
)
Complainant, )
)
v. ) File
No. EC-2015-0309
)
Kansas City Power &
Light Company )
)
And )
)
KCP&L Greater Missouri
Operations )
Company )
)
Respondents. )
APPEARANCES
Robert
J. Hack and Roger Steiner, Attorneys at Law, Kansas City Power & Light
Company, 1200 Main – 16th Floor, Kansas City, Missouri 64105, and
James
M. Fischer, Attorney at Law, Fischer & Dority, P.C., 101
Madison, Suite 400, Jefferson City, Missouri 65101.
For Kansas City Power & Light Company and KCP&L
Greater Missouri Operations Company
Kevin
A. Thompson, Chief Staff Counsel, Steven Dottheim,
Chief Deputy Staff Counsel, Whitney Payne, Assistant Staff
Counsel, Marcella Mueth, Assistant Staff Counsel, Jamie
Myers, Assistant Staff Counsel, and Mark Johnson,
Assistant Staff Counsel, 200 Madison Street, Ste. 800, Jefferson City, Missouri
65102-0360.
For the Staff of the Missouri Public Service
Commission.
Tim Opitz, Senior Counsel, and Cydney Mayfield, Deputy Public Counsel, 200 Madison Street,
Suite 650, Jefferson City, Missouri 65102-2230.
For the
Office of the Public Counsel and the Public.
Chief
Regulatory Law Judge: Morris L. Woodruff
REPORT
AND ORDER
Table of Contents
Appearances............................................................................................................................... 1
Procedural History...................................................................................................................... 2
Findings of Fact.......................................................................................................................... 3
Conclusions of Law................................................................................................................
11
Decision ................................................................................................................................... 16
Ordered Paragraphs................................................................................................................. 23
The Missouri Public
Service Commission, having considered all the competent and substantial
evidence upon the whole record, makes the following findings of fact and
conclusions of law. The positions and
arguments of all of the parties have been considered by the Commission in
making this decision. Failure to specifically
address a piece of evidence, position, or argument of any party does not
indicate that the Commission has failed to consider relevant evidence, but
indicates rather that the omitted material was not dispositive of this
decision.
Procedural History
The Commission’s Staff
filed this complaint against Kansas City Power & Light Company (KCP&L)
and KCP&L Greater Missouri Operations Company (GMO) on May 20, 2015,
alleging that KCP&L and GMO’s contractual relationship with Allconnect, Inc. violates several statutes and Commission
regulations. KCP&L and GMO filed a
timely answer on June 22, 2015. The
parties prefiled direct, rebuttal, and surrebuttal testimony, and an evidentiary hearing was held
on January 19 and 20, 2016. The parties
filed initial post-hearing briefs on February 11, 2016, and reply briefs on
February 25, 2016.
Findings
of Fact
1. KCP&L
is a Missouri general business corporation with its principal office and place
of business at 1200 Main Street, Kansas City, Missouri 64105. KCP&L is an “electrical corporation” and
a “public utility” subject to the jurisdiction, supervision and control of the
Commission under Chapters 386 and 393, RSMo 2000.
2. GMO
is a Delaware general business corporation with its principal office and place
of business at 1200 Main Street, Kansas City, Missouri 64105. GMO is an “electrical corporation” and a
“public utility” subject to the jurisdiction, supervision and control of the
Commission under Chapters 386 and 393, RSMo 2000.
2. Both
KCP&L and GMO are wholly-owned subsidiaries of Great Plains Energy, Inc., a
publically-traded Missouri general business corporation and a public utility
holding company, also located at 1200 Main Street, Kansas City, Missouri 64105.
3. KCP&L
and GMO provide retail electric service to areas in Metropolitan Kansas City,
Missouri, and in other areas of western Missouri. Together, they serve 565,000 residential,
commercial, and industrial customers in 36 Missouri counties. KCP&L also has retail and wholesale
service territory in 11 counties in the State of Kansas.
