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British Columbia Utilities Commission

Terasen Gas Inc. Application for Customer Choice Program Enhancements and

Additional Customer Education Funding

“Application” Project Number: 3698523

Written Argument

of The Marketer Group

September 17, 2008

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Table of Contents

1 Introduction ...............................................................................................................1 2 Voice Signatures for New Contracts and Renewals..................................................2 3 Clarification of the 90-120 Day Renewal Rule...........................................................6 4 Contracts with Start Dates Greater Than One Year..................................................7 5 Validation in GEMs of the Five Year Rule .................................................................9 6 Operational Correctional Drops...............................................................................10 7 Consumer Education...............................................................................................11 8 Other Issues............................................................................................................17 9 Summary of the Marketer Group’s Position ............................................................18

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1 Introduction 1

Pursuant to Commission Order No. G-113-08 dated July 29, 2008, please find 2 the written argument submitted by the Marketer Group. The Marketer Group is 3 comprised of the following members: 4 5

Access Gas Services Inc. 6 Active Energy ULC 7 Direct Energy Marketing Limited 8 Energy Savings B.C. 9 MXenergy Inc. 10 Summitt Energy BC LP 11 Superior Energy Management Gas L.P. 12 Universal Energy Corp. 13

14 In the interest of regulatory efficiency, the members of the Marketer Group will 15 coordinate wherever possible to participate jointly; however, each of the parties 16 retain their right to file and intervene independently throughout the course of this 17 written public hearing process. 18 19 Generally, the matters that the Marketer Group addresses in this Written 20 Argument are: 21 22

Voice Contracting for New Contracts and Renewals 23 Clarification of the 90-120 Day Renewal Rule 24 Contracts with Start Dates Greater Than One Year 25 Validation in GEMs of the Five Year Rule 26 Operational Correctional Drops 27 Consumer Education 28 Other Issues 29

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2 Voice Signatures for New Contracts and Renewals 1

Electronic signatures are allowed under the Electronic Transactions Act which 2 govern the use of both voice and internet signatures. The British Columbia 3 Utilities Commission (“BCUC”) authorized the use of electronic signatures, and 4 these signatures have been utilized for Internet sales since market opening. To 5 our knowledge, these Internet contracts have offered alternative marketing 6 channels for marketers to interact with their customers; have resulted in 7 successful contracts; and have not caused an increase in the number of 8 complaints. 9 10 The Marketer Group thinks that the residential market for natural gas has 11 matured and is ready for the introduction of telephone sales and renewals using 12 voice signatures. Over the past 16 months, consumers have gained greater 13 awareness of the Customer Choice program as evidenced in Terasen Gas’ 14 application for funding. On page 7 of the Application, Terasen Gas (“Tereasen”) 15 indicates, “at its peak in 2007, 77% of natural gas customers were aware of 16 Customer Choice. The return of heavy television advertising in early 2008 quickly 17 re-established higher levels of product awareness when the targeted 85% 18 awareness was exceeded in first week of advertising in January 2008.“ 13% of 19 the total eligible customers elected to choose one of the marketers in the first 20 year. The BCUC has informed the market participants that complaint levels have 21 fallen dramatically since market inception. 22 23 Furthermore, one of the main objections to voice contracting raised by the British 24 Columbia Public Interest Advocacy Centre at the April Market Review was the 25 lack of a Do Not Call list. This concern is now alleviated as the Canadian Radio-26 Television and Telecommunications Commission will invoke their National Do 27 Not Call list (DNCL) on September 30, 2008. Starting on this date, Canadian 28 consumers will be able to register their telephone numbers on the National DNCL 29 for free to reduce the number of telemarketing calls and faxes they receive. 30

It is the Marketer Group’s belief that the Customer Choice program is ready for 31 the addition of voice signatures for new contracts and for renewals, thereby 32

