Retail Disclosure In Plain English

Introduction

The purpose of Senate Bill 1305 (Sher, Martinez; Chapter 796, Statutes 1997) is to ensure that retail providers of electricity disclose to consumers "accurate, reliable, and simple to understand information on the sources of energy that are used to provide electric services." (Public Utilities Code, Section 398.1(b)) Toward that end, the law requires electricity retail providers to disclose fuel source information to consumers about the electricity being sold, using a format developed by the California Energy Commission. The law also allows the Energy Commission to obtain information from generators (through system operators) and retail providers, permitting some verification of the information disclosed to consumers. For a more detailed description of the requirements of SB 1305, you can view the SB 1305 bill language itself (Public Utility Code, Sections 398.1 - 398.5).

In addition, the California Energy Commission has adopted regulations to implement the SB 1305 program. These regulations specify:

1. Guidelines and formats for disclosure of generation-related information to system operators;


2. Guidelines and formats for retail disclosure of fuel source information to consumers; and


3. Guidelines for annual submissions to the Energy Commission by retail providers.

Download Amended Regulations governing SB 1305, as approved by the Office of Administrative Law (March 7, 2001). Updated April 23, 2001. Includes Appendix A -- Power Content Labels, Appendix B - Energy Commission Certificate Program, and Appendix C - Agreed Upon Procedures. (Adobe Acrobat PDF file, 28 pages, 69 kilobytes)

Retail Disclosure Requirements

Retail Disclosure to Consumers

All retail providers selling electricity in California must disclose to consumers the sources of the electricity they are selling, using a format developed by the Energy Commission called the Power Content Label. The retail provider must disclose fuel source information for each electricity product offered for sale in California.

The fuel mix that may be claimed for any given electricity product depends upon the contracts between the retailer and the generator of the electricity purchased. SB 1305 uses the term "specific purchases" to refer to electricity transactions "which are traceable to specific generation sources by any auditable contract trail or equivalent ..." If a retail provider can legitimately claim a specific purchase of electricity, the fuel type for that electricity may be included in the calculated fuel mix for the retailer's electricity product. If the electricity sold to consumers was obtained in a manner that does not constitute a specific purchase (e.g. if the electricity was purchased through a pool such that a fuel mix cannot be discerned), the retailer must claim the net system power fuel mix for that portion of the electricity product. Net system power is the fuel mix of the electricity consumed in California minus specific purchases. Thus, a fuel mix different from the net system power fuel mix may be claimed only if some or all of the electricity for that product was obtained through specific purchases. The legislation does not, however, require disclosure of specific purchases; a retailer may claim the net system power fuel mix for an electricity product that "contains" specific purchases. But if a specific purchase is claimed, all specific purchases for that product must be identified.

General Disclosures to Consumers

Retail providers of electricity must disclose fuel source information about the electricity product(s) offered for sale in California 1) in all relevant marketing materials ("marketing disclosure"), and 2) to consumers of the electricity product being sold, on a quarterly basis ("quarterly disclosure"). There are also annual disclosure requirements which are discussed in another section.

• Marketing disclosure requirements: the legislation states that retail providers of electricity must disclose fuel source information in all "product-specific written promotional materials that are distributed to consumers by either printed or electronic means," excluding advertisements or notices in general circulation media. The regulations further defines the phrase "product-specific written promotional materials that are distributed to consumers" as "any paper, electronic, or other media that contains words pertaining to a specific electricity product being advertised or offered and that are distributed to consumers or made available over the Internet." (Section 1391 (p)) To clarify this with an example, a brochure that does not contain information specific to a particular electricity product sold by the retail provider would not need to include the power content label. Also, billboards, TV, and newspapers qualify as "general circulation media" and any advertisement in them does not need to include the power content label.



• Quarterly disclosure requirements: the legislation states that retail providers of electricity must disclose fuel source information at least quarterly to end-use consumers of the offered electricity. The regulations specify that quarterly disclosures must be provided to consumers of the electricity product "by the end of the first complete billing cycle for each quarter," beginning with the first quarter of 1999, where quarters begin in January, April, July, and October of each year. In response to a frequently asked question, quarterly disclosures do not have to be on the consumer's bill itself. For purposes of quarterly disclosure, the power content label may be presented to the consumer on a bill insert, in a separate mailing altogether, or, with customer permission, provided through the Internet.

The power content label is the format for fuel source information disclosure. The power content label contains information about the electricity product(s) offered for sale and about net system power (renamed "California Power Mix" for the sake of enhancing consumer understanding of the label). A sample of the power content label is shown below. Highlighted text indicates information unique to the electricity product or the company, provided by the retail provider

A summary of the regulatory requirements for the power content label follows:

• Fuel type categories. Fuel mix information is to be provided using the fuel type categories and sub-categories:
  • Eligible Renewable (refer to amended regulations)
    • Biomass and waste
      
    • Geothermal
      
    • Small hydroelectric
      
    • Solar
      
    • Wind
      
      
  • Coal
    
  • Large hydroelectric
    
  • Natural Gas
    
  • Nuclear
    
  • Other
    
  
  
• Calculation of fuel mix for an electricity product. For each electricity product, the percentage of each specified fuel type category or sub-category is calculated by adding the contribution from each specific purchase in the electricity product to the contribution from all other purchases, if any, for that fuel type category or sub-category, as represented by the formula:

w₁(x) + w₂(y)
where:
• "w₁" is the percentage of electricity in this electricity product the retail supplier expects to provide through specific purchases

• "x" is the percentage contribution for a given fuel category or sub-category to total purchases for that electricity product

• "w₂" is the percentage of electricity in the electricity product the retail supplier expects to provide through sources other than specific purchases

• "y" is the percentage contribution for the fuel category or sub-category to the net system power fuel mix. For purposes of this calculation, the contribution from all other sources shall be calculated using only the most recently adopted fuel mix of net system power.

