TCAP Commentary: PUC Puts Electric Providers on Notice

PUC Chair Donna Nelson expresses concerns about unrealistically low prices on powertochoose.org.
PUC Chair Donna Nelson expresses concerns about unrealistically low prices on powertochoose.org.

One-cent electricity? Probably not. But that’s what Public Utility Commission chair Donna Nelson spied on the state’s powertochoose website — and it’s got her angry.

“It has come to my attention that some of the REPs are working the powertochoose website,” said the PUC chair on Thursday, referring to retail electric providers that may be listing misleading prices on the website. “Now we have prices on powertochoose of 1 cent per kilowatt hour. These rates are not the full story of what customers will actually be charged.”

Nelson noted that just transmission and distribution charges — that is, the regulated rates embedded into all competitive electric rates – exceed 1 cent per kWh. But some REPs may be taking steps (such as offering temporary rebates) in order to list unrealistically low rates on powertochoose.org, she said.

Nelson said this adds to customer confusion. She instructed her staff to review the website and the listed offers, and to return to the commissioners with recommendations. “And I want enforcement staff to look at some of these companies,” she said.

Competitive retail electric providers operate in the approximately 85 percent of the state with retail electric deregulation. These providers are free to set their own rates, although included in those rates are regulated transmission and distribution rates that currently run around 4 cents per kWh.

PUC Commissioner Ken Anderson says powertochoose remains popular with consumers.
PUC Commissioner Ken Anderson says the state electricity shopping website remains popular.

Given current market conditions and those transmission and distribution costs, it’s unlikely that any REP could charge 1 cent rates over the long term and remain financially viable. Nelson and other commissioners speculated that the REPs were posting the potentially misleading rates so they can get listed more prominently on the state’s electricity buying website.

Powertochoose.org was created more than a dozen years ago, with the beginning of retail electric deregulation in Texas. It’s been popular with consumers and consumer groups, although it has required periodic adjustments by PUC staff. On Thursday the agency’s executive director appeared to question whether the site had outlived its usefulness, and whether its continued existence was encouraging REPs to play games with their prices.

But Commissioner Kenneth Anderson noted that the powertochoose site remains popular because it’s impartial. “Most folks still use it because it’s neutral,” he said, adding that retail electric providers “are not paying to play” on the powertochoose site and that it “does not favor one retail electric provider over another.”

Dave Lieber, the consumer watchdog at the Dallas Morning News, recently highlighted the misleading 1-cent deals. “One cent? When you read the fine print, you find a confusing jumble of clauses and restrictions that are incomprehensible. Nobody is paying 1 cent for electricity,” he wrote in a Feb. 5 column.

He also warned about misleading electricity shopping copy-cat sites. You can read that column here.

The Texas Coalition for Affordable Power supports the continued operation of the powertochoose website as well as any effort to improve it and weed out misleading price offers.

For more information about electricity prices in Texas, including transmission and distribution rates, check out the TCAP report found here.

— R.A. Dyer

What is the Texas Coalition for Affordable Power?

R.A. Dyer is a policy analyst for TCAP, a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

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