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.

Centerpoint Residential AMS Fee Disappears 5/31/2015

Centerpoint’s $3.05 AMS surcharge for residential customers will expire on 5/31/2015.  REPs should ensure that they cease billing customers that fee after that date.  The AMS fee for other customer classes continues.

HB 489 Gathering REP Support

As reported in Energy Choice Matters, HB 489 seems to have gathered some REP support which will be reflected in a soon-to-be filed Committee Substitute.  HB 489 governs disclosures related to REP smart thermostats.

Rule Waiver Request

IGS logo-energy

I read with interest IGS’ filing yesterday seeking a waiver from the TPV requirement for a Door to Door sale found at 25.474(f)(3).  They also seek a waiver from the authorization disclosure requirements found in (f)(2) which require the authorization disclosures to be delivered using a written LOA or telephonically.  I would suggest that the waiver from (f)(2) is not required as 25.471(d)(8) already defines “in writing” as written words memorialized on paper or sent electronically.  Therefore, it would seem that an LOA presented on an Ipad would comply with this requirement.  So, it is really the TPV requirement that needs to be waived.

I’m not so sure the PUCT will be willing to grant such a waiver.  While the sales process IGS described appears thorough, it suffers from the same limitation that a regular paper LOA suffers from; namely that the sales agent can falsify the LOA and sign on behalf of the customer.  Since devious sales agents can enter any email address for the customer, there is no way to confirm that the information entered by such agent is correct or belonging to the actual end use customer.

Even though IGS described some very good practices with respect to the employment of its agents, and while imperfect as a guard against such agent fraud, requiring a TPV for all door-to-door sales does add an extra layer of protection for the customer and allows for ease of review if and when a complaint is filed.  Given the ease with which such fraud can occur with door-to-door sales, I’d suspect the PUCT will reject IGS’ waiver request.

House State Affairs Committee Meeting on 3/11/2015

The House State Affairs Committee will consider the following electric related bills

HB 489         Anchia

Relating to customer protections related to smart thermostat services marketing and contracts.

HB 1092        Turner, Sylvester         

Relating to an annual report of residential electric customer complaints.

 

The full notice of this public hearing can be found at

http://www.legis.state.tx.us/tlodocs/84R/schedules/html/C4502015031110301.HTM

 

 

Small Increase in PUCT Electric Complaints in 2014

The total volume of electric complaints filed by consumers with the Public Utility Commission of Texas (PUCT) in calendar year 2014 increased by approximately 5% from last year’s record low volume, Regulatory Compliance Services reported

Feb. 25, 2015 — Regulatory Compliance Services’ 2014 Year End Scorecard shows that the PUCT investigated 6,631 electric complaints of the 7,195 complaints it received in calendar year 2014. Investigations related to Retail Electric Providers (REPs) accounted for 4,971 of the 6,631 complaints.

Regulatory Compliance Services reported that the PUCT staff informally determined that REPs may have violated commission rules on approximately 20% of the complaints investigated in 2014, which is down from 22% last year

According to Regulatory Compliance Services, billing issues accounted for 2,782 of the REP complaints received related to retail electric service which is an increase of approximately 14% from the 2013 volume. Of the 2,782 REP billing complaints received by the Commission, 2,566 were investigated. Of those REP billing complaints that were investigated, approximately 19% were closed with the informal finding that a rule violation may have occurred.

A copy of the full report with REP-specific complaint data may be obtained from Regulatory Compliance Services, http://www.your-rcs.com/YearEnd.htm

EFLs, Pricing Discounts and the Power to Choose Website

Staff sent REPs the email below last Friday denoting their “correct” way of showing average prices for plans that include discounts for auto-pay, e-billing and the like.

It appears, based on their statements, that a product is not a “product” for EFL purposes simply because it requires e-billing or auto payment.  Since all customers have the right to request bills via U.S. mail at no charge and retain the right to pay with a check in the mail, staff has construed that to mean that all products must having average pricing that reflects that default offering.  As the billing rule says – 25.479(b)(4)- “The customer may be charged a fee or given a discount for non-standard billing in accordance with the terms of service document.”  Clearly staff interprets discounts as not meeting the definition of a recurring charge.