4. Effective
April 30, 2013, Great Plains Energy Services Incorporated (GPES) acting on
behalf of itself and its affiliates, KCP&L and GMO, entered into a Direct
Transfer Service Agreement with Allconnect, Inc.
5. GPES
is also a direct wholly-owned subsidiary of Great Plains Energy, Inc. It is used as a contracting vehicle to
eliminate redundant administrative expense when negotiating duplicate contracts
that would otherwise be required when contracting for goods or services needed
by both KCP&L and GMO. The use of
GPES as a contracting vehicle began in 2008, when Great Plains Energy, Inc.
acquired what would be the GMO system from Aquila.
6. Aside
from signing the contract with Allconnect, GPES has
no other involvement in the transaction.
7. Allconnect is a corporation headquartered in Atlanta,
Georgia. Dwight Scruggs, Senior Vice
President of Client Services and Business Development for Allconnect
testified on behalf of KCPL/GMO. Scruggs
described Allconnect as “a leading multi-channel
marketplace that simplifies the purchase of services for the connected home”. Allconnect does
that by offering its services to customers of major utilities and home service
providers by assisting them in transferring or establishing other household
services such as communication bundles, video, internet, home phone, and home
security through a variety of service providers.
8. Consumers
pay nothing to Allconnect for its services. Rather, Allconnect
is paid by the service providers for whom Allconnect provides
a new customer.
As a result, Allconnect
has a financial incentive to sell services to KCP&L and GMO customers. That also means that Allconnect
sells only the services of the providers with which it has a business
relationship. Not all providers enter into a business
relationship with Allconnect, so customers who use Allconnect’s services may not be aware of all their service
options.
9. Pursuant
to their agreement, KCP&L and GMO transfer certain callers to Allconnect. Allconnect pays a fee to KCP&L and GMO for every call
transferred.
10. In general
terms, when a residential customer of KCP&L or GMO calls their electric
provider to turn on or transfer their electric service to a new residence, the
KCP&L and GMO call center first obtains all the information it needs from
the customer to turn on or transfer the customer’s electric service. After the KCP&L and GMO customer service
representative has obtained the needed information, he or she will determine
whether the call is eligible for transfer to Allconnect.
11. The
KCP&L and GMO customer service representative tells customers that their call
will be transferred to Allconnect, who is to verify
the information provided by the customers before providing them with an order
confirmation number. They are also told Allconnect will offer them additional home services, such
as home phone, internet, cable/satellite, or home security. Their call is then transferred to Allconnect.
12. When
transferring the customer’s call to Allconnect, the
KCP&L and GMO customer service representative also transfers certain
customer-specific information directly to Allconnect. The customer information provided to Allconnect is the customer’s name, service address, start-date
of service, account number and confirmation number. The Allconnect
representative is supposed to verify the accuracy of that information with the
customer
and then may use that information if the customer accepts Allconnect’s
offer of assistance in arranging other services. Customers are not told that their customer
information is being transferred to Allconnect.
13. Although
KCP&L and GMO share the customer-specific information with Allconnect, the companies retain that information in their
own customer information system.
14. The Allconnect representatives are supposed to verify the customer
information and give the customer a confirmation number before attempting to
sell Allconnect’s services to the customer. In actual practice, the Allconnect
representatives sometimes attempt to sell their services to the utilities’
customers before giving them their confirmation number. Staff’s review of 86 customer calls
transferred to Allconnect revealed that approximately
55 percent of those customers either received their confirmation number at the
end of their conversation with Allconnect or never
did receive a confirmation number from Allconnect.
15. The
confirmation number is the tracking source of KCP&L and GMO’s commitment to
transfer or turn on electric service and provides a means for the customer to
communicate with the utility if anything needs to be changed or something goes
wrong on the day the service is to be connected. KCP&L and GMO transfer the confirmation
number to Allconnect along with the customer
information, so the transfer of the customer call to Allconnect
is not needed to get that number to the KCP&L or GMO customer.
