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Texas PUC Chair: 1.5¢/kWh Offers "Deceptive On The Face"

PUC Chair Warns REPs On Offering Prices "Way Below Cost"

Nelson Schedules Meeting With Stakeholders To Reach Resolution on Power to Choose Site

June 10, 2016

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Copyright 2010-16
Reporting by Paul Ring •

Texas Public Utility Commission Chair Donna Nelson yesterday tasked Staff with reviewing ultra-low priced offers in the market, such as rates listed at an average of 1.5¢/kWh at 1,000 kWh consumption, as Nelson stated, "I think they're deceptive on the face."

Nelson's comments came in a discussion on the Power to Choose website at yesterday's open meeting

"I continue to be bothered by the Power To Choose website and the really low offers ... In spite of our admonition against REPs, they're continuing to do it," Nelson said

"I really want [Staff] to be looking at these one-and-a half cent offers because I think they're deceptive on the face," Nelson said

Nelson said that she was not familiar with all of the parameters of such ultra low price offers, but cited an example where a customer would need to hit 1,000 kWh exactly to receive the 1.5¢/kWh rate

Such offers with impossibly narrow usage bands, while once appearing on the site, have by now generally been removed from the site, with remaining offers in the 1¢ range generally offering the 1¢ rate over a much wider usage band, with a variance of at least 500 kWh. Specifically, of the seven companies with 1¢-1.1¢/kWh offers in the Oncor service area listed on Power to Choose as of June 10, four of the offers provide usage credits resulting in the 1¢ rate for customers using between 1,000-2,000 kWh. The three others provide the usage credits to customers using 1,000-1,500 kWh.

In our review, we did see one company which still provided a usage credit only to usage between 900 and 1,100 kWh, but notably the average price at 1,000 kWh for this plan was a relatively high 4¢/kWh and therefore the offer was not among the top listed products (listed on page 3 of the default view)

"I want to caution the REPs about putting out offers to customers that are way below cost," Nelson said

Regarding how to address this issue on the Power to Choose site, Nelson said, "I don't think the way to solve this is to re-arrange how we list the offers, because customers care about a lot of things, and maybe a lot of them don't care about price, but I think the one thing most customers care about is price."

Nelson has scheduled a meeting with stakeholders on June 21 to try and reach a resolution on the site. Nelson scheduled the meeting as she was a little concerned about the project, "dragging out," and noted that things move a little faster if a Commissioner is involved

Commissioner Kenneth Anderson said that, after reviewing comments in the project thus far, "I remain, at this point, convinced that we need the Power to Choose website."

Anderson noted that determining exactly what changes are appropriate will be the, "difficult aspect."

Anderson said that one proposal he's, "not really sold about," is the push from some stakeholders for some, "kind of a standard offer."

"That, I think, is really anti-competitive," Anderson said

Nelson agreed, noting the legislature has specifically rejected such a product for the market

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