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Report: Number Of Retail Electric Providers Serving Residential Customers At AEP Texas North Falls By 50%

TLSC/ROSE Seeks Review Of REP Products By Zip Code To Review Whether REPs Discriminating On Basis Of Income, Location

December 7, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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The number of Texas retail electric providers serving residential customers at AEP Texas North fell by 50% from September 2017 to September 2018, according to data as listed in the draft Texas Scope of Competition report, as noted by Texas Legal Services Center (TLSC) and Texas Ratepayers' Organization To Save Energy (ROSE).

The draft Scope report includes a chart with a heading "Number of REPs and Products Serving Residential Customers by TDU Service Territory."

For AEP Texas North, the chart lists "Residential Suppliers" as numbering 24 in September 2018, versus 49 in September 2017. Other TDU areas saw only marginal changes in the number of REPs serving residential customers year-over-year, and generally had about 50 REPs serving residential customers

It was not clear from the Scope report from where the data on the number of REPs serving residential customers originated (e.g., public Power to Choose listings or proprietary ERCOT ESI ID data). It was also not clear how different REP brands (trade names) and affiliates were counted; some REPs use multiple brands under the same REP certificate, while some REPs may be affiliated but hold distinct REP certificates.

A current cursory review of the Power to Choose site reveals that, if REPs which have multiple brands and/or affiliates are counted as a single REP, there is not as wide as a disparity between AEP Texas North and Oncor (with AEP Texas having about 25 REPs versus just over 30 at Oncor; of course, REPs are not obligated to list on Power to Choose and more REPs may be serving the residential market than listed)

To the extent the data source for the Scope report comparison was Power to Choose listings, we would note that during September 2018, the Texas PUC pulled REP offers from Power to Choose if the REP did not offer the same offers in both English and Spanish, so the Scope's September 2018 data point potentially could reflect a transitory issue as REPs updated their offers.

In any event, TLSC and ROSE note the significant decline, as reported, in REPs serving residential customers at AEP Texas and said, "There is no explanation of why the number of REPs doing business in Texas decreased. At a minimum, the final Report should discuss the rationale for the reduction from 49 REPS [sic] in 2017 to 24 REPs in 2018 for the AEP North territory."

TLSC and ROSE noted that REPs, per PURA §39.101(d), are required to provide annually to the Commission, "information regarding the service provided, compiled by zip code and census tract."

TLSC and ROSE said that, "Reviewing this data would disclose whether low and moderate income families are being excluded from all of the product markets except for the higher priced or riskier ones. It should be noted that this type of zip code information has been previously provided to legislators in an aggregated format. For instance, and in general, prepaid products are riskier to the consumer than other products in that: the rates are generally higher than other products; a customer cannot pick a set payment date; and there are lesser customer protections, especially involving disconnections. Where are these products being sold? The draft Report does not address this. The public cannot determine whether the market is acting in an anti-discriminatory manner. For example, a product dispersion that reveals low and moderate income families are generally excluded from all but the consumer riskier type of products should lead to a 'drill down' to determine whether additional customer protections such as addressing credit deposits or payment plans or arrangements should be addressed. But the current draft Report does not provide the public with information to determine how and to whom the various type of products are being sold. There is consequently, no assurance that access to all types of products is available to low and moderate income families."

TLSC and ROSE also took issue with a comparison of rates included in the draft Scope report

"The draft Report at Figure 1, page 3, states that current competitive rates are substantially less than the last regulated rates (adjusted for inflation) in the former monopoly service territories. There are several problems with this statement and most revolve around the last regulated rate. The Report simply takes the last regulated rate and adjusts it for inflation. However, this adjustment ignores the decrease in fuel costs that have occurred. A review of the last regulated rates shows that at least 33% and upwards to 45% of these rates constituted the fuel portion. While fuel costs were rising at the start of competition, these costs have been decreasing. An inflation adjustment does not capture these fuel cost changes. So, at best, only the nonfuel portion of the last regulated rates should have been adjusted for inflation," TLSC and ROSE said

TLSC and ROSE further said that, "the nonfuel portion of the last regulated rates should have been adjusted for an efficiency factor caused by technology. For instance, the last regulated rates were based primarily on analog, not smart meters. The change to smart meters reduced the costs of meter readers and line maintenance. No efficiency factors were applied. Consequently, the last regulated rates displayed at Figure 1 of the Report do not provide a clear picture of what these regulated rates would be today, given the reduced fuel costs and improved productivity caused by technology. To be transparent rate comparisons should be comparable," TLSC and ROSE said

"Absent from the discussion of rate comparisons is the substantial rise of REP fees in the competitive retail market. Without the limits of regulated ratemaking these fees are buried in fine print disclosures and many of their amounts are materially above costs. While the competitive market is supposed to keep these fees reasonable, it has not been successful. These skyrocketing fees should be addressed in the final submitted Report as they especially impact on the ability of low and moderate income families to maintain essential service during periods of family crisis such as a job loss or medical emergency," TLSC and ROSE said

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