Archive for Enforcement

A Precedent-setting Switch-old Settlement

Read the press about NRG’s settlement with PUCT staff related to alleged switch-hold violations.  Clearly, the issue surrounds when exactly a switch-hold must be removed.  As the settlement states, the rules require the following with respect to removal:

  • § 25.480(m) requires that the retail electric provider (REP) request removal of the switch-hold by the transmission and distribution utility (TDU) “after the customer’s obligation to the REP relating to the switch-hold is satisfied.”
  • § 25.480(j)(8) provides that a REP “shall submit a request to remove the switch-hold, pursuant to subsection (m) of this section, after the customers payment of the deferred balance owed to the REP.”
  • § 25.480(j)(5)(B) requires the REP to inform the customer that “The switch-hold will be removed after your final payment on this past due amount is processed.”
  • §25.480(h)(7) requires a REP to inform the customer that a switch-hold “…will be removed after your deferred balance is paid and processed.”

The NRG family of companies clearly had a policy in place whereby a set number of days elapsed on all payments to ensure the payments were not returned as insufficient funds prior to fully considering those payments as “satisfactory” for purposes of switch-hold removal.  Staff clearly took issue with the blanket approach of this policy as it would appear to apply to cash payments (where NSF issues would be moot).

It will be interesting to see how the Commissioners deal with this when it comes up for Open Meeting discussion.

I can clearly recall the stakeholder meeting with PUCT staff when the exact language of §25.480(m) was discussed and agree with NRG that it was left vague so as to allow REPs some flexibility in the timelines for processing payments.  Unfortunately, none of that conversation was captured in the official rulemaking record.

In the meantime, I would advise all REPs to let this be a lesson to you going forward.  If you want to ensure the intent behind rule language, you must make formal comments during the rulemaking process as to what you believe proposed language is intended to do.  That would require staff to summarize those comments in the preamble to the adopted rule.  That’s what gives clarity to the intent of rule language.  Absent that, staff is only guided by the plain reading of the rule.


Centerpoint paying fine for switch-hold violations

I should also note that Centerpoint has agreed to pay a fine of $60,000 for violating the rules related to releasing switch-holds.  Again, it is good to see the PUCT hold TDUs equally accountable for violations that directly affect retail service.

Read more here:

Oncor is paying a fine, and it’s not for service quality…

Finally, the PUCT seems to be getting serious about enforcing the rules that TDUs are to follow.  In this instance Oncor has agreed to pay a $700,000 to settle allegations that it was estimating meter reads beyond the allowed 3 consecutive months.  This does not surprise me in the least.  Finally, REPs can feel good they aren’t the only entity being held responsible for service issues that affect retail customers.

The story in can be found here: 


PUCT Issues LITE-UP Audit Reports on Ambit and Amigo

Some interesting reads on the results of the PUCT’s audit of Ambit and Amigo.  Would cause one to wonder whether the recent settlement agreement between Spark and the PUCT also started out as an audit.

Direct Energy Prepay Service to Pay Administrative Penalty

A settlement agreement filed in docket 44833 between Direct Energy and the PUCT staff would have Direct Energy paying an administrative penalty of $220,000 to resolve alleged violations of the PUCT’s prepaid rules related to disconnection of service.  As cited in the settlement agreement, it appears Direct Energy’s systems allowed disconnect orders to be sent to the market during extreme weather events, which is contrary to commission rules.

While the settlement agreement states that the investigation only related to issues surrounding disconnection of service, it would appear the PUCT’s investigation was undertaken in direct response to a Petition for Investigation into Direct Energy’s Prepaid Electricity service plans filed on May 19, 2014 by Texas Ratepayer’s Organization to Save Energy (Texas ROSE).  In their petition, Texas ROSE claimed argued that the PUCT should investigate Direct Energy for the following types of alleged violations:

  1. Automatically placing switch holds on accounts with deferred payment plans without seeking affirmative customer consent as required by PUCT rules.
  2. Disconnecting service immediately prior to an extreme weather event, which “may technically be in compliance with the literal words of the PURA but not the statute’s intent.”
  3. Failure to timely deliver disconnect warning notices due to chronic communication problems in major cell phone systems.
  4. Enrollment of critical care customers on prepay service plans in violation of PUCT rules.
  5. Use of the analogy that “prepaid service is like putting gas in a car is inaccurate” and misleading in violation of PUCT rules.
  6. The risk of disconnection is not being fully explained or is being minimized at time of enrollment.

The PUCT never took formal action on the Texas ROSE petition, which is consistent with their practice.  However, given this agreement, it is clear the PUCT did investigate DE’s prepaid service.  I would also find it hard to believe that the scope of such investigation was limited to just disconnect issues.  As a result, perhaps this provides some closure to the issues raised by Texas ROSE.

