BACKGROUND
Deregulation
State utility commissions used to regulate most of the rates we pay in electric utility bills. Sales for resale between utilities are regulated by the Federal Energy Regulatory Commission (FERC). In the 1990s, however, Enron Corp successfully urged many states and the FERC to deregulate and allow “the market” (e.g., the utility sellers and buyers) to determine electric rates. As a result, no regulator, state or federal, now protects many utility ratepayers from excessive rates.
Electricity deregulation in Texas was approved on January 1, 2002, and called for deregulation that would be phased in over several years. Customers in deregulated areas can choose their electricity service from a variety of retail electric providers (REPs), including the incumbent utility.The incumbent utility in the area (differs to regions within the state) still owns and maintains the local power lines. The REPS compete pricewise to bill customers.
Regulated vs Deregulated
The difference between the two markets is actually fairly simple. In a regulated electricity market, there is only one main company, which is commonly referred to as the utility. This utility claims ownership of the entire infrastructure including wires, transformers, poles, etc. It has two major responsibilities. The first is to purchase electricity from companies that generate it, and the second is to sell and distribute it to its customers.
In a deregulated market, an additional party is involved. The utility still owns the infrastructure, but now, its only responsibility is to distribute the electricity. Deregulated markets permit electricity providers to compete and sell electricity directly to the consumers.
Smart Meters
Most Texans now have Smart Meters and have a monthly fee added to their bills to pay for them. It's called 'Advanced Metering Cost Recovery Factor'.
Touted by Public Utility Commission of Texas (PUC) to:
Your meter will be read without a meter reader having to come to your home.
Your meter can be re-read much faster, should you have questions.
The new meters will record electricity use in 15-minute intervals instead of once a month like the old meters, providing customers more choice and control over their electric usage and expenses.
Smart Meters will provide instant power outage notice to your TDU and support more reliable and efficient electric delivery to your home.
Since in-person meter readings will not be required, the number of vehicles on the road will be reduced, thus reducing pollution, traffic, and fuel consumption.
Eventually, you will have access to detailed readings of your electricity use and corresponding price.
As meters are installed and enabled, the time needed to process service orders, such as starting or stopping service, will be reduced.
In the future, the meters will be able to communicate with programmable devices (like your air conditioner or dishwasher) through a Home Area Network (HAN) module to monitor and control electricity consumption.
You will have more choice and control over your electric usage and bill.
HAS DEREGULATION DECREASED RATES?
Houston Chronicle wrote: A decade of electricity deregulation in Texas has driven up the pay of investor-owned utilities' chief executives, but it has not fulfilled promises to produce the nation's most reliable and cheapest power.
According to a 2014 report by the Texas Coalition for Affordable Power deregulation cost Texans about $22 billion from 2002 to 2012. And residents in the deregulated market pay prices that are considerably higher than those who live in parts of the state that are still regulated.
Texas Rose says: Not according to official government data. In fact, average electricity prices paid by residential customers in deregulated areas of Texas have been anywhere from 9 to 46 percent higher than average prices paid in areas of Texas outside deregulation. Moreover, according to the available data at the United States Energy Information Administration, average rates in deregulated areas of Texas historically have been higher than the nationwide average, while average rates in areas of Texas outside deregulation are generally lower than the nationwide average.
More REPS are charging more and higher fees. The fees cancel out the claimed benefits of advanced meters that are supposed to help consumers save money by being more energy efficient and lower the costs of disconnection and reconnection.
MY EXPERIENCE
I opened an account with REP X after looking at rates and fees. They had no base charge and no minimum usage charge that was a selling point. I think it is insane to be charged for not using something and I believe in conservation for both environmental and financial reasons. I had no problems with the company during my first contract with them.
When my contract was nearing an end last June they notified me; I checked both ‘Power to Choose’ and 'My True Cost' to see if they still looked like a good deal and met my ‘no minimum fees’ criteria, and looked at their prices in comparison to others before going to their website to renew. No new changes in terms were provided. To my horror, I then found they had upped my rate, added fees for both a base charge and a minimum usage fee (not there before).
I contacted them and got no help at all. I requested a copy of our contract and they did not provide it. I really got annoyed when they charged me a minimum usage fee for a billing service period that was only 29 days although the month had 31.