16. While
the accuracy of the information taken by the utilities regarding the turn-on or
transfer of electric service is very important, the transfer of callers to Allconnect to verify that information is not necessary. KCP&L and GMO performed that verification
function for themselves for many years before entering into a contract with Allconnect, and every other regulated utility in Missouri,
to the best of Staff’s knowledge, performs that verification function for
itself. In fact, KCP&L and GMO’s own customer
service representatives continue to perform that verification function today, Allconnect is just another verification layer.
17. The
limited value of the verification performed by Allconnect
is shown by the small number of corrections that resulted from that
verification. From 80,741 calls
transferred to Allconnect by KCP&L and GMO
between January and October, 2015, Allconnect
informed KCP&L and GMO of 10,217 “corrections” to its collected customer
data. After reviewing those proposed
“corrections”, KCP&L and GMO actually made only 279 corrections to its
customer data. KCP&L and GMO’s witness, Jean Trueit, conceded that the number of mistakes identified by Allconnect is a small number that does not concern her.
18. Trueit explained that the large number of identified
corrections that do not need to be corrected occurs when Allconnect
sends KCP&L and GMO a file of error corrections each day. Most of the corrections identified by Allconnect do not require correction. For example, Allconnect’s
system spells out the word apartment in an address, while KCP&L and GMO’s
system uses the abbreviation APT; that discrepancy would generate an error
notice.
19. Allconnect uses two transfer models in its dealings with
utilities. In the agent transfer model,
the utility’s customer service representative explains the services offered by Allconnect to the caller and explicitly asks permission
before transferring the call to Allconnect.
20. KCP&L
had a prior contractual relationship with Allconnect in
the period of 2005 to 2007. Under that
contract, the company’s customer service representatives used an agent transfer
model in transferring calls to Allconnect. KCP&L terminated that contract because the
transfer model was not working. It
required KCP&L’s customer service representative to spend too much time
with customers trying to explain the services offered by Allconnect
and resulted in too many customers refusing to be transferred to Allconnect.
21. The
other transfer model is the confirmation model. Under that model, which is the model used by
KCP&L and GMO, the utility customer service representative simply tells the
customer that their call will be transferred to Allconnect
with minimal explanation and no request for permission.
22. Specifically,
the script used by KCP&L and GMO customer service representatives states:
Is there anything else I
can help you with? Ok, Mr/Mrs _______________ Now, I’m
going to transfer you to Allconnect. They will confirm your order to ensure
accuracy and can help you connect or transfer other services to your home. Thank you for calling KCP&L. Please hold while I transfer you now.
23. KCP&L
and GMO witness Jean Trueit testified that from the above
statement, customers are made aware that Allconnect
will provide them with sales options.
She further testified that “[i]f they do not
wish to be transferred they are able to advise the CSR [customer service
representative] of this. The Company CSR
does not force the customer to be transferred to Allconnect”. According to KCP&L and GMO, nine percent
of customers refuse to be transferred to Allconnect.
Nevertheless, in some recorded calls to
which Staff listened as part of its investigation, KCP&L or GMO customers
were transferred to Allconnect despite their
objections.
24. KCP&L
and GMO’s witness, Charles Caisley, who is
KCP&L’s Vice President for Marketing and Public Affairs,
testified that the company is willing to consider changes to the script used by
the customer service representatives to better inform customers about Allconnect and to obtain their consent before their call is
transferred.
25. KCP&L
and GMO have conducted customer satisfaction surveys to determine whether their
customers are satisfied with their experience with Allconnect. Those surveys showed that in 2014,
approximately 43 percent of customers taking the survey reported that the fact
that “your electric utility offered you the opportunity to purchase additional
home services such as phone, internet, and cable all in one call” greatly or
somewhat improved their “impression or perception of KCP&L”. On the other side, 18 percent of the customers
taking the survey responded to that question by saying that their impression or
perception of KCP&L had been greatly or somewhat decreased.