Note that if no specific purchases are claimed, w₁ = 0 and w₂ = 100%, resulting in a fuel mix identical to that of the net system power.


• Location of the power content label in promotional materials.



• If the promotional materials consist of more than one page, the power content label or a note directing the consumer to the correct page shall appear on the cover page or first facing page. Or, if promotional materials pertain to more than one electricity product and consist of multiple pages, then the power content label for a given electricity product may appear on the page discussing that electricity product.



• If a note is used to direct the consumer to the label, the note shall appear in a type size no smaller than 10 point.
  
  

Question: If my company is using a single label to display information about all three of our electricity products, what are our label location options for our brochures? Answer: You may place the label on the cover page, the first facing page, or, if all of your electricity products are discussed on the same page of the brochure, you may place the label on that page. Another option is to place a note on either the cover or first facing page directing the consumer to the label, in which case the label can go on the page of your choice.




• All information contained in the power content label must appear in one place without other intervening material.



• Formatting requirements for the power content label.



• All information within the power content label shall utilize:
  
  
  • A single sans serif font
    
    
  • At least one point space between two lines of text
    
    
  • Kerning such that letters never touch one another
    
    
  • A type size no smaller than 10 point, except that the footnotes and subheadings may be in a type size no smaller than 8 point
    
    
  • Black type or type that is a color easily distinguishable from the background color.
  
  
  
• Because the remaining formatting requirements are easier to follow in an illustrative format, a series of Web pages walks the reader through the required elements of the label.

Go to Beginning of Label Series.

Retail providers shall provide a power content label containing an annual disclosure for each electricity product for which the provider made a claim of specific purchases during the previous calendar year. For purposes of this discussion only, the annual disclosure will be referred to as the annual report label.

A summary of the regulatory requirements for the annual report label follows:

• Fuel type categories. Fuel mix information is to be provided using the following fuel type categories and sub-categories:
  • Eligible Renewable (refer to amended regulations)
    • Biomass and waste
      
    • Geothermal
      
    • Small hydroelectric
      
    • Solar
      
    • Wind

  • Coal

  • Large hydroelectric

  • Natural Gas

  • Nuclear

  • Other

  
  
• Calculation of fuel mix for an electricity product. For each electricity product, the percentage of each specified fuel type category or sub-category is calculated by adding the contribution from each specific purchase in the electricity product to the contribution from all other purchases, if any, for that fuel type category or sub-category, as represented by the formula
  w₁(x) + w₂(y)
  where:
  • "w₁" is the percentage of electricity in this electricity product the retail provider actually purchased through specific purchases

  • "x" is the percentage contribution for a given fuel category or sub-category to total purchases for that electricity product

  • "w₂" is the percentage of electricity in the electricity product the retail provider actually purchased through mechanisms other than specific purchases

  • "y" is the percentage contribution for the fuel category or sub-category to the net system power fuel mix. For purposes of this calculation, the contribution from all other sources shall be calculated using the most recently adopted fuel mix of net system power.

  
  
• Comparison of actual purchases to projected purchases. Retailers required to disclose an annual report label must compare actual power purchases for the completed calendar year with projected power purchases disclosed to consumers in the same year. The purpose of this requirement is to show to consumers whether they did or did not "get what they paid for."
  • If the percentage of any fuel type category or sub-category contained in any general disclosure made during the previous calendar year for an electricity product varies by more than plus or minus five percentage points from the corresponding percentage of actual purchases, the retailer must display fuel mix information for the general disclosure that varies the most from this annual disclosure. The retail provider shall also provide an explanation of why this difference between projected and actual fuel mixes exists.
  
  
  
  

  Definition The general disclosure that varies the most from an annual disclosure is that in which the sum of the squares of the differences between the contribution of each fuel category or sub-category identified in the general disclosure and in the annual disclosure as represented by the formula (xi - yi)2 is greatest. In the equation, "x" is the percentage contribution for fuel category or sub-category "i" listed in a general disclosure and "y" is the percentage contribution for fuel category or sub-category "i" for the annual disclosure, and "i" equals each fuel categories and sub-categories.

  
  
  
• All information contained in the annual report label must appear in one place without other intervening material.



• Formatting requirements for the annual report label.



• Like the power content label, all information within the annual report label shall utilize:



• A single sans serif font



• At least one point space between two lines of text



• Kerning such that letters never touch one another



• A type size no smaller than 10 point, except that the footnotes and subheadings may be in a type size no smaller than 8 point



• Black type or type that is a color easily distinguishable from the background color



• The formats for the annual disclosure label are similar to the power content label, but with some changes.

  Go to Annual Label Series.