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Texas PUC Changes Power to Choose Website To Remove 1¢ Credit-Based Offers From Default View, Commissioners Consider Whether Products With Usage Credits Meet Definition of "Fixed"

June 30, 2016

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

In an initial step, the Public Utility Commission of Texas has changed the default view of the Power to Choose website such that products with minimum usage fees or credits do not appear in the product list.

Related: RetailEnergyX.com: Even Without Gimmicks, 1¢ Power Plans Make Economic Sense for Texas Retail Providers

Only plans with fees/credits that are linked to usage are excluded; plans with flat monthly service charges, independent of usage, still appear in the default view.

Under the change, the lowest offer in the Oncor service area on the default view, for 1,000 kWh usage, is about 5¢/kWh, as the 1¢/kWh offers which were dependent on usage credits have been removed from the default view

Customers may click a button to show plans with minimum usage fees/credits after the default view loads.

Notably, while plans with non-volumetric usage fees/credits are excluded from the default view, the default view, as of June 29, still does include plans which do have different usage tiers of volumetric energy rates. For example, the lowest offer at Oncor on the site has an energy rate of 1¢/kWh for usage from 0-1,000 kWh, but a 10¢/kWh energy rate for the incremental usage above 1,000 kWh. This results in an average rate of about 5¢/kWh at 1,000 kWh usage, but 9¢/kWh at 2,000 kWh, which to us still presents what consumer advocates considered a "problem" as was occurring under the minimum usage fee/credit mechanism -- a significant divergence in average per-kWh rates at the three EFL usage levels. While some of the usage-based credits plans have much larger variations of up to 10¢/kWh between usage levels, many others have a difference of about 5¢/kWh in the average rate at 1,000 kWh versus the other EFL levels, which is similar to the variation that still exists in certain of the tiered volumetric usage products allowed under the new default view (including the offer that currently appears first under the default as the "lowest" rate).

To be clear, we saw no inherent problem with the reasonable minimum usage fees/credit plans (excluding those which only gave the credit at an absurdly small usage band such as 990-1010) which have been vilified (nor do we have a problem with the tiered kWh rate products now topping the default view); the minimum usage fees/credits were merely a product of the Power to Choose site itself, and their existence, along with the continued divergence in average per-kWh rates despite the elimination of the vilified products, merely reinforces what we've been saying -- REPs are going to find any means possible, within the rules, to have their offers appear most favorably on the site, and banning certain products (which was already tried with teaser rates) will just lead to the creation of a new product which achieves the same goal. Such "whack-a-mole" regulation compels the question of whether customers would be better served by visiting a third-party site which, unlike a "neutral" state-sanctioned site, may offer opinions on the best products, and which plans are simply gimmicks. Moreover, unlike the Power to Choose site, third-party sites are financially invested in ensuring customers select a satisfactory product so that customers return to the site in the future -- a motive which should eliminate the listing of any products that are not in the customer's interest.

Related: RetailEnergyX.com: Texas Should Stop Listing REP Rates On Power To Choose Site

Chairman Donna Nelson did stress that removal of the plans with minimum usage fees/credits from the default view was just an initial step on which stakeholders reached consensus and which could be implemented quickly, as Nelson said that the Commission's review of the site is ongoing.

Among other issues under consideration is educating customers about the various EFL usage levels, and whether Power to Choose can use data from the SMT portal to inform the shopping process.

Additionally, Nelson said that the Commission would look at whether certain plans with minimum usage fees/credits meet the current definition of fixed rate product, or whether the definition needs to be changed.

The current definition of fixed rate product is, "A retail electric product with a term of at least three months for which the price (including recurring charges) for each billing period of the contract term is the same throughout the contract term, except that the price may vary from the disclosed amount solely to reflect actual changes in the Transmission and Distribution Utility (TDU) charges, changes to the Electric Reliability Council of Texas (ERCOT) or Texas Regional Entity administrative fees charged to loads or changes resulting from federal, state or local laws that impose new or modified fees or costs on a REP that are beyond the REP’s control."

Nelson will be holding another stakeholder meeting concerning the Power to Choose site

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