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Texas TDU To Issue Refunds, Through Retail Energy Providers Or Potentially Mailed Check, To Customers Placed on Wrong Delivery Rate Schedule

TDU To Pay $425,000 Fine Under Settlement With Texas PUC Staff

February 20, 2017

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

Sharyland Utilities, L.P. is to issue refunds, through one of three avenues including through a customer's retail electric provider, and pay a $425,000 fine under a settlement with Staff of the Public Utility Commission of Texas that resolves Staff's investigation into alleged violations of 16 Tex. Admin. Code (TAC) § 25.214, relating to Retail Delivery Service Provided by Investor Owned Transmission and Distribution Utilities, and Sharyland's Tariff for Retail Delivery Service adopted pursuant thereto.

The settlement states that, since the initial assignment of Sharyland Utilities, L.P. (ex-Cap Rock) customers onto unbundled delivery rate schedules and the transition to competition and implementation of Sharyland's new tariff in May 2014, Sharyland moved over 1,500 customer accounts from the Small Secondary to the Large Secondary rate schedule.

The settlement states that, "After Commission Staff analyzed the data obtained from Sharyland, Commission Staff concluded that Sharyland incorrectly transitioned 738 of the approximately 1,500 customers from the Small Secondary rate schedule to the Large Secondary rate schedule."

"Additionally, Commission Staff asserts that Sharyland did not timely transition many of the 1,500 customers, transitioning these customers several months after the customer's usage reached or exceeded 3,500 kWh in a billing cycle and the customer's demand exceeded 10 kW in a subsequent billing cycle. Accordingly, Commission Staff concluded that over one thousand customers were impacted by Sharyland's handling of their transition from the Small Secondary rate schedule to the Large Secondary rate schedule," the settlement states

The settlement states that, "Due to the different billing determinant used in the two rate schedules (kWh vs. kW), a majority of the transitioned customers received higher retail delivery charges under the Large Secondary rate schedule than they would have received under the Small Secondary rate schedule. While some customers received higher retail delivery charges of only a few dollars, one customer received higher delivery charges of more than $10,000."

Under the settlement, for service provided from May 2014 through the September 2016 billing period, Sharyland has agreed to refund to the 1,046 impacted customers approximately $989,292 (including interest on the overbillings incurred by the customer under the incorrect rate schedule). Sharyland warrants that it calculated the refund for each customer by subtracting the amount that should have been billed using the correct rate schedule from the amount that was originally billed using the incorrect rate schedule for each monthly service period. The differences between the two for each monthly service period were then summed to create the total amount to be returned to each customer. The total amount to be refunded excludes additional money that the customer would have owed if the customer had been billed using the correct rate schedule.

Additionally, Sharyland has agreed to provide refunds to 427 of the 1,046 impacted customers that were transitioned from the Small Secondary to the Large Secondary rate schedule consistent with the kWh and kW requirements, but not transitioned in the ensuing month. According to the settlement, "Staff asserts that Sharyland again lacked a consistent procedure in its transition of these 427 customers; some customers were transitioned several months after hitting the kWh and kW requirements. Many of these customers could have received lower bills had they been transitioned in the ensuing month."

For the refunds for service provided from May 2014 through the September 2016 billing period, Sharyland will coordinate with each customer's retail electric provider (REP) in order to process the refunds.

Commission Staff and Sharyland have agreed that customers will receive refunds in one of three ways: (1) by Sharyland issuing revised invoices to the customer's REP, in the same manner as invoice corrections under Section 4.4.3 of Sharyland's tariff for retail delivery service, (2) by directly mailing a check to the REP with a request that the REP forward the check to the customer (or otherwise pass the financial benefit of the refund onto the customer), or (3) by directly mailing a check to the customer. Sharyland must obtain a written acknowledgment or agreement from the REP as to which method will be used to issue the refunds to customers. In absence of such written acknowledgement by the customer's REP or agreement between Sharyland and the customer's REP, either of which may be by e-mail, Sharyland shall issue revised invoices to the customer's REP, in the same manner as invoice corrections under Section 4.4.3 of Sharyland's tariff for retail delivery service

According to the settlement, of the 1,046 customers whose rates were affected by Sharyland's transition from the Small Secondary rate schedule to the Large Secondary rate schedule, 416 customers ultimately ended up on the incorrect rate schedule. In addition to issuing refunds, Sharyland has agreed to reclassify these 416 customers to the correct rate schedule.

For service provided after the September 2016 billing period, consistent with the procedure in Section 4.4.3 of Sharyland's tariff for correcting invoices, Sharyland will cancel the original invoices that were sent to the customer's REP and issue a revised invoice to the customer's REP for recent billing periods based on any reclassifications.

Sharyland has initiated the process of reclassifying customers and issuing refunds or revised invoices to REPs and Sharyland agrees that all reclassifications, refunds, and revised invoices will be complete by May 2017.

In calculating the refund amounts noted above, Sharyland agreed to not reduce the amounts to be refunded by approximately $228,000 to reflect months in which the customer financially benefited from the incorrect transition from the Small Secondary to Large Secondary rate schedules -- i.e., months in which the customer's delivery charges would have been higher had the customer remained in the Small Secondary rate schedule.

In the settlement, Sharyland asserts that it has made staffing changes to improve its organizational effectiveness and processes and has implemented business process changes to prevent this type of inconsistent tariff application in the future, including creating procedures that specify which Sharyland employees have authority to implement changes in a customer's rate schedule and requiring documentation of the reason for the change. In the settlement, Sharyland asserts that the customer misclassifications addressed in this matter related to Sharyland transitioning the former Cap Rock divisions to competition -- the first such transition for these previously-bundled service territories and customers -- and were inadvertent

The settlement remains subject to PUC approval

Docket 46873

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