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Texas Staff: "Onus" on REPs to Communicate Information to End-Use Customers, Including TDU Rate Changes

October 6, 2014

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Reporting by Karen Abbott • kabbott@energychoicematters.com

"In the deregulated electric market, the onus is on the retail electric provider (REP) to communicate information to end-use customers," Staff of the Public Utility Commission of Texas said in opposing a motion from Ambit Energy for rehearing of an order denying summary decision in a complaint case involving a customer whose TDU service classification was changed, which prompted a change in rates charged by Ambit

Click here for background on the case, much of which centers on whether Ambit was required to provide advance notice of a rate change due to a change in the customer's TDU service classification

"[W]hile Ambit argues in its motion that it was incapable of disclosing CenterPoint's demand charges to [complainant] Mr. Isa with advance notice because of the deregulated market structure and applicable tariff provisions, Staff interprets the Commission's customer protection rules to still require Ambit to make this disclosure," Staff said.

"Staff believes that, when taken together with P.U.C. SUBST. R. 25.471(b)(3), which states that a key purpose of the Commission's Customer Protection Rules is to provide customers with sufficient information to make informed decisions about electric service in a competitive market, Ambit could have and should have learned of Mr. Isa's usage and informed him of CenterPoint's demand charge."

"In the deregulated electric market, the onus is on the retail electric provider (REP) to communicate information to end-use customers. REPs must communicate the costs that ratepayers should expect for their electric service," Staff said.

"The Customer Protection Rules recognize that the deregulated electric market is extremely difficult for ordinary ratepayers to comprehend; therefore, end-use customers need to be prospectively informed in clear and conspicuous terms so that they can plan for their financial commitments resulting from enrolling in electric utility service. CenterPoint had no legal duty to communicate its demand charges to Mr. Isa. When it comes to billing, Ambit is CenterPoint's customer and Mr. Isa is Ambit's customer. Mr. Isa is not CenterPoint's customer in this regard. Further, the Commission's Rules do not require transmission & distribution utilities to communicate demand charges that result from changes in customer classification to REPs with advance notice. The Commission also recently refused to adopt rules that would require advance notice to REPs of such changes in classification," Staff said.

"Ambit argues that it was unforeseeable that Mr. Isa's usage would trigger CenterPoint's tariff leading to a demand charge. Staff does not agree with this position because, as the usage was obviously approaching 10 kVa, Ambit had the duty to inform Mr. Isa of the consequence in the event his usage triggered the demand charge," Staff said.

"Simply put, Ambit admits that it knew that Mr. Isa's usage was at 9 kVa prior to triggering demand charges. At 9 kVa, Ambit should have advised Mr. Isa that a demand charge would be incurred in the event his usage increased to over 10 kVa. It may have been speculative for Ambit to predict what Mr. Isa's potential usage would be, but that does not absolve it from the duty of informing the customer of the result in the event his usage did increase. Such communication would not have conflicted with P.U.C. SUBST. R. 22.475(f)(2)(B), which states that for small commercial customers, a description of the demand charge and how it will be applied, if applicable, shall be conspicuously contained in the Terms of Service. The language of the rule is forward-looking in nature and does not preclude the REP from communicating such changes subsequent to enrollment," Staff said.

Docket 42111

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