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Future of Texas Power To Choose Site: Introduction of Narrower Limits For Acceptable Product (Standardized Product?), Or Complete Elimination

February 11, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Public Utility Commission of Texas is facing an existential crisis with the price comparison listing on its Power to Choose electricity shopping site as retail electric providers adjust how their products are priced to appear as the lowest quoted offer, even when such quote, although in compliance with current disclosure rules, isn't indicative of the customer's actual experience and price.

Under consideration are a continuum of changes, from narrowing the type of products listed on the site, to dropping the price comparison feature entirely, given the maturity of the market.

Prompting the examination of the current practice is the re-emergence of 1¢/kWh rates on the site, which due to their specific requirements, may not reflect real-world pricing for specific customers if certain conditions are not met.

"It has come to my attention that some REPs may be working the system on Power to Choose in order to be listed as offering the lowest price," Chairman Donna Nelson said.

Nelson conceded that the problem has been created in part by her prior direction that the site's default view be in order of lowest rate (initially showing only fixed rates), rather than the site's former default view which randomized offers and price.

Nelson said that the 1-cent rates, "are not always the full story of what a customer actually will be charged," and that such rates, "make it really difficult for most customers," to compare prices, which is the site's intended purpose.

Nelson directed staff to make recommendations to avoid such issues, "up to and including whether it's still time to have a Power To Choose website, because if we have it, it has an indica of officialness from the Commission, and people look at it and they see, 'OK, this is the PUC's website, this 1¢ rate must be legitimate, so therefore I'm going to sign up,' and then they get their bill and it's not 1¢"

Nelson noted that the Commission had previously acted to stop prior issues with the site, such as the prior posting of ultra-low teaser rates by REPs, which were not even applicable for an entire month.

However, "The REPs always find a way, not all of the REPs but some of the REPs, whatever practice we put in place to try and end the confusion, then they find a way around that," Nelson said

This inevitable outcome has been why RetailEnergyX.com has previously postulated that the only way to avoid such issues is to cease listing prices on Power to Choose (click here for RetailEnergyX.com's prior discussion)

Most of the 1¢ offers quote a 1¢ rate at 1,000 kWh due to the application of credits which apply to usage above 999 kWh usage.

Brian Lloyd, the PUC's Executive Director, added that, "the development of those offers has been driven, ironically, by the fact that we have this website, and we sort by price."

"Are we causing that to be the innovation by the virtue of running this website, when we would rather innovate on overall price, overall value-added to customers, and things like that," Lloyd said

Lloyd said options under consideration to combat the confusing pricing include randomization, additional filters, and potentially a rulemaking on disclosures. Nelson suggested that the Commission may engage focus groups to improve the site

While Commissioner Kenneth Anderson wondered whether the issue could be solved simply by re-introducing randomization, Nelson reiterated her original concern that customers who view the default listing of prices, and see that the initial random rates are in excess of their current rate, may erroneously stop shopping even when there are lower rates that are available, but not displayed under the default view

Lloyd also suggested that one option may be limiting what product types are listed on the Power to Choose site.

"What they [REPs] are allowed to offer under the rules, and what we post on our website can be two very different things," Lloyd said, suggesting a more rigorous standard for the products allowed to be posted on the Power to Choose site may be appropriate given the imprimatur of a state-run site

While such standard could still allow a wide range of custom, but approved, product types, and while neither Lloyd nor any of the Commissioners uttered this word, another of the avenues to implement such standards would be a "standardized" product for Power to Choose listings, a policy which consumer advocates have repeatedly advocated.

Lloyd noted that some 15 years into electric choice, there are a plethora of other private sites that offer comparisons, and that, "you don't see a lot of that [the confusing gimmicky offers] on those sites, probably because they're private businesses and want people to come back and not feel like they got tricked on the site."

Of course, such sites operate based on compensation (typically from the REP but with some instead charging a fee to the customer), and Anderson said that most customers still use the Power to Choose website because it is a neutral and impartial site, with no pay-to-play

Nelson also directed Enforcement Staff to look at whether any of the ultra low price offers are violating rules, and whether the companies are implementing charges that aren't reflected in the rate that pops up

"We're watching y'all, and we're going to look further into this," Nelson told REPs

Staff is to update the Commission at the March 24 open meeting

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