26. KCP&L
and GMO have an adequate number of employees available to handle customer
inquiries, service requests, safety concerns and complaints.
27. If a
KCP&L or GMO customer makes a complaint related to their experience with Allconnect, the KCP&L/GMO customer service
representatives are expected to collect the pertinent information and determine
the nature of the complaint. If the
complaint is about actions by KCP&L/GMO, the KCP&L/GMO customer service
representative will resolve the complaint with the customer. If the KCP&L/GMO employee determines that
the complaint is about Allconnect actions, he or she
will notify Allconnect of the complaint. Allconnect will
attempt to resolve the complaint with the customer. Allconnect then
provides a summary of the complaint resolution to KCP&L/GMO.
28. KCP&L
and GMO account for the revenues received from Allconnect,
as well as the costs associated with its relationship with Allconnect,
“below the line” in non-regulated accounts.
That means that those costs and revenues are not included when the rates
paid by KCP&L and GMO customers for regulated electric service are
determined. In contrast, costs and revenues that are
included when rates for regulated service are calculated are said to be “above
the line”.
29. The
amount of revenue KCP&L and GMO receive from Allconnect
is highly confidential so it will not be included in this order. KCP&L and GMO’s costs associated with the
Allconnect relationship are significantly lower than
the associated revenues,
so the relationship is a source of profit for the utilities, albeit a small
source when compared to the companies’ total annual revenues of $2.3 billion.
30. KCP&L
and GMO indicated a willingness to change the Allconnect
program, including a willingness to move the costs and revenues associated with
that program “above the line,” if directed to do so by the Commission.
Conclusions
of Law
A. KCP&L
and GMO are electrical corporations as that term is defined at Section
386.020(15), RSMo (Supp. 2013). As
electrical corporations, KCP&L and GMO are subject to regulation by this
Commission as described in Chapters 386 and 393, RSMo.
B. The
Commission’s Staff is authorized to file a complaint against KCP&L and GMO
by Section 386.390, RSMo 2000, and by Commission Rule
4 CSR 240-2.070(1).
C. As
the party asserting the affirmative of the issues, Staff, as the complainant,
has the burden of proof.
Application
of Section 393.190.1, RSMo
D. Section
393.190.1, RSMo (Cumm.
Supp. 2013), provides, in part, that:
[n]o … electrical
corporation, … shall hereafter sell, assign, lease, transfer, mortgage or
otherwise dispose of or encumber the whole or any part of its franchise, works
or system, necessary or useful in the performance of its duties to the public,
… without having first secured from the commission an order authorizing it so
to do.
Staff
and Public Counsel contend KCP&L and GMO have violated this statute by
selling specific customer information to Allconnect
without having sought or obtained permission from the Commission.
E. That
statute restricts the utility’s ability to dispose of or encumber any part of
its “franchise, works or system.” A
utility franchise is “no more than local permission to use the public roads and
rights of way in a manner not available to or exercised by the ordinary
citizen.” No one contends that the customer information
that has been sold is a part of the utilities’ “franchise”, so the question
narrows to whether it is part of their “works or system”.
F. Missouri’s
statutes do not define either “works” or “system” in the context of service by
an electric utility. However, the term “electric plant” is defined by Section
386.020(14), RSMo (Cumm.
Supp. 2013) as including:
all real estate, fixtures
and personal property operated, controlled, owned, used or to be used for or in
connection with or to facilitate the generation, transmission, distribution,
sale or furnishing of electricity for light, heat or power; and any conduits,
ducts or other devices, materials, apparatus or property for containing,
holding or carrying conductors used or to be used for the transmission of
electricity for light, heat or power[.]
That
definition includes tangible items of property used to provide electric
service. It does not include intangible
assets such as the customer information KCP&L and GMO have sold to Allconnect.
G. Although
there is no statutory or case law stating that electric “plant”, “works”, and
“system” are synonymous,
that is a reasonable conclusion consistent with the apparent purpose of the
statute to restrict the sale or transfer of a utility’s works or system so as
to protect the physical integrity and the financial viability of the works or
system needed to serve the utility’s customers.
