Texas’ utility commissioners complained Thursday about the “deceptive” rates many retail electricity companies offer to consumers.
The Public Utility Commission is investigating ways to make electricity shopping less onerous and confusing without greatly restricting the types of offers companies can make. The commission is looking to improve the state’s Power to Choose website that offers comparative pricing from more than 50 retail companies.
Commission Chairwoman Donna Nelson acknowledged the shopping process is difficult.
“The concept of choice doesn’t work if the customers aren’t educated about what they’re buying,” Nelson said.
She said retail companies were warned about promoting offers that promise low rates that are only temporary or only apply if consumers use certain amounts of electricity. “And they continue to do it,” she said of some retailers ignoring the warnings.
The Texas Legislature deregulated the electricity market for most of the state in 2002 to provide more choices to consumers and reduce rates. But the average cost of electricity for Texans in Houston and other parts of the state with deregulated power markets exceeded the national average in 2014 for the first time in three years, according to a report released Wednesday.
The 85 percent of Texans who live in deregulated service areas paid about 15 percent more than residents in communities with municipal utilities, such as San Antonio and Austin, according to the annual report by the nonprofit Texas Coalition for Affordable Power, which represents more than 165 Texas cities and governmental subdivisions across the state.
Nelson said she will hold a June 21 meeting with certain stakeholders to seek temporary fixes while the commission finalizes its investigation.
Utility commissioner Ken Anderson acknowledged that changes to the website are needed, but he said cheaper electricity rates are out there for people who do their homework.
“Anyone who’s paying the higher price isn’t shopping,” Anderson said.
Late last year, the commission added a filter to the Power to Choose website that allows shoppers to weed out offers with so-called minimum use fees that kick in if a consumer doesn’t use at least 1,000 kilowatt-hours of power a month. Such plans charge people more for trying to conserve power. Many of the plans that appear to be the cheapest include minimum use fees that increase rates when a customer uses less than or more than a specific amount of electricity each month.
Anderson said he doesn’t want to force companies to offer only standardized plans. “That’s really anti-competitive,” he said.
When Houston Mayor Sylvester Turner served in the legislature last year, he pushed for legislation to do away with such minimum-use plans. But his bill died during the session.
Turner took up the issue after the Houston Chronicle reported that more than 70 percent of electric plans available in the Houston area contained terms that penalize customers for not using enough power each month. The Chronicle’s analysis of 309 electricity plans at Power to Choose found that those with minimum-use fees charged customers an average of $10.67 a month if they failed to use at least 1,000 kilowatt-hours of power.
Jake Dyer, a policy analyst at the affordable power coalition, said minimum-use fees often are part of “gotcha” offers that ultimately trick consumers into paying higher rates. He said it would be better if the Power to Choose website filtered out such offers by default.
Electricity companies contend the minimum-use fees cover some overhead costs so they can reduce their average electricity rates. Although plans on Power to Choose disclose the fees, Dyer said, customers don’t always read the fine print, or find the wording confusing.