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Texas ALJ: Names "AEP Texas Commercial & Industrial Limited Partnership" [sic] and "AEP Retail Energy" May be Used by REP
May 18, 2012
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Copyright 2010-
The names "AEP Texas Commercial & Industrial Limited Partnership" [sic] and "AEP Retail Energy" are not deceptive or misleading, and are not in violation of Commission Rules, a Texas State Office of Administrative Hearings ALJ said in a proposal for decision regarding AEP Texas Commercial & Industrial Retail Limited Partnership's application to serve mass market customers (39509).
Therefore, "Unless outweighed by a policy that prevents REPs and TDUs from sharing common brand names, the ALJ recommends that the Commission approve the Application because the name AEP Retail Energy is not deceptive, misleading or vague," the ALJ said.
Note that the ALJ quoted the name as "AEP Texas Commercial & Industrial Limited Partnership" whereas the actual certificated name is "AEP Texas Commercial & Industrial Retail Limited Partnership."
AEP Texas Commercial & Industrial Retail Limited Partnership is currently certified to serve customers over 1 MW, and is seeking to serve all customers. Several REPs have opposed the use of the AEP name for a mass market REP.
See prior coverage of the case
"The name AEP Retail Energy on its face is not deceptive, misleading, or vague. It describes the function of the company (providing retail energy), and it designates that the REP is a member of the AEP group of companies," the ALJ said.
"Applicant seeks to take an already-approved name for larger customers and expand its customer base," the ALJ added. This statement could refer to either the certificated name "AEP Texas Commercial & Industrial Retail Limited Partnership" or trade name "AEP Retail Energy," as both appear on the current certificate.
In fact, nowhere in the proposal for decision does the ALJ specifically address the name AEP Texas Commercial & Industrial Retail Limited Partnership, with the findings of fact, conclusions of law, and related discussion addressing a specific name citing the name AEP Retail Energy. The only indication from the ALJ that the name AEP Texas Commercial & Industrial Retail Limited Partnership is not deceptive or misleading is in an opening summary paragraph (in which the name, ironically enough in a case where much of the evidence debated whether the name was confusing to customers, is improperly identified).
Indeed, even AEP Texas Commercial & Industrial Retail Limited Partnership has been inconsistent with describing its desired names. In direct testimony, AEP Texas Commercial & Industrial Retail Limited Partnership's witness said that, "The two names that AEP REP seeks to use and have approved are those that the Commission has already approved for AEP REP as an Option 2 REP: 'AEP Texas Commercial & Industrial Retail Limited Partnership,' and the d\b\a name 'AEP Retail Energy.'" These are also the only two sought names on the actual REP certificate amendment filed by AEP Texas Commercial & Industrial Retail Limited Partnership (aside from AEP Plus, which the company is no longer seeking to continue to use).
However, in a post-hearing brief, and perhaps the source of the ALJ's incorrect citation, AEP Texas Commercial & Industrial Retail Limited Partnership said, "AEP REP further seeks permission to use and have approved two of the names the Commission previously approved for AEP REP's use as an Option 2 REP - 'AEP Texas Commercial & Industrial Limited Partnership' [sic] and the d/b/a 'AEP Retail Energy.'" Note the term "Retail" has been dropped from AEP Texas Commercial & Industrial Retail Limited Partnership.
While Matters presumes this is scrivener's error, and not a formal request to use the name "AEP Texas Commercial & Industrial Limited Partnership" (due to prior statements and the fact that the presently approved name uses the term retail), it begs the question that if the company itself, and an ALJ examining record evidence in the case, cannot properly cite the company's name, what are the chances that customers will be able to correctly understand the company's certificated name.
This is notable because Matters has been of the opinion that the protesting REPs' case was stronger in arguing that the certificated name is inappropriate for the mass market, rather than the sought trade name AEP Retail Energy (while marketing will be done under AEP Retail Energy, the certificated name must appear on certain documents by rule, such as the EFL).
While protesting REPs may argue that the retail market should not allow the sharing of any corporate brand between a REP and TDU, precedent in the market certainly favors the finding that the sharing of a corporate brand, such as in the name AEP Retail Energy, does not qualify as misleading or deceptive.
However, the term "AEP Texas," which would be the first two words of the certificated name, is more than a corporate brand, and has been used in the market as the public face for AEP Texas North Company and AEP Texas Central Company, rather than simply an umbrella brand for the individual TDUs as well as other AEP companies. Therefore, Matters finds it distinguishable from the prior existence of TXU Electric Delivery Company and TXU Energy Retail Company, for example.
While AEP Texas Commercial & Industrial Retail Limited Partnership has argued that the term "AEP Texas" is its Texas brand for all AEP companies in the state, AEP Texas North Company and AEP Texas Central Company identify themselves in the public as only "AEP Texas," rather than some extension of that umbrella brand name (e.g. AEP Texas Central, or AEP Texas TDU). The website AEPTexas.com is exclusively used by the TDUs, and the TDUs in news releases identify themselves as AEP Texas (though occasionally news releases concerning one specific company may use the legal name, such as a release regarding AEP Texas Central bonds, news releases covering both TDUs use simply AEP Texas with no reference to either AEP Texas Central and AEP Texas North, see recent examples here and here).
Due to the use of the term AEP Texas, the names AEP Retail Energy and AEP Texas Commercial & Industrial Retail Limited Partnership are distinguishable. While AEP Retail Energy may have a "plain meaning" as the ALJ describes due to its use of Retail in the name, the ALJ does not examine this question with respect to the name AEP Texas Commercial & Industrial Retail Limited Partnership.
While the certificated name AEP Texas Commercial & Industrial Retail Limited Partnership does contain the term "Retail" to identify the company's role in the market, the term comes after five other words, including the prominent use of the term AEP Texas. There is simply so much jargon in the name that the word "retail" becomes lost, as it literally was when used by both AEP Texas Commercial & Industrial Retail Limited Partnership itself, and the ALJ, as each cited the name as simply "AEP Texas Commercial & Industrial Limited Partnership."
Without the key term retail differentiating this particular AEP Texas company (whether the term is actually present or not, experience with sophisticated individuals including the company and ALJ shows that the term retail can too easily be "read out" out of the name likely due to its length), customers are confronted with an unknown company billing itself as part of AEP Texas [with a long line of words after], which to date in the mass market has solely been used to mean one of the AEP TDUs.
Indeed, a proposed finding of fact illustrates this point in finding that, "AEP is not the brand or logo of the incumbent utilities."
No such finding of fact is made for the term "AEP Texas."
Nonetheless, most of the case centered on the trade name AEP Retail Energy. The preliminary order, whose structure the PfD follows, also focused on the propriety of the trade name rather than certificated name.
"AEP Retail Energy is affiliated with the AEP companies and indicating that affiliation is an accurate description of the company, and not facially misleading," the ALJ said.
The ALJ also concluded that, "There is no evidence that any name recognition or confusion about the role of TDUs and REPs in the marketplace would overcome a potential customer's desire to save money."
While AEP Retail Energy has offered to use a disclaimer, as previously required under PURA for shared REP-TDU brands, the ALJ found that, "[b]ecause the name AEP Retail Energy is not misleading, there is no need for the disclaimer."
"However, if the Commission determines that the use of the disclaimer helps to alleviate confusion, then the request should be approved with the requirement that Applicant use the disclaimer for a period of time equivalent to the time provided in the disclaimer statute or five years," the ALJ said.
Copyright 2010-
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