H. The
idea that Missouri’s statutes treat “plant” and “system” as synonymous is
supported by other definitions within section 386.020, RSMo. While that statute defines “electric plant”
and “gas plant” for electric and gas service, it offers definitions of “sewer
system”
and “water system for those types of service.” Although the labels of “plant” and “system”
are placed on the definitions for the different types of service, all the
definitions refer to tangible, physical items of property used by a utility to
serve customers.
I. In
support of their position, Staff and Public Counsel point
to a 1992 Commission decision that found the Commission had power under Section
393.190.1 to require Kansas City Power & Light Company to seek authority from
the Commission before selling sulfur dioxide (SO2) allowances
created under the Clean Air Act Amendments of 1990. In that decision, based on the facts
established in that case, the 1992 Commission did indeed find that a utility’s
“system” describes something broader than its “works”. The Commission concluded that “[a] utility’s
system is the whole of its operations which are used to meet its obligation to
provide service to its customers.” In support of that statement, the 1992 Commission
cited a 1934 Missouri Supreme Court decision, State ex rel. City of St. Louis v. Pub. Serv. Comm’n.
J. A
review of that Supreme Court decision reveals that it concerned the sale of
stock by one utility holding company to another layer of holding company. The 1930s Commission had approved that sale
of stock, finding no detriment to the public. In its decision, the Supreme
Court rejected the City of St. Louis’ contention that public policy required
the Commission to make an affirmative finding that the stock sale was in the
public interest, not just a finding of no detriment. The Supreme Court’s decision has nothing to
do with the definition of a utility’s system and whether such a system is
limited to physical, tangible property.
It does not support the statement for which it was cited. The 1992 Commission cited no other legal
authority for its conclusion that a utility’s “system” was something broader
than its “works” and that intangible SO2 allowances were part of
that “system”.
Application
of Commission Rule 4 CSR 240-20.015(2)(C)
K. Commission
Rule 4 CSR 240-20.015 generally applies to affiliate transactions by electric
utilities. A provision of that rule
defines an “affiliated entity” as one that is “… controlled by, or is under
common control with the regulated electrical corporation.” By terms of that definition, GPES is an
affiliate of KCP&L and GMO; Allconnect is not.
L. The
affiliate transaction rule defines an affiliate transaction as one “… between a
regulated electrical corporation and an affiliated entity …” including “…all
transactions between any unregulated business operation of a regulated
electrical corporation and the regulated business operations of a electrical corporation.”
M. Commission
Rule 4 CSR 240-20.015(2)(C) provides “[s]pecific
customer information shall be made available to affiliated or unaffiliated
entities only upon consent of the customer or as otherwise provided by law or
commission rules or orders. …” Although
this provision is included in the affiliate transaction rule, there is nothing
in the rule that limits its restrictions on sharing customer information to
affiliate transactions.
Application
of Commission Rule 4 CSR 240-13.040(2)(A)
N. Chapter
13 of the Commission’s rules concerns the service and billing practices of
Missouri’s regulated utilities.
Commission Rule 4 CSR 240-13.040(2)(A) provides: “At all times during
normal business hours qualified personnel shall be available and prepared to
receive and respond to all customer inquiries, service request, safety concerns
and complaints. …”
Financial
Penalties
O. Section
386.570, RSMo 2000 provides that public utilities that
violate any provision of statute, rule, or order of the Commission are subject
to a penalty of not less than one hundred dollars, nor more than two thousand
dollars for each offense.
P. Section
386.600, RSMo 2000 authorizes the Commission to file
an action in any circuit court to recover such penalty.
Authority to Order Changes to Transfer Script and Accounting Practices
Q. Section
393.130.1, RSMo (Cumm.
Supp. 2013) requires every electrical corporation to “furnish and provide such
service instrumentalities and facilities as shall be safe and adequate and in
all respects just and reasonable.”