The Proton Sale…

If you are at all curious, like me, you may be wondering the identity of the “redacted” individual referred to in staff’s final recommendation as relates to Proton’s sale (transfer of ownership and control) filed in docket 42450.  Some sleuthing has revealed the the problematic proposed employee is Francisco Segura.  Mr. Segura was the Vice President of Operations and Customer Relations at Energy West d/b/a Franklin Power Company.  It is Energy West/Franklin that experienced a Mass Transition of customers to POLR in 2005 and had its certificate revoked, see docket 31166. Mr. Segura then went on to work at Glacial Energy as President of Operations (see Glacial’s REP application in docket 32342).  Glacial’s REP license was nearly revoked in docket 40090, but the PUCT allowed it to continue in business as long as Mr. Gary Mole, the then owner of Glacial, and prior owner of Energy West, relinquish all control and ownership in Glacial.

As stated in the Findings of Fact in docket 40090, Glacial failed to disclose Gary Mole’s ownership interest in Franklin Power Company (Franklin) in its initial application for REP certification. Franklin experienced a mass transition of its customers to the provider of last resort (POLR) in 2005. Glacial also failed to disclose pending complaints against Franklin by TXU Electric Delivery Company and CenterPoint Energy Houston Electric LLC to revoke Franklin’s REP certificate for failure to satisfy its financial obligations.

These complaints were consolidated in Complaint of CenterPoint Energy Houston Electric LLC Regarding Retail Electric Provider Energy West Resources, Ltd., Docket No. 31166, Order No. 3, Consolidating Dockets and Requiring Response (Jul. 13, 2005) and a hearing on the merits was held on February 28, 2006. Franklin’s REP certificate was subsequently revoked by Order on July 17, 2006.

It is clear that with Staff’s recommendation in this docket, Mr. Segura should also be viewed as black-listed, i.e. no ownership interest greater than 10% and experience cannot be used towards managerial qualifications.


A small victory, I’d say

Docket 41848 - PETITION OF COMMISSION STAFF TO REVOKE THE RETAIL ELECTRIC PROVIDER CERTIFICATION OF PROTON ENERGY, INC. AND NOTICE OF VIOLATION BY PROTON ENERGY, INC. OF PURA §§ 17.004(a) & 39.101(b) & PUC SUBST. R. §25.107,25.454, 25.472, 25.473, 25.474, 25.475, 25.479, 25.480, 25.483, & 25.485

It’s not often that I’d call a $400,000 administrative penalty and an agreement to leave the market a “victory” but I think in this case I would.

Staff noticed this company for penalties in excess of $2.7M and sought revocation of their license.  Staff alleged an number of violations, the most serious of which were the switch-holds and the extreme weather disconnects.  Frankly, the majority of the rest were mostly routine compliance audit findings.  While the Commissioner’s may find it tough to swallow approving such settlements (with as they said today, “holding their noses”), they should console themselves with the notion that had this gone through the litigation process, they may not have fared as well as the settlement.  While the Commissioner’s may be the final voice in what the appropriate “punishment” is for a set of proven facts, they can’t as easily dismiss r ignore a set of facts, once those facts have been proven — something best done through the hearing process.  Yes, perhaps they could have instituted a “ban” against the principle, but that assumes the violations (facts) alleged by staff won out at the end of the day.  Clearly settlements are sought by both parties to avoid the uncertainty that comes with litigation.  Maybe staff would have won, maybe Proton would have won (or won enough).

I will say this though, ending up with an administrative penalty of less than 15% of what staff originally sought is a victory in and of itself!  Getting the opportunity to sell your company and recoup some of your investment, Priceless!

Now that’s tough enforcement!

Criminal enforcement of misleading/deceptive sales tactics!,0,3566541.story

Submit EFLs to ERCOT!

From a presentation at last week’s RMS meeting:

“The PUCT has asked ERCOT to notify REPs of the requirements to update EFLs and submit to ERCOT by July 1.”


  1. Renewable energy percentage for each product
  2. Electricity Facts Label for each product
  3. Completed Renewable Content Calculator for each product

ERCOT will send a market notice describing the reporting requirements and process

Any Questions or Concerns:  Email to:


PUCT Investigating REP Fees

The PUCT has launched an investigation into REP fees.  The investigation appears to be industry-wide with REPs receiving Requests for Information from PUCT staff.  The requests seek information relating to certain types of fees being charged by REPs such as connection fees, disconnect fees, and late fees.  Since there is no labelling convention for these types of non-recurring fees, the staff’s questions are meant to broadly inquire of REPs whether they charge fees for these types of activities, and if so, what they call their fees, how these fees are defined in their Terms of Service documents, the dollar amount of such fees, and the total dollar amount of such fees collected in 2013.