Archive for May 2008

Today’s Emergency OM

The PUCT convened in an Emergency Open Meeting today to address the substantial increase in the Market Clearing Price for Energy (MCPE) in the Electric Reliability Council of Texas. The unforeseen and substantial increase in the MCPE has caused the rates charged by providers of last resort (POLR) to also increase substantially, as the energy charge in POLR rates are based on the MCPE. Consequently, this rise in POLR rates was also not reasonably foreseeable.

Chairman Smitherman commented that due to the price increases, other REPs may be in financial difficulty. He encouraged other REPs to work with these troubled REPs to take customers and that Commission staff stood ready to assist with rule interpretation issues, if needed. Parties (particularly the POLRs) needing rule clarifications should put their plans (how they want to charge customers) in writing and submit to staff (Lauren Damen and the Executive Director). He also encouraged the POLRs and their affiliates to offer other rates than the standard POLR rate which is allowed under Commission rules. He cautioned that POLRs not put customers on term products that charge cancellation fees. Chm. Smitherman also asked market participants to work together for the benefit of affected customers to ensure that wrongful disconnects and missed low income discounts were minimized.

Com. Parsley commented that whatever the market can do to prevent these customers landing on the high POLR rate is the end goal of the Commission.

Randy Chapman with Texas Legal Services Center commented that the Commission should consider re-evaluating many of the rules, including the REP financial standards and the POLR rules, to prevent further issues caused by escalating prices.

Finally, the PUCT is working with the Independent Market Monitor and ERCOT to evaluate the causes of the recent price spikes and take necessary actions to address.

National Power Bows Out as Well…

—–Original Message—–
From: ERCOT Client Relations []
Tuesday, May 27, 2008 1:51 PM
Subject: MA052708-01 INFORMATIONAL: Mass Transition Event


NOTICE DATE:  May 27, 2008

NOTICE TYPE:  MA052708-01 INFORMATIONAL:  Mass Transition Event

SHORT DESCRIPTION:  Market Participant Mass Transition Event

INTENDED AUDIENCE:  All Market Participants

DAY AFFECTED:  May 28, 2008

LONG DESCRIPTION:  National Power Company Inc. (NPC), a Qualified Scheduling Entity (QSE) and a Load Serving Entity (LSE) in the ERCOT Region, has informed the Electric Reliability Council of Texas, Inc. (ERCOT) that NPC will be unable to comply with its obligations under the Standard Form Market Participant Agreement as of Close of Business on May 27, 2008.  As such, NPC has asked ERCOT to proceed with a Mass Transition event pursuant to the ERCOT Protocols and Retail Market Guide.


Pursuant to Protocol Section 15.1.3, Mass Transition, and Retail Market Guide (RMG) Section 7.11, Mass Customer Transition Process, ERCOT will begin the Mass Transition of NPC’s Customers to the Providers of Last Resort (POLRs) on May 28, 2008


The size of the associated Load is approximately 616 MWhs per day and the total number of ESI IDs involved is approximately 15,163.


ERCOT has been working closely with the Public Utility Commission of Texas (PUCT) and affected Market Participants to ensure an efficient and effective transfer of customers.


CONTACT:  If you have any questions, please contact your ERCOT Account Manager. You may also call the general ERCOT Client Services phone number at (512) 248-3900 or contact ERCOT Client Services via e-mail at

ERCOT’s Legal Department is also available should your entity’s legal department have any specific questions.  You may reach Chad V. Seely ( at (512) 225 – 7035.

If you are receiving e-mail from an ERCOT distribution list that you no longer wish to receive, please follow this link in order to unsubscribe from this list:




