ARM Protests Use of AEP Retail Energy Trade Name in Texas Mass Market

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February 16, 2011  

The Alliance for Retail Markets has filed a protest against AEP Texas Commercial & Industrial Limited Partnership's application to become an Option 1 REP in Texas (Docket 39112), arguing that the use of the certificated trade name "AEP Retail Energy" in the mass market would, "result in customer confusion and adversely impact competition in the State's retail electric market."

AEP Retail Energy's application to become an Option 1 REP was exclusively reported in Matters (1/31).   AEP Retail Energy is currently an Option 2 REP.

An Option 1 REP may serve all customer classes, and the Texas REP certification process does not further require REPs to indicate which specific classes the REP is seeking to serve.  AEP Retail Energy has not indicated whether it intends, through the amendment, to serve residential customers or will simply start serving mid-merit and smaller commercial customers; however, it should be noted that in Ohio, where AEP Retail Energy launched last year originally as a non-residential supplier, AEP Retail Energy has since started offering residential service (see 1/14).

AEP Retail Energy is a currently authorized trade name for AEP Texas Commercial & Industrial Limited Partnership; however, ARM said that concern regarding the use of the AEP name has been limited due to the REP's Option 2 status, under which AEP Retail Energy only transacted with specific customers in excess of 1 MW signing an affidavit for such service, since such customers are sophisticated and understand the distinction between AEP Retail Energy and AEP Texas North Company and AEP Texas Central Company.

"Both AEP TCC and AEP TNC have operated in Texas using the AEP brand for a significant period of time, including the time in which retail electric competition has existed in Texas.  The certification amendment requested in this docket will permit the concomitant use of the AEP brand by two long-standing utilities and a new mass market REP that formerly restricted its business to only commercial and industrial customers with loads greater than one megawatt," ARM said.

ARM noted that Subst. R. 27.107(e)(1)(B) prohibits REP names that are deceptive, misleading, or vague, and argued that, "use of the d/b/a name 'AEP Retail Energy' in the State's competitive retail mass market has a significant potential for misleading or deceiving customers, regardless of whether intentionally or not."

"[I]t is highly probable that [residential and small commercial] customers ... will assume that the common use of the name 'AEP' by both a utility and a REP indicates an affiliate relationship in which the AEP utility will favor the AEP REP over other retailers in the competitive market ... For example, [customers] may presume that the electric service of AEP Retail Energy customers will be restored first after an outage event, or that smart meters will be deployed at those customers' premises ahead of other non-affiliated REP customers' premises," ARM said.  ARM further argued that customers may incorrectly believe that AEP Retail Energy customers will receive more reliable service from the utilities.

"More pointedly, some initial confusion may result from the misperception that AEP Retail Energy and the AEP utility are one and the same company, which will only exacerbate these types of erroneous perceptions and presumptions," ARM said.

Since the stipulation regarding the acquisition of what was then TXU Electric Delivery by Energy Future Holdings in 2007, a condition of which was the use of the Oncor name for the wires company, there has not been an Option 1 REP in Texas which shares a name with a current wires company.

As its primary requested relief, ARM asked that the Commission deny the REP certificate amendment of AEP Retail Energy if the new mass market REP is permitted to retain the AEP brand in its business name.  ARM does not oppose the certificate amendment if the new mass market REP is not permitted to retain the AEP brand in its business name.

Alternatively, ARM said that if the mass market REP is allowed to use the AEP brand name, it should be required to file plans detailing its compliance with various code of conduct requirements, and well as how the AEP companies will educate customers about the different and distinct roles of the AEP utilities and the retail supplier.

As another alternative, ARM sought to apply the requirements of PURA 39.157(d)(5)(B), which expired in 2005, to AEP Retail Energy.  This expired provision required a REP using the name of an affiliated utility to comply with certain advertising and disclaimer requirements.  Despite the expiration of these provisions, "ARM posits that the Commission may nevertheless apply them in the exercise of its discretion if it concludes such action is an appropriate remedy, in whole or in part, for the use of the misleading and deceptive nature of the AEP REP business name upon removal of the one-megawatt customer load restriction."

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