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allowing another sales channel for marketers to use and a prudent renewal 1 solution. 2 3 To achieve this goal, The Marketer Group accepts the creation of a stakeholder 4 group including marketers, the Commission, Terasen Gas and consumer 5 representatives as a useful and prudent process to formally review the voice 6 signature requirements. As indicated in Terasen Gas’ response to TGI-MG-6, a 7 timeline for implementation cannot be considered until the associated processes 8 are developed and reviewed by all parties. The Marketer Group would like to 9 commence these discussions in November 2008, with a proposed 10 implementation date of January 2, 2008. 11 12 The Marketer Group does recognize that even though the legal framework is in 13 place for voice signatures through the Electronic Transactions Act, we do accept 14 that the BCUC may want to have additional protections to clarify these electronic 15 signatures in the Customer Choice Program in the Code of Conduct. 16 17 The Marketer Group has previously provided a list of requirements that it 18 believes should guide the development of voice signatures required in the Code 19 of Conduct. We elect to comment on new contracts and renewal contracts 20 separately given how different they are from a practical perspective. For 21 instance, in the case of renewals, the customer already has been with the 22 marketer for at least a year, and so the customer can certainly be deemed 23 knowledgeable about the product and its performance. In addition, the Code of 24 Conduct compels the marketer to provide the customer with a complete package 25 before the marketer calls to renew. The customer is clearly being given every 26 reasonable opportunity to consider their options before the call to confirm the 27 renewal. 28 29 These elements for considered review for the Code of Conduct are as follows: 30 31 Renewals 32 33

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• The call would be digitally recorded and maintained by the marketer for 1 the duration of the marketing contract. It must be available upon request 2 by either the customer or the BCUC. 3

• The marketer must: 4 o State the call is being recorded 5 o Confirm that the consumer is the account holder or authorized to 6

enter into an agreement for the premise 7 o Confirm product, price and term of the agreement 8 o Confirm changes to cancellation rights, renewal provisions, 9

penalties, or other changes to the terms and conditions of the 10 contract 11

12 • The electronic signature must be compliant with the Electronic 13

Transactions Act. 14 • The Confirmation letter process will be sent. 15

16 Notably, there are some features for new contracts not required for renewals. 17 For instance, the Marketer Group views that confirmations such as no affiliation 18 of the marketer to Terasen; knowledge of gas supply from a different supplier 19 than Terasen; no guarantee of savings money; and terms like cancellations, 20 renewals, and penalties are known to the customer and need not be repeated in 21 a validation call. The customer has also been with the marketer for a 22 considerable length of time and would be deemed appropriately knowledgeable 23 in these matters. Finally, the marketer sends the renewal package to the 24 customer in advance of the call and so all documents would be available to the 25 customer. 26 27 New Contracts 28 29

• The call would be digitally recorded and maintained by the marketer for 30 the duration of the marketing contract. It must be available upon request 31 by either the customer or the BCUC. 32

• The marketer must: 33 o State the call is being recorded 34

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o Identify the Gas Marketer and confirmation to the customer that 1 the marketer is not affiliated with Terasen Gas or the government. 2

o Confirm that the consumer is the account holder or authorized to 3 enter into an agreement for the premise 4

o Confirm that gas is provided by the gas marketers and there is no 5 obligation to switch 6

o Confirm the customer may not save money 7 o Confirm the customer has a copy of the agreement 8 o Confirm product, price and term of the agreement 9 o Confirm consumer’s cancellation rights 10 o Confirm renewal provisions 11 o Confirm penalties for early termination of the contract 12

• The electronic signature must be compliant with the Electronic Business 13 Transactions Act. 14

• The Confirmation letter process will be part of both voice contracts for 15 renewals and new contracts. 16

• The Marketer must provide all documentation (Notice of Appointment of 17 Marketer, Completed Contract, and Standard Information Booklet) to the 18 customer. 19

• All telemarketing would conform to requirements of the CRTC including 20 the Do Not Call list being implemented at the end of September. 21

22 The Marketer Group is confident that a joint formal review by all parties involved 23 will ensure the appropriate consumer protection measures are balanced with the 24 benefits voice signatures would bring to the market. Some of these benefits are 25 reiterated below. 26 27

1. Voice contracting serves to strengthen consumer protection by removing 28 many of the potential ambiguities arising from door-to-door sales because 29 the sales interactions are recorded. 30

31 2. Voice contracting provides the ability to digitally access and audit those 32

portions of the conversation relevant to the agreement specifics, 33

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consumer consent, and consumer questions and answers regarding the 1 agreement. 2

3 3. It also allows for a greater geographic reach of the Customer Choice 4

program as marketers can cost effectively access customers in remote 5 regions of British Columbia. 6