Com. Parsley’s Memo on Fixed and Variable…

Full Text Below…

Memorandum from Commissioner Parsley to Commissioner Hudson and Chairman Smitherman
SUBJECT: Open Meeting May 22,2008, Agenda Item No. 4, Project No. 26793, Proceeding Related to Retail Market Oversight Activities
Recent events have highlighted several concerns that I have with respect to retail market REP offers and customer contracts. The first concern centers on interpretation the 45-day notice provision in P.U.C. SUBST. R. 25.475(e)(1). It has come to my attention that there may be some who mistakenly believe that this provision alone grants a REP the ability to change pricing terms after giving 45-days notice. I believe that this is a wholly incorrect interpretation of our rule. This provision, standing alone, does not and cannot confer rights on a REP that its contract does not otherwise provide. Therefore, if the contract legally permits the REP to change its pricing terms, it can, provided that the REP gives notice of that increase at least 45 days in advance of the change. It is the contract terms that control; our rules simply provide the method by which those terms can be implemented.  My second concern involves the description of pricing terms as either “fixed” or “variable.” P.U.C. SUBST. R. 25.475(f)( 1)(D) provides that “[i]f the price of electric service
will not vary, the phrase ‘fixed price’ and the length of time for which the price will be fixed” shall be included in the electricity facts label. Similarly, under 25.475(f)(1)(E), a price described as “variable” requires a “description of how the prices will change and when.”  Additionally, for purposes of posting on, we prepared guidelines for REPS to use regarding what products can be appropriately classified as fixed and variable.1
Neither the language of the rules nor the guidance provided permit a REP to market a product as “fixed” if the REP reserves the right to change that “fixed” price based on vague and undefined criteria like changing market conditions.2 If a terms-of-service document specifically indicates that a product is fixed through the term of the contract, then I believe, such a claim provides added protections to customers beyond what our rules provide, and would generally control over a more general statement regarding notice for material changes.  And, to the extent that a contract is marketed as “fixed,” yet the contract contains terms suggesting that the terms are something other than fixed, that contract may be deceptive and mi~leading.  In instances in which a REP does not follow either the rule or our guidance, I believe it is appropriate, as we have done with National Power, to remove these non-conforming offers from our website, unless we receive assurance from the providers that they intend to honor their contractual commitments.  Finally, I think we should direct Staff to review our customer protection rules to see what clarifications may be appropriate to ensure that there is no confusion about our views for the future.  I look forward to discussing these matters with you at the open meeting.

1.  See Terms and Conditions of Posting Offers on at

2.  Indeed, such vague terms may not justify the changing of a rated defined as “variable.” A “variable” rate is described as one that has some sort of set basis for the fluctuation, such as wholesale electricity prices, natural gas or other fuel prices, or ancillary services costs. See id. “Changing market conditions” or other similar terms are far more vague and uncertain, and it is uncertain that these types of terms would support the changing of a variable rate. And it is only fair to note that our rules do not allow a REP to offer a rate that is never charged. In other words, offers of “teaser” rates that then are never actually charged are not “variable,” and, instead, could fall under the classification of “misleading.”  P.U.C. SUBST. R. 25.475 (b)(2).

Oncor announces AMI Deployment

No PUCT filing yet…

Staff’s Definition of Fixed and Variable

The PUCT staff’s definitions of fixed and variable (when using the Power to Choose website)
i. Price is fixed for duration of contract and contract term is longer than one month.
ii. A month-to-month product can be designated fixed if the REP has guaranteed that the price will not change for a period of time longer than one month, and the EFL and Terms of Service clearly specify the period of time for which the price will not change.
iii. Pricing may include provisions allowing the customer to continue to be served by the REP on a month-to-month basis following the end of the contract term at prevailing market rates, irrespective of whether or not advance change is given.
iv. Pricing may include a provision to allow for rate changes with notice due to changes in non-bypassable TDSP charges, the ERCOT fee approved by PUCT, or change in law or regulation.

v. A product that has a contract term and includes provisions allowing the REP to change the price or cancel the contract, with or without notice, due to changes in wholesale electricity prices, natural gas prices, fuel prices, or ancillary services costs (including all balancing energy costs, reserves costs,BENA adjustments, RMR costs, UFE costs, congestion charges, or any other charge or allocation of costs from ERCOT except for the ERCOT administrative fee) should not be designated as fixed on

vi. A month-to-month product that includes provisions allowing the REP to change the price, with or without notice, due to changes in wholesale electricity prices, natural gas/other fuel prices, or ancillary services costs (including all balancing energy costs, reserves costs, BENA adjustments, RMR costs, UFE costs, congestion charges, or any other charge or allocation of costs from ERCOT except for the ERCOT administrative fee) should not be designated as fixed on

i. A product where the price is designed to fluctuate up and down based on wholesale electricity prices, or natural gas/other fuel prices, or ancillary service costs (including any costs associated with balancing energy costs, reserves costs, BENA adjustments, RMR costs, UFE costs, congestion charges, or any other charge or allocation of costs from ERCOT except for the ERCOT administrative fee).
ii. Any product where the price is permitted to be adjusted upward by the REP due to changes in wholesale electricity prices, natural gas/fuel prices, or ancillary services costs (including any costs associated with balancing energy costs, reserves costs, BENA adjustments, RMR costs, UFE costs, congestion charges, or any other charge or allocation of costs from ERCOT except for the ERCOT administrative fee) with or without notice should be designated as variable on

