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State makes push for clarity on power plans
by Houston Chronicle
Midland Reporter-Telegram
INFORMATION IS POWER
The Public Utility Commission is considering several changes in its rules on information that electric retailers must provide consumers. The information would appear on the Electricity Facts Label or Terms of Service, both of which typically are available by mail, on company Web sites and on the state's Web site www.powertochoose.org.
Among the proposals:
New definitions for types of rate plans:
* Guaranteed fixed: Price and term of contract cannot change.
* Limited fixed: Term cannot change; price can change to reflect transmission charges, grid operator fees or revisions in the law.
* Variable: Price may vary based on criteria set by the company.
* Indexed: Prices may vary on pre-defined formula based on publicly available indexes or data.
* Minimum 10-point type size.
* Maximum 250-word paragraph length.
* Summary of any state rules or laws mentioned.
A new Q&A on the Electricity Facts Label, including:
* Fees associated with terminating service
* Under what circumstances, and by how much, prices can change
* Other fees that may be charged
* What percentage of the retailer's electricity comes from renewable sources, and how does that compare with the statewide average?
* Eliminate current Facts Label sections on emissions and sources of power generation.
* Facts Label to contain monthly costs for 500, 1,500 and 2,500 kilowatt-hours to reflect more typical residential usage amounts.
The PUC will take public comments on the proposals by e-mail at customer@puc.state.tx.us or by mail at P.O. Box 13326, Austin, TX 78711-3326, attention Central Records. In all cases reference Docket No. 35768.
By Tom Fowler
Houston Chronicle
Texas is overhauling the way information about electric power plans is presented to customers, a response to the collapse of five Texas retail electric companies this year.
A draft of the proposed changes includes clearer definitions of fixed-rate price plans, a question-and-answer format to explain terms of a contract and even a minimum type size and maximum paragraph length for certain documents.
The revisions would not affect the appearance of monthly bills but rather the Terms of Service and Electricity Facts Label. These typically are on state and company Web sites or by mail and provide basic information about power plans.
For several years consumer advocates have been calling on the Public Utility Commission to increase the amount of information readily available to consumers shopping for electric plans.
Earlier this summer the PUC responded by publishing a consumer complaint report card and providing links to some financial data on retail electric providers on its www.PowerToChoose.com Web site.
Carin Nersesian, head of government affairs for the Office of Public Utility Counsel, said the proposed changes are an added improvement. Her agency serves as an advocate for residential and small commercial customers in state utility markets.
"Overall, we're pretty pleased with the changes that have been made," Nersesian said.
The issue came to a head earlier this year when two companies, Riverway Power and National Power, told customers that fixed-rate plans for which they had signed long-term commitments would no longer be honored and new, higher rates would apply.
The companies contended that a "material change clause" in state rules gave them leeway to make the changes, which they said were necessary because of rising natural gas and wholesale power costs.
But consumers complained loudly, and PUC commissioners issued stern warnings to the companies. The companies relented but soon after went out of business, and their customers were forced onto plans with other providers. Three other companies went out of business as well.
Within weeks PUC staff started to draft the new language related to customer disclosure rules and asked for industry input.
The proposed rules create two categories of fixed-price contracts -- guaranteed fixed and limited fixed.
Companies could not change price or the length of time a contract is in effect under guaranteed-fixed contracts. Under limited fixed plans the retailer could revise contract terms only in response to changes in laws, or higher charges from the companies that run the transmission system or from the statewide grid operator.
There may be room for improvement in the proposed rules, however, industry observers say.
Patricia Dolese, a former PUC staff member who now does consulting for retail electric companies, said the proposed rules essentially dictate what kinds of products companies can offer. While there was a need to clarify definitions, that effort may backfire by discouraging retailers from being innovative and creating new products, Dolese said.
In particular the rules might make it harder for retailers to create plans that take advantage of a new generation of digital meters that could allow customers to pay rates based on what time of day they use power, with lower rates coming during times of low demand.
"If a product doesn't fit neatly into one of those definitions I'm not sure a company will be willing to offer it," Dolese said.
Customers have been drawn to fixed-price contracts, but if retailers can't change the terms in case of a crisis they may be less likely to offer fixed rates, Dolese said.
"If fewer companies offer fixed-price plans, where does that leave customers? With just variable-rate or indexed plans?" Dolese said.
Indexed plans vary prices using pre-defined formulas based on publicly available indexes or data.
Nersesian said her agency is concerned about a provision that says retailers don't have to provide the PUC with all their contract documents for posting online unless they choose to have their rates published on the powertochoose.org site.
"It's a little troubling because we're always advertising the Power to Choose site as a way to compare plans, but letting some of them decide not to make their information available," Nersesian said.
Some companies choose not to appear on the Power to Choose site because they don't want more customers, Dolese said, while others simply don't want to make it easy for their competitors to know their rates, particularly pre-paid providers whose customers pay for electric service in advance.
"I'd be more than a little reluctant to sign up with someone who made it hard for me to find out information about details of their plans, but apparently some people don't have a problem with that," Dolese said.