7 The Marketer group looks forward to working with stakeholders to develop the 8 appropriate voice contracting processes and help consumers realize these 9 benefits as soon as practicable. 10 11

3 Clarification of the 90-120 Day Renewal Rule 12

The Marketer Group is concerned that strict interpretation of the 90-120 rule in 13 Article 27 means that the existing marketer would not be able to present their 14 customers with new competitive offers while competing marketers could. 15 16

On page 14 of the Code of Conduct, it states: “the renewal date shall be 17 such that it coincides with a LDC program entry date. Notice periods for 18 contract renewal should require the Gas Marketer to give notice to the 19 Consumer no more than 120 and no less than 90 days prior to the 20 applicable renewal date.” 21

22 Terasen Gas recommends in its response to the BCUC in IR 9.2 that Article 27 23 would clarify the intent better if the phrase “no more than 120 days and” was 24 removed. The Marketer Group agrees that removing this clause will provide the 25 necessary clarity. 26 27 For even greater clarification, we recommend that inclusion of the definition of 28 renewals. Defining a new contract would not be necessary in our view. 29 30 Terasen Gas provided the following definitions in its response to IR TGI-MG-12 31 on page 19: 32 33

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The term “renewal” means the recontracting of a customer at the expiry of 1 a contract by the same gas marketer and where the terms, conditions, 2 and price remain largely unchanged. 3 4 The term “new contract” means the signing of a contract by a gas 5 marketer either for the first time, or where a period of time has passed 6 since the expiry of a previous contract, or where the terms, conditions, 7 and price are largely changed after the expiry of a previous contract.” 8

9 Terasen has distinguished renewals in terms of whether prices change. The 10 Marketer Group views this differently. Renewals can and do offer significant 11 price change for new terms—and would not be commonly viewed as being 12 “largely unchanged”. We view that a renewal uses an existing contract with the 13 same marketer, but will be for a new term, and that it may or may not be at a new 14 price. The existing contract may have minor revisions and reflect changes due to 15 changes in the law. 16 17 A new contract relates to a new prices, new products, and new contract terms 18 and conditions. The existing marketer may not require an extended period of 19 time to have expired before it introduces new products. 20 21 We do not view any further changes as warranted to clarify the 90-120 day rule. 22

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4 Contracts with Start Dates Greater Than One Year 24

The current rules allow for marketers to start contracts well into the future. The 25 BCUC in IR 9.1 even questions whether such contracts comply with Business 26 Practices and Consumer Protection Act. 27 28 The Marketer Group has reviewed the Business Practices and Consumer 29 Protection Act with respect to natural gas contracts, starting more than one year 30 out and believes that marketers are allowed to enter into contracts with start 31 dates greater than one year out. The question is whether at this time in the 32 market development whether it is appropriate to allow this. 33 34

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The Marketer Group views that residential customers are not in a position to 1 evaluate these types of products at this time. The Marketer Group asserts that 2 these customers cannot reasonably acquire information to assess the suitability 3 of the contract for terms with start dates greater than one year. There does not 4 seem to be any competitive offers posted for start dates that go beyond one year 5 on the Terasen Gas website. Consumers cannot find this information from 6 wholesale/traded markets as it is not relevant for small consumers. Wholesale 7 markets are designed for wholesale traders for large volume, standardized 8 volumes and quality sent to specific delivery ports, not to the customer’s home. 9 Larger users can more reasonably utilize this and other mechanisms to assess 10 the offer, we do not view that residential customers can. 11 12 Until a discernable market for long dated contracts exists, we recommend that for 13 residential customers, that contracts with start dates greater than one year be 14 disallowed. We believe that a review during the BCUC annual meeting would be 15 appropriate to discern whether the market was sufficiently liquid to accommodate 16 these types of contracts for residential customers. 17 18 The Marketer Group asserts that given that marketers will be managing supply 19 positions in relation to these contracts there may be sizable financial 20 consequences for changing rules retroactively. Importantly, there is currently 21 nothing that prevents such contracts either in the Code of Conduct or in Rules for 22 Gas Marketers, as clarified by Terasen Gas in the meeting April 8, 2008, or in the 23 Business Practices and Consumer Protection Act, according to our internal legal 24 reviews. 25 26 If the BCUC wants to continue to allow this type of contract option, then the 27 Marketer Group asserts the following changes must be made to the Code of 28 Conduct to protect customers as they are not currently protected now from these 29 types of contracts. 30 31 With changes highlighted in italics and underlined, Article 26 of the Code of 32 Conduct should be modified to read: 33 34

