Nelson: Texas Needs to Make Sure Rules Don't Prevent REPs from Offering Load Response Technologies to Customers due to Churn Concerns March 15, 2013 Email This Story Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • firstname.lastname@example.org
Texas needs to address concerns of retail electric providers which are leery of providing customers with technologies to enable demand response due to the fear that the investment may go unrecovered due to customer migration, Donna Nelson, Chairman of the Public Utility Commission of Texas, said during a workshop on demand response yesterday.
Nelson has heard from REPs that they are leery of making investments to facilitate customer demand response due to the concern that the customer may later switch away from the REP, and therefore the REP may not recover that investment.
Nelson noted that REPs may offer two or three-year contracts to customers as a part of offering any enabling demand response technology, but said that the PUCT needs to make sure that, "if a customer leaves, that our rules are such that they [the REP] can avoid losing that cost."
Nelson did not indicate there were any specific barriers in the current rules that would prevent REPs from designing contracts to prevent unrecovered costs (the obvious mechanism would be a termination fee, which are not capped in Texas), but said that the rules should be looked at to ensure there are no obstacles.
To the extent REPs provide customers with a physical technology, such as an in-home device, the contract could stipulate that the device must be returned if the customer migrates to a competitor (or perhaps rendered unusable through its use of proprietary technology or a "lock" similar to locked cell phones), and again, there is no obvious provision in the rules prohibiting such a contract. Although enforcing either provision obviously has limitations, those are cost/benefit decisions for the REP, and do not seem to implicate the substantive rules.
When asked about any barriers in the current rules, Michael Jewell of the Demand Response Provider Coalition said that he did not think the current rules prevent the use of termination fees to recover costs of technologies provided to customers who later leave their contract.