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Consumer Groups Urge Retention of Rescission Period in Texas
June 22, 2011
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The PUCT should retain the three day right of rescission for all types of contracting for electric service, consumer advocates and the Texas Energy Association for Marketers said in separately filed comments (38674).
As only reported in Matters, a proposed rule would remove the requirement for a rescission period for all customers, except those enrolled via door-to-door sales, where a rescission period would remain applicable pursuant federal law (4/22). The change is intended to facilitate same day switching.
TEAM opposes elimination of the rescission period due to the potential financial exposure to REPs associated with the proposed elimination.
Under same-day switches with the elimination of the right of rescission, TEAM explained that if a customer switches from REP 1 to REP 2 and then desires to leave REP 2:
- The customer would submit a second switch away from REP 2 and may go back to REP 1 or switch to another REP, i.e., REP 3.
- REP 2 would be obligated to pay the TDU charges and wholesale settlement costs for the days that the customer was with REP 2.
- REP 2 would bill the customer for the period of time that the customer received service from REP 2.
"The ability to collect the amount due on the partial month bill is significantly diminished," TEAM said. Although fixed price contracts may contain early termination fees, "recovery of that fee will be difficult," TEAM said. Such fees are not applicable if the customer was served on a month to month product.
In contrast, with the current rescission period, if a customer rescinds a switch, the ERCOT settlement transactions go forward as though the switch to REP 2 never occurred (via a manual MarketTrak process). From a financial settlement perspective, REP 2 is not obligated for any TDU charges or wholesale settlement costs for that customer, and the TDU charges and wholesale settlement costs for that period are billed to the customer by REP 1, which retains the customer.
"TEAM recognizes that its position is not ideal, and that either scenario has difficulties. Operational burdens exist if same day switches are implemented and the 3 business day right of rescission remains in place. This is true because if a customer exercises the right of rescission, a manual process through Market Trak is required to return the customer to its original REP. However, under today's rules, customers are switched before the expiration of the right of rescission period. Thus while the operational issues identified would increase cost, they would not be a barrier to leaving the right of rescission in place," TEAM said.
Consumer advocates also opposed elimination of the rescission period. The Steering Committee of Cities served by Oncor said that the rescission period, "helps assure consumers that the retail electric market is reasonably free of scams and high pressure sales practices."
"If the right of rescission is available, residential consumers have less reason to worry about REP sales solicitations that lead them to make regrettable 'spur-of-the-moment' decisions," Cities said.
If the Commission does decide to eliminate the rescission period, the Office of Public Utility Counsel said that it should be retained for telesales, in additional to door-to-door sales as required by federal law, since customers do not have access to written terms during a telephonic solicitation.
OPUC noted that there were a total of 197 slamming complaints between December 1, 2010 and May 31, 2011. "While this is not a huge number, it demonstrates that slamming does still occur," OPUC said.
Additionally, some 29,170 switches were canceled in 2010, although this number is not broken down by customer rescissions versus accidental enrollments which were corrected (e.g. numbers in the ESI ID transposed, etc.)
The Texas Ratepayers' Organization to Save Energy and Texas Legal Services Center further said that if the rescission period is eliminated, the PUCT should adopt additional provisions to improve the quality of information given to consumers before they make a decision to switch. These additional provisions include: providing stronger disclosure provisions in the solicitation of retail electric customers; requiring that REP websites be accessible for the elderly and for people with disabilities; and increasing the record retention provisions to match the statute of limitations for contracts and for other regulatory retention timelines.
Furthermore, Texas ROSE said that if the rescission period is eliminated, a customer should be able to switch providers for 45 days after a switch occurs without being subject to the early termination fee.
The proposed rule amendments also deal with timing requirements for disconnections and reconnections, and other services.
Texas ROSE sought to require that REPs shall submit reconnection requests on a 24/7 basis. The rule seeks to speed reconnections for customers with provisioned advanced meters to two hours after TDU receipt of a reconnection request (one hour for customers on prepaid service).
However, Texas ROSE noted that this two-hour reconnection window is only triggered once the REP submits the reconnection request, and under current rules REPs are not required to submit a reconnection request for payments made on a weekend or holiday until 2:00 p.m. on the first business day after the payment was made.
The REP Coalition sought to extend the cut-off deadline for the same-day reconnection of service to a premise with an advanced meter that is not communicating with the TDU (and cannot be reconnected remotely) from the proposed 2 p.m. deadline to 5 p.m.
"Extending the cut-off deadline for reconnection requests by three hours (that is, from 2 p.m. to 5 p.m.) at such a premise will ensure that a disconnected customer will not unnecessarily go without service for an extended period of time once having satisfied its financial obligation to its retail electric provider (REP)," the REP Coalition said.
The REP Coalition noted that the current cut-off deadline for guaranteeing the same-day reconnection of service is 5 p.m. on a business day, provided that the customer pays an extra fee for same-day reconnection.
This option is available to all customers under the rule today, regardless of the type of meter. The REP Coalition noted, however, that under the proposed modifications to the rule, the opportunity to pay for a guaranteed same-day reconnection of service appears to be reserved for only customers who do not have an advanced meter.
In other words, absent the REPs' proposed modification, customers with smart meters will be worse off under the amended rule, given that the same-day reconnection of service will only be guaranteed if the TDU receives the request by 2 p.m., three hours earlier than the 5 p.m. cut-off deadline applicable to customers without advanced meters paying the guaranteed same-day fee.
However, the Joint TDUs support the proposed 2 p.m. deadline, stating that it strikes the proper balance between the expectations of customers with advanced meters that their reconnect will be processed that day, and the ability of the TDU to complete field work using the reduced staff identified in each TDU's negotiated advanced metering system (AMS) deployment plan.
The Joint TDUs note that the 2 p.m. deadline will apply only in those instances in which attempts to communicate with the customer's meter are unsuccessful as a result of an AMS equipment problem. "In many cases, the inability to complete remote reconnection will be the result of an issue on the customer's side of the meter, rather than a problem with the AMS system," TDUs said, such as due to tampering, in which case the reconnection timeline as stated in the rule would not apply.
The Joint TDUs also sought a provision allowing a TDU to propose a charge applicable to a Priority Move-in request for a customer with an AMS meter.
The proposed rule requires the TDUs to offer a Priority Move-in, pursuant to which, if the request is received by 5 p.m. on a business day, the customer's service will be energized that day even if remote connection through AMS communication with the customer's meter fails.
In contrast, a Standard Move-in would not require same-day completion if submitted after 2 p.m. and AMS communication fails.
"Unless the TDU has a specific charge applicable to Priority Move-in service, every Move-in order will likely be sent as a Priority," the TDUs noted. "In effect, the 2PM deadline included in the rule for Standard Move-in requests will be ineffectual and the Priority service will become the Standard service," TDUs added.
Although charges for Priority Move-in requests exist today, for at least one TDU the charge is to be zeroed out under AMS deployment.
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