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The first page of the agreement between the Gas Marketer and a 1 Consumer must accurately summarize and clearly state the essential 2 elements of the Offer including: 3

4 Cancellation provisions, including any out clauses, these clauses 5

must be comprehensively described in this section 6 7 Also important should these types of contracts be allowed, the Marketer Group 8 wants to be notified to allow them to provide the customer with a competitive 9 offer. This would at least allow the customer to have two competitive offers to 10 select from. 11 12

5 Validation in GEMs of the Five Year Rule 13

The Marketer Group views the Code of Conduct as clear with respect to the five 14 year rule and does not view any further rules as warranted. 15 16 Terasen Gas recommends that contracts also be amended to further clarify the 17 90-120 day rule. In the response to the BCUC IR 9.2, Terasen recommends the 18 following addition to be included in the Marketer’s Offer: 19

20 “8. A customer may be contracted for by any Gas Marketer, or 21 combination of Gas Marketers, for a period of up to five years at any time. 22 No customer may be contracted for a period in excess of five years at any 23 time.” (Page 36) 24

25 The first sentence relates to clarifications on the term lengths, and we view that 26 this type of clarification as unnecessary. 27 28 The second sentence essentially repeats what is said in point 7 on the same 29 page, and in our view, the point that a maximum term of five years is stated very 30 clearly in point 7. 31 32 The Marketer Group views that Point 8 as suggested in Terasen’s response to 33 the BCUC’s IR 9.2 on page 37 be disregarded in Article 26. 34

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1 Where this is concern is the validation process used by Terasen may reject 2 contracts that should be valid. The Marketer Group is concerned that in 3 Terasen’s filing, they propose to reject a contract that results in the customer 4 being contracted in GEMS for more than 5-years. We recommend that Terasen 5 set that “GEMS rule” to 6 years. That way a customer may still sign a five-year 6 agreement in the final year of their expiring contract. Otherwise, a new 5 year 7 agreement would be rejected and the maximum term available to that customer 8 then becomes less than 5 years. 9 10

6 Operational Correctional Drops 11

The Marketer Group supports Terasen’s initiative to provide an operational 12 correction drop to gas marketers. It is the understanding of the Marketer Group 13 that operational requests will be accepted by Terasen Gas from the time the 14 customer’s 10-day cancellation period has expired to the time that the customer’s 15 volume becomes part of the final marketer supply requirement. It is also our 16 understanding that the operational correctional drop request will be submitted to 17 Terasen Gas through the normal means of uploading transaction requests and 18 not done through GEM. 19

20 The Marketer Group submits that it would be useful to define the terms 21 operational correction drops and courtesy drops in order that these two drops 22 can be easily distinguished and used correctly by all parties. 23 24

Operational Correction Drop: encompass drop requests from gas 25 marketers in cases where the customer is not questioning the validity of 26 the contract but includes drops where either in extenuating circumstances 27 or as a customer service gesture forms the basis for the drop request. 28 These drops requests are submitted to Terasen Gas through the 29 uploading of a transaction request and not by logging a GEM dispute. 30 31

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Courtesy Drops: encompass drop requests from gas marketers in cases 1 where the marketer and the customer validate that the contract is invalid 2 and was incorrectly enrolled with Terasen Gas. 3

4 The Marketer Group agrees with Terasen Gas’ responses in Marketer Group IR 5 13(f) and (g) where it is stated that there will be no fee to process the operational 6 drop and that it is our understanding that the operational drop will not be included 7 in calculation of compliant statistics. 8 9

7 Consumer Education 10

The Marketer Group firmly supports an education campaign at this stage of the 11 Customer Choice campaign and also that Terasen can remain primarily 12 responsible, but the Marketers and BCUC have a pivotal role to perform in the 13 communication plan and its execution. We continue to support the 11 key 14 principle messages. The support though for the campaign, the primary 15 responsibility, and the execution all require significant provisos. These provisos 16 fall under 4 main categories: (1) Roles and Responsibilities, (2) Content Review, 17 (3) Key Elements, and (4) Defined Education Campaign End Date. Each of 18 these will be discussed in turn. 19