PUCT Staff Email re: Fixed and Variable

From: Godines, Grace []
Sent: Wednesday, May 21, 2008 12:43 PM
To: Godines, Grace
Cc:;; Walker, Mark;; Prosser, Debi; Walters, Nathan; Levine, Norman;; Rahim Ali;; Will Mackintosh;;; Everard Santamarina;;; Ruth Witchet; Cindi Wakefield; Rina Peczon; Tim Hamilton; Alexsa Torres;; Ann Dodson; Symon, Bill; Jim Crysdale; Charlie Hewitt; Chris Haywood; Rebecca DuPont;; Sarah Fisher;; Z. Lateef;; Bernadette Torres; Diana Martin; Jennifer Taylor; Paul Thies;; Matthew Gallagher;; Margaret Scharold;;
Subject: REPs who post offers on powertochoose
Importance: High
In the Terms and Conditions of Posting Offers that you are required to acknowledge as a condition of posting offers on, the PUCT has reserved the right to give guidance regarding how offers are to be classified on the website (i.e. fixed vs. variable). Those guidelines are located on the instructions for posting that are included at the top of your offers page.  Recent events have demonstrated a widespread failure to comply with these instructions.  As a result, the PUCT has revised the Terms and Conditions of Posting Offers ( and Attachment A to the Instructions (  to make it clear that these guidelines are to be followed, and that the PUCT reserves the right to remove offers and/or suspend access to the website if they are not.
Please review the revised Terms and Conditions and Instructions and review all of your posted offers for conformance with the guidelines listed in Appendix A, item 13 of the Instructions with respect to the designation of the product as “fixed” or “variable”.  You have until close of business on Friday to conform your offers to the guidelines.  Beginning next week, we will begin to remove offers that are classified incorrectly and may suspend your access to the website until such time that we are comfortable that your information is correct.
Thank you

Fixed vs. Variable: Today’s Open Meeting Discussion

The Commissioners discussed the events of last week and the need to provide further clarification regarding the use of the words “fixed” and “variable” as they relate to contract terms.  They also expressed concern regarding the use of the material change notification provision.
Com. Parsley filed a memo in project 26793 (not yet available for online viewing) that summarized her thoughts.  As she stated at the meeting, her first point was to clarify that the 45 day advance notice provision does not in and of itself create a contractual right to make a material change to a contract, but that the language of the underlying contract must allow for such action.  Com. Hudson agreed with this sentiment as did Chm. Smitherman, although Chairman Smitherman did make a point to say it was dangerous to conclude that if the contract has a material change provision, then it’s okay to make the material change (related to price).
Com. Parsley responded by saying that to her the issue came down to deceptive trade.
All commissioners agreed that fixed should mean fixed for the term.
Staff then advised that they have issued clarifications on the use of these terms for REPs that are using the Power To Choose website.  The text of this email will be provided in a separate entry.   
Com. Hudson urged caution in drawing lines to sharply about what is and is not allowed as the deployment of AMI may raise other issues that may beg for a re-thinking of the customer protection rules. 
At that juncture, Staff advised that they do plan on opening a rulemaking and tentatively are looking to bring a draft for publication to the first Open Meeting in July.

Nodal Delayed

By TOM FOWLER, Houston Chronicle Copyright 2008

Texas’ electric grid operator said today it will delay a long-planned, multimillion-dollar redesign in the way power flow is handled due to slower-than-expected delivery of software and other technical difficulties.

Cancellation Fees

Since the FCC is a regulatory agency the PUCT tracks, it is interesting to note what the FCC is attempting to do with contract cancellation fees.  I wouldn’t be surprised to see this idea surface here…

May 21, 7:36 AM EDT, By JOHN DUNBAR, Associated Press Writer


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WASHINGTON (AP) — The government is quietly negotiating to help cell phone customers avoid expensive fees when they cancel contracts with wireless companies, The Associated Press has learned.

The Centerpoint Smart Meters

I know many of us have spent some time reviewing Centerpoint’s filings.  Below is an interesting spin from a consumer perspective…
05/18/2008, By TOM FOWLER : Copyright 2008 Houston Chronicle

The digital box beeping on Karen Allen’s kitchen counter wasn’t much louder than a telephone, but she says it still turned her husband’s hair gray.