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Texas REPs Seek to Prohibit Use of Logo, Brand By Both Utility and Competitive Affiliate

September 25, 2013

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Copyright 2010-13
Reporting by Karen Abbott •

Several retail electric providers have urged the Public Utility Commission of Texas to adopt a new rule which would prohibit a utility from sharing any same brand, logo, or any identifying brand feature with a competitive affiliate engaged in competitive electric service in Texas.

The proposal was made by the REP Coalition, consisting of the Alliance for Retail Markets, Reliant Energy, the Texas Energy Association of Marketers, First Choice Power, CPL Retail Energy, WTU Retail Energy, and TXU Energy

Specifically, the REP Coalition sought the following addition to the Substantive Rules:

"A utility shall not share the same brand, logo, or any identifying brand feature with a competitive affiliate engaged in competitive electric service in Texas, nor shall a utility allow the use of its brand, logo, service mark, or any identifying brand feature by such affiliates. For purposes of this section, use or sharing includes, but is not limited to, shared domain names (including e-mails), social media links, digital applications, or any promotional materials or advertising. Utilities may allow disclosure of their affiliation with competitive affiliates in other communications to the extent that such communications do not constitute joint marketing and advertising."

The REP Coalition said that, "[a]s the facts in [the prior] AEP and CenterPoint [cases] both demonstrate, the name and logo under which the TDUs have operated since 2002 or later is doubtlessly a valuable resource for competitive affiliates providing competitive electric services in Texas, if allowed to use the TDU brands in the market."

"These brands immediately convey all the associated goodwill of the TDU to any service or product to which the brand is attached," the REPs said.

The REPs specifically noted evidence from the AEP Retail Energy proceeding, which indicated that, within the AEP TDU service territory, 73% of consumers expressed familiarity with the company "AEP Retail Energy" despite the fact it did not operate in Texas. Outside of the AEP TDU service territories, the survey showed that familiarity of any degree with the AEP Retail Energy brand plunged to 18% in the Oncor territory and 12% in CenterPoint territory, the REPs said.

"Unquestionably, the marketing and promotion efforts of TDUs to create customer familiarity with and recognition of their brands through the ubiquitous use of their names and service marks in the electric market has the effect of making their competitive affiliates immediately familiar and recognizable to customers if they are allowed to use the same name brand and logo in their provision of competitive electric services. This is a competitive advantage that is only available to affiliates of the TDUs with their monopoly service areas and it is a type of advantage that PURA Chapter 39 Subchapter C seems structured to prevent," the REPs said.

"The REP Coalition maintains that one means of favoring a competitive affiliate is to share a name and service mark with its affiliated utility. This act of instantaneously creating recognition of and familiarity with an otherwise unknown product or service inherently 'favors' that product or service."

The adoption of the language proposed above by the REPs, "will significantly diminish the potential for improper co-branding of TDUs and their competitive affiliates through the use of common names, logos, and service marks," the REPs said.

Additionally, the REPs said that the Commission should continue to prevent utilities from favoring their competitive affiliates even in instances where the brands are not shared. "For example, a billboard containing only the utility logo and the competitive affiliate logo would be a problem even if they were different logos. Similarly, linked websites, referrals via social media, or cross-promoting the TDU and competitive affiliate brands on digital applications would also fall within the definition of favoring, even if they are not shared brands," the REPs said.

The REPs said that SUBST. R. 25.272(h)(2)(B)(vi) should "continue" to prohibit links from a utility's internet website to a competitive affiliate's web site. "Directly linking a competitive affiliate's website to that of the utility is a form of advertising, just as placing an internet advertisement on a website or paying for web searches to produce the website at the top of the resulting search list is advertising. The Commission correctly prohibited links from utility websites to those of their competitive affiliates when the rule was adopted and there is no reason to reverse or diminish that prohibition now. This section should be expanded to prevent shared social media or digital application links in addition to direct website links," the REPs said.

The TDUs, filing comments separately, generally said that the current substantive rules prevent the behavior sought to be prohibited by PURA.

AEP Texas Central Company (TCC) and AEP Texas North Company (TNC) said that the language contained in current PUC SUBST. R. 25.272(b)(2), "is sufficient to prevent improper activities between utilities and competitive affiliates and essentially repeats the language contained in PURA §39.157(h)."

"In the event such market power abuses were to occur, the Commission has adequate enforcement tools available to it, as specified in PURA §39.157(a) and incorporated in PUC SUBST. R. 25.272(i)(5)," TNC and TCC said.

TNC and TCC said that the only shared branding by AEP Texas (the TDUs) and its competitive affiliates is the red AEP parallelogram. The TDUs reported that the Third Court of Appeals has set expedited oral argument on the Commission's prohibition of the joint use of the parallelogram by AEP Texas and its affiliated retail electric provider for October 9, 2013.

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