20 1. Roles of the Customer Education Program: 21

22 The BCUC, Terasen Gas, and the Marketers should be partners in the Customer 23 Choice education program--each has an important role in the Customer Choice 24 Program. It is our view that for: 25 26

o Information on Choice--Terasen and marketers are jointly responsible for 27 providing information on choices for customers; 28

o Customer Protection role—The BCUC and the Business Practices & 29 Consumer Protection Authority of British Columbia (BPCPA) jointly share 30 that responsibility; and for 31

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o Teaching People How to Evaluate the Choices—It is the individual that 1 ultimately bears that responsibility, with limited exceptions, such as 2 mental infirmaries. 3

4 In the end, the BCUC, BPCPA, Terasen, and Marketers each bear a 5 responsibility to ensure the individual has the right information to help them make 6 choices. 7

8 2. Content Review and Rebuttal: 9

10 From the Marketer’s vantage point, having a completed communication plan 11 presented in an Application without opportunity for review is neither efficient nor 12 fair to parties, principles, or process set out for the Customer Choice Program. 13 14 In two recent examples, content review would have screened messages that we 15 do not view as adhering to the key messages. In the case of the Peach Cobbler, 16 it is our view that this advertisement infers the use of storage to keep prices as 17 low as they can be—storing up for the winter months for example. We are not 18 clear as to the factual basis of the statement that Terasen can use its gas 19 storage to keep prices low or how this advertisement increases a customers 20 understanding of the Customer Choice program. 21 22 By way of a second example, in the advertisement with the bunny slippers and 23 the Terasen Gas, there is no Customer Choice logo, but there are two Terasen 24 logos. There is a subtle message of choice, but ultimately staying with Terasen 25 appears to be the main message. The warm fuzzy slippers are the same soft 26 comfortable color as the Terasen logo and overalls worn by the Terasen 27 ‘employee’. The choice is a stark, ugly looking pair of slippers, and that forms 28 the essential information on Customer Choice in this advertisement. The 29 inference to stay with Terasen is clear in our view. 30 31 The Marketer Group strongly asserts that they must have the opportunity to 32 review all material in advance of publication to ensure the messages focus on 33 Customer Choice, stay in line with the key messages, and are fair and unbiased. 34

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We are happy that Terasen as stated in response to TGI-MG-14 that “Terasen 1 Gas is committed to working with gas marketers, consumer organizations, and 2 the BCUC to identify Customer Choice communications that are effective and 3 mutually acceptable” (Page 26) 4 5 Where the Marketer Group differs from Terasen is in Terasen’s retention of the 6 final wording and creative direction. We view it is essential that a dispute-7 resolution mechanism be set up to review and decide on issues. As we have 8 asserted, certainly other market participants have a critical stake in public 9 messages. It is our view that material that is being disputed by the Marketer 10 Group should not be published until the dispute resolution body has reviewed the 11 matter. 12 13 In our view, a more efficient and fair process would be to review prudence and 14 efficacy of such expenditures at the annual BCUC meetings where it would be 15 ideal to evaluate the communication plan, its execution and associated budgetary 16 considerations for the upcoming year. Terasen would send out the final plan for 17 final approval by the Marketer Group and BCUC before being launched. 18 19

3. Key Elements of the Communication Plan 20 21

Terasen Gas indicates on page 23, IR 4.2 that the prime objectives of the 22 customer education campaign should be: 23 24

o “Ensuring that Terasen Gas has a presence in overall marketing strategy 25 for the program; 26

o Limit customer confusion about the program launch by reinforcing the 11 27 key messages; 28

o ensure customer satisfaction and product preference is protected from 29 the undue influence of unprofessional sales tactics used by the sales 30 agents of some gas marketers; 31

o ensure most customers are aware of the product and that the awareness 32 of it 33

o shifts to a more fundamental understanding of the product; and 34

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o help to establish a stable, competitive marketplace attractive for gas 1 marketers to compete in and offer a selection of fixed price contracts for 2 the supply of natural gas.” 3

