StarTex's Bob Zlotnik Raises Concerns on REP Disclosures; Use of Non-Spin

May 10, 2011
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Greater enforcement of retail pricing plans and disclosures in Texas is needed given some of the current practices in the market, said StarTex Power CEO Bob Zlotnik.

Several issues, including the use of teaser rates, have recently attracted the attention of the PUCT (4/15).

StarTex honors its promotional rates for a full 30 days. However, Zlotnik noted that it has become apparent that some REPs are offering a promotional rate for only the first billing cycle, which may only be for a few days depending on the timing of the enrollment. Disclosure of the applicable time period for such rates may not always be clear.

Zlotnik also said that the posting of variable rate history is another area requiring Commission attention.

Zlotnik reported that some REPs' variable rate history only reflects the energy charge, and not the full variable rate, including TDSP and other charges, actually charged to customers for a particular month.

Zlotnik said that there needs to be greater enforcement of these issues by the PUCT. While non-compliant products are removed from Power to Choose, Zlotnik said similar products often reappear only to be taken down again, and he believes that fines for non-compliant products would curb such behavior.

While the Commission has levied numerous fines in connection with its general compliance audits, some of which include violations of EFL or pricing disclosure rules, there have not been any public enforcement actions regarding Power to Choose outside of these audits, which were initiated in 2009.

"The bottom line is that consumers need to be educated," Zlotnik said. "As the market is fluxing, consumer education becomes the only tool to combating high bills and unexpected charges."

For the second consecutive year, StarTex Power was awarded the Houston Better Business Bureau Pinnacle Award. The award, which is the BBB's top honor, is conferred upon companies that maintain a superior commitment to ethics, overall excellence, and quality in the workplace.

Turning to the nodal market, Zlotnik expressed concern with the use of Non-Spin by ERCOT, which has the effect of mitigating balancing prices. Since Non-Spin costs are socialized across the market, while balancing prices would be paid by only unhedged QSEs (or their REPs), use of Non-Spin essentially "bails out" REPs relying on the balancing market, Zlotnik said.

Such actions, combined with ERCOT's temporary relaxation of credit standards in February, can essentially distort retail pricing, Zlotnik noted, by shielding unhedged REPs from true wholesale market conditions, allowing them to continue to offer retail pricing not reflective of expected market conditions, had Non-Spin deployment not been used to mitigate balancing prices.

Furthermore, Zlotnik raised concern that the use of Non-Spin harms resource adequacy by blunting balancing market price signals required in an energy only market to incent new generation.

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