Further, Section 393.140(5), RSMo 2000 provides
in relevant part:
[w]henever
the commission shall be of the opinion, after a hearing had upon its own motion
or upon complaint, that … the acts or regulations of any such persons or
corporations are unjust, unreasonable, unjustly discriminatory or unduly
preferential or in any wise in violation of any provision of law, the
commission shall determine and prescribe … the just and reasonable acts and
regulations to be done and observed.
R. Section
393.140(4), RSMo 2000 give
the Commission authority to “prescribe by order, forms of accounts, records and
memoranda to be kept by such persons and corporations.”
Decision
Based on its findings of fact and conclusions of
law, the Commission has made the following decision. In describing its decision, the Commission
will respond to the list of issues set forth by the parties before the
evidentiary hearing.
I.
Does the
evidence establish that, through the relationship with Allconnect,
the Company has violated section 393.190.1 RSMo?
Section 393.190.1, RSMo
requires regulated utilities to seek authority from the Commission before
disposing of, or encumbering any part of its “franchise, works, or system,
necessary or useful in the performance of its duties to the public”. KCP&L and GMO have not violated that statute.
The purpose of the statute is to ensure that a
regulated utility does not impair its ability to provide service to the public
by selling or encumbering (because of the possibility the utility could lose
control of the property if the incurred debt is not paid) the property it needs
to serve the public. KCP&L and GMO’s
transfer of customer information does not fall within the strictures of the
statute for two reasons.
First, the transfer of customer information to Allconnect that occurs under the contract is just a sharing
of that information. KCP&L and GMO
retain that information and can continue to use it to perform their duties to
the public. The statute’s concern to
protect the integrity of the utility’s means of serving the public is not affected
by that transaction. Thus, the
Commission determines there is no disposal or encumbering.
Second, customer information is not physical,
tangible property that generally falls within the statutory definition of
“plant”, “works”, and “system”, the disposition of which is restricted by the
statute. Staff and Public Counsel point
to the Commission’s 1992 Kansas City
Power & Light Company decision that concluded, under the facts
established in that case, that federal SO2 allowances, were a part
of the utility’s “plant”, “works” or “system”, such as to bring them within the
disposition restrictions of the statute.
This Commission has concluded that part of the legal basis for the 1992
Commission’s decision is questionable, but this Commission has not been asked
to set aside that earlier decision and will not do so. In the future, the Commission may once again
examine the circumstances presented in a particular case and conclude, as was
done in 1992, that some item of intangible, non-physical property is a part of
a utility’s “plant”, “works” or “system.”
But that conclusion is not appropriate in the circumstances described in
Staff’s complaint. The Commission finds
and concludes that KCP&L and GMO have not violated section 393.190.1 RSMo.
II.
Does the
evidence establish that, through the relationship with Allconnect,
the Company has violated 4 CSR 240-20.015(2)(C)?
Staff and Public Counsel assert that KCP&L and
GMO have violated the Commission’s affiliate transaction rule by transferring
customer information to Allconnect without having
obtained the consent of those customers.
Despite Staff and Public Counsel’s claims to the contrary, KCP&L and
GMO’s transaction with Allconnect is not a
transaction between affiliates. In that
transaction, Allconnect pays money to KCP&L and
GMO. In return, the utilities transfer
certain customer calls and related customer information to Allconnect. GPES, which is an affiliate of KCP&L and
GMO, signed the contract with Allconnect as a
contracting vehicle on behalf of KCP&L and GMO, but GPES is not otherwise
involved in the transaction. GPES’
signature on the contract does not turn KCP&L and GMO’s transaction with a
wholly unaffiliated Allconnect into an affiliate
transaction.
Nevertheless, KCP&L and GMO have violated 4 CSR
240-20.015(2)(C).
