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TXU Proposes Oncor Be Prohibited From Sharing "Identifying Brand Features" With Parent, NextEra Competitive Affiliates

February 14, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Echoing concerns raised by certain other retail market participants, TXU Energy filed a statement of position with the Texas PUC, in the proceeding reviewing NextEra Energy, Inc.'s proposed acquisition of Oncor, in which TXU said that Oncor should be prohibited from using any "identifying brand features" used by its parent or competitive affiliates

While NextEra has made certain commitments with respect to a prohibition on the use of the Oncor logo, trademark, or "brand" (a nebulous term) by a competitive affiliate, the NRG companies have warned of the potential for "transitive" co-branding among Oncor and competitive affiliates which may not violate the language of the code of conduct.

TXU expressed similar concerns, stating, "TXU Energy maintains that TDUs should not be permitted to utilize their resources, which include but are not limited to their brands, to cross-subsidize, support, or favor their competitive energy affiliates. This includes the utilization of 'transitive co-branding' to create an explicit or implicit impression of corporate relationships between subsidiaries of the same parent when one of those subsidiaries is a regulated utility such as Oncor."

"For example, TXU Energy would be strongly opposed to the use of similar brand colors, logo elements, cross-referencing to the parent company, and any other indication of affiliation between Oncor and a hypothetical competitive affiliate that services or sells products in a competitive energy-related market in this state to the extent those services are energy related (e.g., retail electricity brokerage services). TXU Energy contends that this would represent a violation of 16 TAC § 25.272(h)'s safeguards regarding joint marketing, advertising, and promotional activities between a utility and its competitive affiliates."

TXU Energy offered a modified version of a revision to a NextEra regulatory commitment originally proposed by the Texas Energy Association for Marketers which would make explicit that Oncor shall maintain "identifying brand features" separate and distinct from both its parent companies, and any competitive affiliates

TXU Energy also offered recommendation on how any merger credits should be provided if adopted in the case.

"In the Texas competitive market structure, retail electric providers ('REPs') are the customers of transmission and distribution utilities ('TDUs') such as Oncor. As such, any bill credits would necessarily flow to end-use customers of REPs through those customers' contracts for retail electricity service because REPs are the entities that have the relationship with end-use customers and provide the billing function. Notwithstanding the foregoing, TXU Energy recognizes that it is the intent of parties that the benefit of these credits be realized by the end-use retail electric customers, which in turn necessitates that Oncor's implementation of the credits be done in a manner that is operationally efficient for REPs so as to not impose unnecessary costs on the market," TXU said

"First, TXU Energy suggests that a one-time credit be considered. One-time credits will be the most efficient and lowest cost method of delivering value to end-use customers and present a lower level of operational complexity than an ongoing (and potentially frequently changing) monthly credit, and will avoid unnecessary recurring administrative expenses from being imposed on the Commission and the competitive market," TXU said

"If the Commission, however, determines that monthly bill credits should be implemented, having the credits be a constant level, as opposed to varying amounts for each month of the year, for a known, predefined period of time, (e.g., three months) would be operationally easier for REPs to implement and communicate to customers," TXU said

TXU also asked that REPs be given 45 days notice for any change in credits if they vary and a one-time credit is not used, and that changes take effect on the same date as other routine TDU changes (e.g. the scheduled TCRF changes).

"In any event, TXU Energy recommends that Oncor use existing transaction codes (preferably an existing SAC 04 code such as RRR008 Merger Savings Credit) to implement the customer credits as this would be the most efficient way for REPs to prepare their billing systems for the flow through of the credits," TXU said

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