I checked my meter information at SmartMeter Texas and found that had they billed for 31 days, the minimum would have been met and they could not have applied the charge. As a layman, I consider a month a calendar month, and believe if there’s a shorter billing period the minimum requirement should have been prorated. When did the meaning of monthly change? Billing periods did not matter until they stuck in base charges and the minimum usage fee. I would have left but there was a $200.00 cancellation fee.
Again, I got no help by complaining to the company. They eventually sent me what they said was my contract, although everything about it didn’t match the facts of my case. More about that later.
Although my claim was small moneywise, knowing these date changes affect millions I filed an informal complaint at PUC thinking perhaps my shining the light on this would help others.
The PUC ruled against me. I am highly suspect of their investigation. I never had the opportunity to rebut anything X told them. And every single date and fact X provided can be proved wrong or questionable by their own documents!
* My invoices all have Contract Expiration Date on them as well as other disputed facts.
* My June bill shows Contract Expiration Date: 06/30/14 and no Base Charge or Minimum Usage Fee.
* My July bill shows that the Contract Expiration Date has been updated to: 06/30/15 and no Base Charge or Minimum Usage Fee.
These and my subsequent bills should have established that my account was renewed in June, that I renewed for one year and that I have major new charges.
In the meantime, X had eventually (in December) provided what they said to be my contract. However, what they gave me stated it was for 9 months and the Electricty Facts Label (EFL) was dated in September both in electronic(email) and hard copy. My contract was for a year and the PDF linked to was not the one clicked on when I renewed in June.
They apparently gave PUC the same 9 month contract, but sent them a hard copy of an EFL dated in May. They said I had recieved a copy of the contract when I renewed. That is false. They didn't send me anything untill December despite many calls and an email. I call this providing false business records to investigating bodies.
TEXAS LEGAL CONSIDERATIONS
Justifiably, Texas is now considered by most class action lawyers (on both sides of the aisle) to be the state most hostile to class actions. One judge commented to the author, “I don’t know why anyone would bring a class action in state court in Texas because as far as I can tell, the Texas Supreme Court has abolished class actions — it just hasn’t said so.”
Texas Supreme Court Guts Consumer Class Action Protections
Texas Rule of Civil Procedure 42 specifically authorizes Texas citizens to bring class action lawsuits. A case cannot be pursued as a class action, however, until a Texas trial court determines and certifies that the requirements of Rule 42 have been met.
The Texas Supreme Court, through a series of decisions beginning in 2000, has created so many obstacles to certification that it has become practically impossible to have a class action in a state court. The Texas Supreme Court has restrictively interpreted Rule 42 so as to effectively eliminate class actions in Texas courts.
[…]
So, even if a trial court in Texas does certify a class action under Rule 42, that does not mean the defendant will settle, or consumers will get their money back, or that the case will even go to trial as a class action. The defendant can appeal to have the class decertified. That happened again recently in Southwestern Bell Telephone Co. v. Marketing on Hold, Inc. A lawsuit was filed alleging that Southwestern Bell had improperly charged fees to approximately 6,900 customers from 1991-1998. The trial court conducted a four day certification hearing and determined that all of the Rule 42 requirements had been met for class certification. The Court of Appeals agreed. And the Texas Supreme Court reversed and decertified the class.
By my judgement X is guilty of Breach of Contract, Texas Deceptive Trade Practices and Falsifying Records. There's not much recourse because individual consumer claims are small and in Texas
Attorney Fees are paid by the loser. And apparently regulators don't regulate. I think we've seen this before.
SUMMARY
I failed at my attempt to blow the whistle. But, what the heck, this is Texas. I believe Texas is so strongly pro business that it fosters those companies that have a culture of 'delight when cheating their customers'. Think Enron Scandal and BP Manager Joked of ‘Squeezing Gold’ From California for Gas.
Personally, I think companies that cheat their customers and falsify business records to investigating bodies deserve contempt. And those investigative bodies should do their jobs. Further, I have a strong distaste when companies use technology to do their nefarious deeds.
Many Texans have the problems but few complain. Many may not even realize how big this problem is and how it affects them. It affects the elderly and low income people the worst.