4 The Marketer Group supports Terasen Gas’s position with the exception of 5 Terasen Gas’ role in customer protection. That role is clearly the purview of the 6 BCUC and BPCPOA and, not, Terasen Gas. Importantly, customer protection 7 and business practices are far broader than energy marketer activities, and thus 8 fall under the purview and scope of these agencies—not Terasen Gas. 9 10 In presenting the messages to the wider public, the Marketer Group strongly 11 asserts that the messages should provide unbiased, factual information relevant 12 to Customer Choice—and not only to Terasen. These messages should not be 13 clouded and confused with other messages or use of cute analogies that create 14 subliminal linkages. The primary messaging should relate only to the key 15 messages for Customer Choice. 16 17 This does not negate the importance of Terasen Gas. The Marketer Group 18 believes as does Terasen Gas states on page IR 2.1 to the BCUC: 19

20 “In terms of raising the awareness of consumers about the Customer 21 Choice program, there remains an intrinsic link between the Customer 22 Choice product and Terasen Gas because the gas marketer product 23 appears on the Terasen Gas bill. Using the Terasen Gas look and feel to 24 promote the program has many advantages. The approach allows 25 Terasen Gas, a company that people generally trust, to introduce 26 customers to gas marketers. This approach legitimizes gas marketer 27 activity and helps the Company to maximize the impact of the customer 28 education expenditure. The relationship is analogous to having a 29 business associate or acquaintance introduce you to someone, versus 30 having a complete stranger try to do the same thing. When Terasen Gas 31 talks about Customer Choice and the role gas marketers play with 32 respect to the product, some of the trust the utility has established with 33 customers is transferred to marketers. The Company’s introduction – 34

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using Terasen Gas branded messaging – serves to facilitate a possible 1 relationship between the gas marketer and the customer.” 2

3 A logo is a key element of brand and the choice of which logo used is important 4 as well to this program. It is the Marketer Group’s view that the Customer Choice 5 logo and/or name should be prominent in all messages, alongside the Terasen 6 Gas logo. 7 8 The Marketer Group supports Terasen’s agreement to the Commission’s 9 recommendation as stated in IR 2.2: 10 11

“To avoid giving customers the impression that an agent of a Gas 12 Marketer represents Terasen Gas, should the branding of Terasen Gas 13 be removed from the Standard Information Booklet, and perhaps be 14 replaced by the name and logo of the Commission and/or the names and 15 logos of licensed Gas Marketers? 16

17 Message 7 of the 11 Key Messages approved by Commission Order No. C-6-06 18 clearly identifies the need to educate customers on the two main components of 19 gas service – commodity and delivery. Experience in other jurisdictions suggests 20 that consumer acceptance of deregulation is closely linked to their level of 21 understanding as to how their services will be affected by contracting their gas 22 supply with an independent marketer. A clear understanding of Terasen’s role as 23 a regulated utility responsible for gas delivery, billing and default supply is an 24 important component of a strong deregulated market. Terasen’s role to deliver 25 gas and provide default gas supply should be emphasized. 26 27 The Commission suggests in IR 1.1 that the 28 29

“benchmark of the education program be to lessen confusion and provide 30 the customer with the correct information on the customer choice program 31 to decrease the number of disputes and complaints”. 32

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In response to IR 1.1, Terasen suggests that the prevention or reduction in the 1 number of complaints and disputes should be addressed through the application 2 of the Code of Conduct for Gas Marketers rather than as an objective of the 3 Customer Education Plan. The Marketer Group agrees with Terasen Gas and 4 suggests that protection against unprofessional selling tactics falls within the 5 responsibility of the Commission in its application of the Code of Conduct. The 6 Code of Conduct and Rules for Gas Marketers offer the Commission the full 7 range of investigative powers and penalties to deal with bad behaviour in the 8 market. Furthermore, through the course of research undertaken to prepare for 9 this Application, we found no evidence to correlate education with reduced 10 complaints. 11

12 4. Defined Education Campaign End Date 13

14 While we support an education campaign over the next year, we do view that it is 15 prudent for the BCUC to review the costs relative to the benefits, the 16 communication plan, its execution, and to consider a terminal date for the 17 education program. 18 19