So, if you post on PTC, best comply with their interpretation.  But what about other websites? I would suggest this does not affect other websites.  I disagree with the PUCT as to the notion that a product EFL – whereby the product requires enrollment on e-bill/autopay – does not meet the definition of a recurring charge.  I believe it does and therefore the average price calculation should reflect the addition of such discounts on the EFL.  I believe the EFL should note that if the customer ceases e-bill/auto pay, the discount (which should be specifically stated/identified) will be removed.

PUCT Email:

Good afternoon.

A year and a half ago, we sent an email to all of you who post on the PTC website regarding EFLs listing a discounted average price per kWh in the pricing disclosure section of the EFL that only applies to customers who choose a certain option(s) such as auto pay, electronic billing, etc. As mentioned in that email dated March 20, 2013, the average price per kWh listed in the pricing disclosure section, as well as the rate reflected on the PTC site, should be the non-discounted price.

P.U.C. SUBST. R. 25.475(g)(2)(A) states that a fixed rate product shall provide the total average price for electric service reflecting all recurring charges, excluding state and local sales taxes, and reimbursement for the state misc. gross receipts tax, to the customer. The rule does not include discounts.

A REP may show discounted pricing in the EFL below the non-discounted price for various discount features such as pay, electronic billing, etc.  However, the price reflected at the top of the price disclosure chart, as well as the price reflected on the PTC, should be the non-discounted price. The rule does not forbid a REP from having a plan(s) that require the customer enroll in auto-pay, paperless billing, etc. and disclosing a lower price than plans that don’t require those features.

 

For those EFLs that are listing a discounted average price per kWh in the pricing disclosure section of the EFL that only applies to customers who choose a certain option(s), please make the necessary revisions by COB October 24, 2014. If the revisions are not completed and uploaded onto the PTC site by COB October 24, 2014, any EFLs not in compliance will be removed from the PTC site and the matter may be referred to the Oversight & Enforcement Division.

Finally, to help us with our contact list, please respond with the following information:

PTC Residential Contact Person (include: name, title, mailing address, email, telephone, fax)

Let me know if you have any questions. Thanks.

Gabriel Cardenas

Information and Education

Public Utility Commission of Texas

512-936-7046

 

Fees are disclosed…

Interesting commentary in the DMN this morning about “Sneaky Fees”…see video below. What I find a little misleading though, is the complete failure to mention the electricity facts label (EFL) and to note that minimum usage fees may be included in the average price calculation depending on the exact level of usage that triggers the minimum usage fee. All recurring fees are required to be included in the average price calculation for each product’s EFL at three different usage levels. The whole purpose of the EFL is to present and “apples to apples” comparison between products. Unfortunately, Mr. Schnurman confuses the issue by attempting to equate an apples to apples comparison with a much more specific to each customer cost savings calculator as he refers to the feature on the www.currentchoice.com website. Cost savings calculators are great. Should the PUCT incorporate one on their website? That’s their call. But to run a headline that alleges the PUCT’s website has the Power to Confuse and that sneaky fees obscure the cost of electricity is simply sensationalism. As his own column points out, the fees “are disclosed (often prominently).”

What is true is that there is no easy way to compare a customer’s total anticipated cost among various providers as there can be many non-recurring fees that are unique to how a customer uses electricity. For example, a customer may incur disconnect fees if they fail to make timely payments with one REP, while another may not charge such a fee.

All non-recurring fees are required to be disclosed by the PUCT in each REPs Terms of Service document.

Could it all be much simpler if there were no fees? REPs, like airlines, tend to implement fees to directly recoup cost drivers. Disconnect fees are imposed when you get disconnected, just like baggage fees are imposed on those who want to check bags. If such fees weren’t charged, all of us would pay a higher price.

Door to Door Sales Scams…

An interesting news story running out of Ohio is worth a watch if you haven’t seen it… deceptive sales news story 01

Training your sales agents correctly should help prevent these types of problems.  Click here for more information on our online training offerings.

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.