The rules are still in draft form, and comments are being accepted for several more weeks. The PUC hopes to have them completed by year's end.
The Public Utility Commission is considering several changes in its rules on information that electric retailers must provide consumers. The information would appear on the Electricity Facts Label or Terms of Service, both of which typically are available by mail, on company Web sites and on the state's Web site www.powertochoose.org.
Among the proposals:
New definitions for types of rate plans:
* Guaranteed fixed: Price and term of contract cannot change.
* Limited fixed: Term cannot change; price can change to reflect transmission charges, grid operator fees or revisions in the law.
* Variable: Price may vary based on criteria set by the company.
* Indexed: Prices may vary on pre-defined formula based on publicly available indexes or data.
* Minimum 10-point type size.
* Maximum 250-word paragraph length.
* Summary of any state rules or laws mentioned.
A new Q&A on the Electricity Facts Label, including:
* Fees associated with terminating service
* Under what circumstances, and by how much, prices can change
* Other fees that may be charged
* What percentage of the retailer's electricity comes from renewable sources, and how does that compare with the statewide average?
* Eliminate current Facts Label sections on emissions and sources of power generation.
* Facts Label to contain monthly costs for 500, 1,500 and 2,500 kilowatt-hours to reflect more typical residential usage amounts.
The PUC will take public comments on the proposals by e-mail at customer@puc.state.tx.us or by mail at P.O. Box 13326, Austin, TX 78711-3326, attention Central Records. In all cases reference Docket No. 35768.
By Tom Fowler
Houston Chronicle
Texas is overhauling the way information about electric power plans is presented to customers, a response to the collapse of five Texas retail electric companies this year.
A draft of the proposed changes includes clearer definitions of fixed-rate price plans, a question-and-answer format to explain terms of a contract and even a minimum type size and maximum paragraph length for certain documents.
The revisions would not affect the appearance of monthly bills but rather the Terms of Service and Electricity Facts Label. These typically are on state and company Web sites or by mail and provide basic information about power plans.
For several years consumer advocates have been calling on the Public Utility Commission to increase the amount of information readily available to consumers shopping for electric plans.
Earlier this summer the PUC responded by publishing a consumer complaint report card and providing links to some financial data on retail electric providers on its www.PowerToChoose.com Web site.
Carin Nersesian, head of government affairs for the Office of Public Utility Counsel, said the proposed changes are an added improvement. Her agency serves as an advocate for residential and small commercial customers in state utility markets.
"Overall, we're pretty pleased with the changes that have been made," Nersesian said.
The issue came to a head earlier this year when two companies, Riverway Power and National Power, told customers that fixed-rate plans for which they had signed long-term commitments would no longer be honored and new, higher rates would apply.
The companies contended that a "material change clause" in state rules gave them leeway to make the changes, which they said were necessary because of rising natural gas and wholesale power costs.
But consumers complained loudly, and PUC commissioners issued stern warnings to the companies. The companies relented but soon after went out of business, and their customers were forced onto plans with other providers. Three other companies went out of business as well.
Within weeks PUC staff started to draft the new language related to customer disclosure rules and asked for industry input.
The proposed rules create two categories of fixed-price contracts -- guaranteed fixed and limited fixed.
Companies could not change price or the length of time a contract is in effect under guaranteed-fixed contracts. Under limited fixed plans the retailer could revise contract terms only in response to changes in laws, or higher charges from the companies that run the transmission system or from the statewide grid operator.
There may be room for improvement in the proposed rules, however, industry observers say.
Patricia Dolese, a former PUC staff member who now does consulting for retail electric companies, said the proposed rules essentially dictate what kinds of products companies can offer. While there was a need to clarify definitions, that effort may backfire by discouraging retailers from being innovative and creating new products, Dolese said.
In particular the rules might make it harder for retailers to create plans that take advantage of a new generation of digital meters that could allow customers to pay rates based on what time of day they use power, with lower rates coming during times of low demand.
"If a product doesn't fit neatly into one of those definitions I'm not sure a company will be willing to offer it," Dolese said.
Customers have been drawn to fixed-price contracts, but if retailers can't change the terms in case of a crisis they may be less likely to offer fixed rates, Dolese said.
"If fewer companies offer fixed-price plans, where does that leave customers? With just variable-rate or indexed plans?" Dolese said.
Indexed plans vary prices using pre-defined formulas based on publicly available indexes or data.
Nersesian said her agency is concerned about a provision that says retailers don't have to provide the PUC with all their contract documents for posting online unless they choose to have their rates published on the powertochoose.org site.
"It's a little troubling because we're always advertising the Power to Choose site as a way to compare plans, but letting some of them decide not to make their information available," Nersesian said.
Some companies choose not to appear on the Power to Choose site because they don't want more customers, Dolese said, while others simply don't want to make it easy for their competitors to know their rates, particularly pre-paid providers whose customers pay for electric service in advance.
"I'd be more than a little reluctant to sign up with someone who made it hard for me to find out information about details of their plans, but apparently some people don't have a problem with that," Dolese said.
The rules are still in draft form, and comments are being accepted for several more weeks. The PUC hopes to have them completed by year's end.
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