5. Other Communication Issues 20 21 The Commission’s suggested changes to the Terasen bills in IR 6.4 really 22 demonstrates the role additional market participants can provide with their 23 recommendation to the bill inserts required. We view the message as an 24 inexpensive manner to provide additional information on the Customer Choice 25 Program and choices for customers in a fair and balanced manner. The 26 Marketer Group supports the inclusion of the tag line or will gladly work with 27 Terasen and the BCUC to find a suitable message to add to bill inserts. 28 29

“CUSTOMER CHOICE 30 31 Customers may purchase natural gas from a variety of independent Gas 32 Marketers under the CUSTOMER CHOICE program, as an alternative to 33 buying gas from Terasen Gas at a variable regulated rate. Customers 34 participating in CUSTOMER CHOICE pay a contracted long-term, fixed 35 commodity price for their natural gas. Under both purchase options, 36

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Terasen Gas provides delivery of the gas to customers. 1 No one knows for certain whether natural gas costs will rise or fall in the 2 coming years. But a fixed price commodity contract will protect you from 3 possible future cost increases. 4 5 To learn more visit www.terasengas.com.” (Page 29) 6

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8 Other Issues 8

There are several specific issues raised in the IRs that do not belong to a major 9 category already discussed that the Marketer Group would like to respond to in 10 turn. 11 12

1. The Marketer Group is not clear why the technical workshop that Terasen 13 agreed to at the April Market Review needs to wait until the following 14 annual meeting to occur, as per response to IR 11.5 on page 43. It is our 15 view that this workshop will comprise a technical expert from Terasen 16 Gas to explain how the natural gas projections are developed. We are 17 not sure why this would take a significant amount of time to prepare for. 18 Moreover, the people attending such a workshop would be the technical, 19 operational support within marketing organizations and not necessarily 20 the same people who would typically be appropriate to attend the annual 21 workshop. 22

23 2. Terasen Gas has been able to update new prices for marketers on an ad 24

hoc basis, and we support this continued practice. 25 26

3. The BCUC has recommended a self-regulating marketer association. 27 Such associations can and do develop over time, but at this time, we 28 would recommend that the informal association is working effectively to 29 manage issues in relation to the BCUC and Terasen Gas. 30

31 4. The Marketer Group has a similar view to Terasen that expenses incurred 32

in support of the Customer Choice program should be recovered from all 33 customers eligible to participate in the program and from gas marketers 34 regardless of whether they choose to participate. The program is about 35

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choice, including the choice to remain on variable utility rates. The 1 purpose of customer education is to inform eligible customers about the 2 program so that there is a general awareness of it in the marketplace. 3 (See IR response 7.2, page 33). 4

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9 Summary of the Marketer Group’s Position 6

The Marketer Group is generally pleased with the Customer Choice Program and 7 the efforts to improve the basic format of operation, regulations, and marketing 8 channels. The following is a summary of the positions advanced by the Marketer 9 Group: 10 11

a) It is the Marketer Group’s belief that the Customer Choice program is 12 ready for the addition of voice signatures for new contracts and for 13 renewals, thereby allowing another sales channel for marketers to use 14 and a prudent renewal solution. The Marketer Group would like to 15 commence the discussions in November 2008 to go over the changes to 16 the Customer Choice Program with a proposed implementation date of 17 January 2, 2008. 18

b) Terasen Gas recommends in its response to the BCUC in IR 9.2 that 19 Article 27 would clarify the intent better if the phrase “no more than 120 20 days and” was removed. The Marketer Group agrees that removing this 21 clause will provide the necessary clarity. 22

c) The Marketer Group recommends that for residential customers, 23 contracts with start dates greater than one year be disallowed until a 24 competitive market for these products exists. 25

d) We recommend that Terasen set the “GEMS rule” to 6 years, rather than 26 5 years. That way a customer may still sign a five-year agreement in the 27 final year of their expiring contract. 28

e) The Marketer Group supports that operational requests will be accepted 29 by Terasen Gas from the time the customer’s 10-day cancellation period 30 has expired to the time that the customer’s volume becomes part of the 31 final marketer supply requirement. 32

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f) The Marketer Group supports an education campaign and Terasen’s 1 primary role, but insists that marketers and the BCUC play an important 2 role in the development of the communication plan and content as well as 3 the execution of the communication plan. 4