Riverway Power, the Houston-based electric retailer that filed for bankruptcy last week rather than have ERCOT put all its customers on “provider of last resort” accounts with other providers (in other words, really expensive accounts) is telling some customers they can switch to other companies without having to pay a cancellaton fee, readers tell us.
Also, they sent the following letter to customers:
On June 3, 2008, Sure Electric, LLC dba Riverway Power Company took the extraordinary step of filing for Chapter 11 protection in U.S. Bankruptcy Court (styled Sure Electric, LLC case no. 80-33664-H4-11) to protect assets for our creditors and to ensure the continuation of our normal business operations for our customers, which include the prevention of moving them to the Provider of Last Resort (POLAR)[stet]. Without this action, our customers would have been subjected to paying very high cost for power. We value the trust our customers have placed in us and took steps to protect them from paying extremely high rates.
The events which caused Riverway Power to file for Chapter 11 protection were certain extraordinary and unprecedented market conditions and price fluctuations in the Energy Balancing Markets managed by the Electricity Reliability Council of Texas. These pricing conditions caused a financial responsibility requirement which must be met in 48 hours; not meeting the financial requirement would have resulted in Riverway Power customers being transitioned to POLAR. We maintain, as Riverway Power has always met its financial responsibility with ERCOT and never been past due in its payments to ERCOT, that this requirement was excessive and the calculations should be subject to further review.
Riverway has filed a motion seeking to terminate (reject) many of its contracts. While Riverway is seeking to terminate (reject) the contracts and no longer be their service provider under the terms of the existing contract, that they will continue to receive power and that Riverway is working with the appropriate agencies to provide alternatives to the customer. We intend to offer a new rate to the terminating customers; in addition we may offer a choice to move to other providers at a special negotiated rate for Riverway Customers.
At this time, you should wait for our next email informing you of the next step. Your power service will continue, and there will be no interruption of your service other than due to non-payment. We urge you to continue to pay your power bill as this will ensure continued service.
Riverway Power intends to maintain business as usual throughout the Chapter 11 proceedings. We intend to maintain our leadership as a low cost provider. Many power companies have emerged from Chapter 11 protection after restructuring themselves for success. We intend to do the same.
We value our relationship with you and want to provide the assurance that we will continue same level of service and support during this restructuring period. We thank you for your continued support and business.
Should you have any questions, please email them to email@example.com.
Riverway Power Customer Care.
A few thoughts:
• It’s nice the company is admitting it’s trying to dump a bunch of customers. A number of readers told us at first the customer service staff was telling them our story about them wanting to terminate customers was a lie.
• The narrative of what led to the financial problem is one we’ve heard from other retailers (who haven’t gone out of business). These wholesale power spikes were pretty rough for the industry but ERCOT hopes new rules that go into effect will take care of the issue.
• It’s interesting that they’re trying to negotiate contracts with other providers to take on some of the customers . National Power did this will some customers, moving about 6,000 customer to Amigo Energy.
• It’s also interesting they may offer the customers they’re trying to cancel new contracts at a different price. No doubt they’ll be much higher than before, but the question is can they be better than what others are offering?
• If one is planning on changing, here’s some advice on what one can do to make it go better.