That regulation requires that customer information be made available to
“affiliated or unaffiliated entities” only with the consent of the customer, or
as otherwise allowed by Commission rules or orders. The plain language of the rule says that it
applies equally to the transfer of customer information to either affiliated or unaffiliated entities. The fact that the provision is found in a
rule that otherwise regards affiliated transactions, does not change the clear
language of the rule. That rule applies
even though KCP&L and GMO’s transaction with Allconnect
is not an affiliate transaction.
KCP&L and GMO argue that the rule’s restriction
on the transfer of customer information should not apply to its transaction
with Allconnect because in many other circumstances,
utilities transfer customer information to other entities without having first
obtained consent from the customers. For
example, a utility may engage the services of an another company to collect
past-due accounts, read meters, or operate a customer call center on behalf of
the utility. Customer information may
routinely be transferred to those entities without the consent or knowledge of
the utility’s customer.
However, those situations differ from the transaction
with Allconnect in that such contractual
relationships are designed to effectuate some aspect of the utility’s obligation
to provide safe and adequate service to its customers. In contrast, the transfer of customer
information to Allconnect does not serve any utility-service
related purpose. The transaction is
simply designed to deliver customer information to a third-party that wants to
sell an unrelated service to the utility’s customer.
KCP&L and GMO attempt to mask the true nature
of the transaction by having Allconnect “confirm” the
accuracy of the customer information already taken by KCP&L and GMO’s
customer service representatives. The
evidence established that the KCP&L and GMO customer service
representatives are capable of “confirming” the accuracy of the information
they obtain from their customers. They
did so for many years before KCP&L and GMO entered into their contract with
Allconnect and are capable of doing so now. Rather, the confirmation function performed
by Allconnect is a pretext to attempt to avoid
regulatory problems of the type represented by Staff’s complaint. Indeed, the confirmation function serves as a
marketing hook to discourage utility customers from dropping off the line when
their call is transferred to Allconnect.
The Commission finds and concludes that KCP&L
and GMO have made customer-specific information available to Allconnect without the consent of their customers in
violation of 4 CSR 240-20.015(2)(C).
III.
Does the
evidence establish that, through the relationship with Allconnect,
the Company has violated 4 CSR 240-13.040(2)(A)?
Commission Rule 4 CSR 240-13.040(2)(A) requires a utility to have qualified personnel
available to respond to customer inquiries and complaints. The evidence established that KCP&L and
GMO have adequate numbers of trained customer service representative available
to serve the needs of their customers.
Staff and Public Counsel did not question that KCP&L and GMO have
such representative available. Rather
they are concerned that some customer complaints about their treatment by Allconnect are transferred to Allconnect
for resolution rather than being resolved by the KCP&L and GMO customer
service representatives. The Commission
shares Staff and Public Counsel’s concerns.
It is vital that KCP&L and GMO’s customer service representatives
respond and resolve any complaints related to the transfer of a utility
customer to Allconnect. Such complaints must not be transferred to Allconnect. However,
if the customer calls KCP&L or GMO to complain about the service they
received from Allconnect after the call was
transferred, it is appropriate for the utilities to pass that complaint along
to Allconnect for resolution, so long as the
utilities continue to monitor the complaint to ensure that their customers are
treated fairly.
Despite those concerns, the Commission finds and
concludes that KCP&L and GMO have qualified personnel available to respond
to complaints and have not violated Commission Rule 4 CSR 240-13.040(2)(A).
The Commission has found and concluded that
KCP&L and GMO have violated Commission Rule 4 CSR 240-20.015(2)(C) by transferring customer information to Allconnect without having obtained the consent of those
customers. The question then becomes,
does the Commission wish to exercise its discretion to direct its General
Counsel to file an action in circuit court to seek financial penalties against
KCP&L and GMO?
The Commission will not do so. While KCP&L and GMO have violated a
Commission Rule by transferring customer information to Allconnect
without the customers consent, that action does not convince the Commission
that penalties are appropriate. There is
nothing inherently wrong with the service that Allconnect
is offering to KCP&L and GMO’s customers.
It is a service that many customers seem to appreciate, based on the
favorable reaction measured by the customer surveys reported by the utilities. But not all customers appreciate the offer,
and if KCP&L and GMO wish to continue offering that service, they must
obtain customer consent before transferring their calls and customer
information to Allconnect.
In addition to the issues identified by the parties
before the hearing, the following issues developed during the course of the
hearing.
V.
Should the
Commission order KCP&L and GMO to end their relationship with Allconnect as a matter of good public policy even if that
relationship does not violate any statute, rule, or Commission order?
This question was raised by the Commission as it
heard the evidence and considered whether the relationship with Allconnect was in violation of any statute or Commission
Rule. Having found and concluded that
KCP&L and GMO have violated a Commission Rule, the question of whether the
relationship should be ended even if it does not violate any rule has been
effectively eliminated. Nevertheless, having
found that KCP&L and GMO’s current practices with regard to transferring
customers to Allconnect are unjust and unreasonable, the
Commission will presecribe
the changes KCP&L and GMO must make to bring the Allconnect
relationship into compliance with the Commission’s rule, as it is authorized to
do by Section 393.140(5), RSMo 2000.
If KCP&L and GMO wish to continue their
contractual relationship with Allconnect by
transferring customer calls and related information, they must ensure that
customers understand that they have the option to transfer to Allconnect; that they can complete their business with
KCP&L or GMO without having to transfer to Allconnect;
and that Allconnect is a third-party that offers
services separate and apart from the services offered by the utility. KCP&L and GMO will need to modify the
script used by their customer service representatives regarding the proposed
transfer to Allconnect to obtain the informed
customer consent.
In addition to changing the transfer script,
KCP&L and GMO will also need to modify how they account for the revenues
and expenses associated with the Allconnect
relationship. That leads to the final
issue.
VI.
Should
KCP&L and GMO be ordered to account for the Allconnect
revenue and expenses “above the line”?
KCP&L and GMO currently account for revenues
and expenses associated with the Allconnect
relationship “below the line”; meaning they are treated as non-regulated
revenue and expense that is not considered by the Commission when the
companies’ rates are set. That also
means the companies’ shareholders bear the risk of any associated loss and keep
any resulting profit. The companies
indicated at the hearing that they are willing to modify their accounting
practices to bring the Allconnect revenue and
expenses “above the line”, treating it as regulated revenue and expense, if the
Commission directs them to do so.
The Commission finds and concludes that the revenue
and expense associated with the Allconnect
relationship should be treated as regulated revenue and expense and brought
“above the line”. While the services Allconnect offers are not regulated by this Commission,
KCP&L and GMO’s relationship with its customers is regulated. Further, the customer information and
contacts that KCP&L and GMO are selling to Allconnect
are developed through that regulated relationship. Finally, moving the revenue and expenses
above the line reduces the impression that KCP&L and GMO are selling their
customer’s information to increase their unregulated profits.
THE COMMISSION ORDERS
THAT:
1. Kansas City Power & Light Company and KCP&L
Greater Missouri Operations Company shall immediately cease violating
Commission Rule 4 CSR 240-20.015(2)(C).
2. If Kansas City Power & Light
Company and KCP&L Greater Missouri Operations Company wish to continue
their contractual relationship with Allconnect, Inc.
they shall file for Commission approval a modified customer service
representative script to ensure that customers give their informed consent
before their calls and related information are transferred to Allconnect.
3. Effective with the date of this order,
Kansas City Power & Light Company and KCP&L Greater Missouri Operations
Company shall treat all revenues and expenses associated with its contractual
relationship with Allconnect, Inc. “above the line”
as regulated revenues and expenses.
4. This
report and order shall become effective on May 27, 2016.
BY THE COMMISSION
Morris
L. Woodruff
Hall, Chm., Stoll, Kenney, Rupp, and
Coleman, CC., concur;
and certify compliance with
the
provisions of Section 536.080, RSMo
Dated
at Jefferson City, Missouri,
on this 27th day of April, 2016.
