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AARP Texas Alleges Several Retail Providers Offering Non-Compliant Fixed Rate Products

Alleges TOSs Being Used To Circumvent Statutory Protections, Says REPs' Non-compliance "In Plain Sight"

Seeks Requirement For REPs To Submit All TOSs For PUC Review

August 27, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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Texas Legal Services Center (TLSC) and AARP Texas alleged that several retail electric providers are offering non-compliant fixed rate products, while alleging others are using terms of service documents to circumvent customer protections in PURA or the PUC rules, in comments filed with the Texas PUC in a customer protection rulemaking proceeding

TLSC & AARP alleged that, "On August 23, 2021 there were 8 fixed price prepaid plans on Power to Choose in zip code 77478. Five of the plans (offered by Peso Energy, Ampra Energy, Eligio [sic] Energy and Heritage Power), [sic] are a one-month or month-to-month contract. A fixed price contract is defined as having a minimum term of3 [sic] months."

As of early Aug. 27, each EFL cited by the groups identified the cited product as fixed. In the EFLs from Ampra and Peso, the "Contract Term" field was listed as "1 month(s)". In the EFL from Eligo, the "Contract Term" field was listed as "1 months". In the EFL from Heritage, the "Contract Term" field was listed as "Month-to-Month."

It wasn't clear if the REPs were being inartful in describing their product, due to its prepaid nature, as not being a term contract, yet still offering customers a fixed rate for a term at least as long as required by rule. However, to the extent this were the case, it wasn't clear from the EFL how long the fixed rate would last if it truly was not only for one month

Notably, the EFL for the Ampra & Peso products stated, "Except for price changes allowed by law or regulatory action, this price is the price that will be applied during your first billing cycle; this price may change in subsequent months at the sole discretion of REP." The Ampra & Peso EFLs also directed customers to historic rates, a disclosure typically provided for non-fixed products.

"Overall, the Commission needs to be proactive in monitoring for compliance with the rules and taking corrective action. There are inconsistencies with the rule in plain sight. There is no need for in-depth investigation to identify them," TLSC & AARP alleged

TLSC & AARP further alleged that, in a review of several REPs' terms of service (TOS) documents, "we have found many provisions that are inconsistent with statute and 16 TAC."

TLSC & AARP cited, "language from TOS Agreements that raise concerns about REPS using the TOS as a vehicle to limit a customer' s rights."

TLSC & AARP said that PURA §§17.004(a)(6) and 39.101(a)(2) state that all buyers of retail electric services are entitled to privacy of customer consumption and credit information. TLSC & AARP said that Substantive Rule §25.272(c)(5) defines proprietary customer information as follows: "Any information compiled by an electric utility on a customer in the normal course of providing electric service that makes possible the identification of any individual customer by matching such information with the customer' s name, address, account number, type or classification of service, historical electricity usage, expected patterns of use, types of facilities used in providing service, individual contract terms and conditions, price, current charges, billing records, or any other information that the customer has expressly requested not be disclosed. Information that is redacted or organized in such a way as to make it impossible to identify the customer to whom the information relates does not constitute proprietary customer information."

TLSC & AARP said that Section 25.472 (b) states: "A REP or aggregator shall not release proprietary customer information, as defined in §25.272(c)(5) of this title (relating to Code of Conduct for Electric Utilities and Their Affiliates), to any other person, including an affiliate of the REP, without obtaining the customer's or applicant's verifiable authorization by means of one of the methods authorized in §25.474 of this title (relating to Selection of Retail Electric Provider)."

While TLSC & AARP said that there are particular circumstances where customer information is exempt from this "high level" of privacy protection, such as when a REP provides information to a consumer reporting agency as defined by the Federal Trade Commission, the groups said that, "Section 25.474 does not authorize burying language in a TOS to have a customer unwittingly abdicate the statutory protection of his or her personal information to third parties."

"Yet many REPs utilize the TOS Agreement to authorize the release of customer information to third parties, in particular collection agents and agencies. Some TOS Agreements even specify that employer information and work telephone numbers will be provided to the third party entity," TLSC & AARP said. TLSC & AARP included several illustrative examples of language from the relevant TOSs in their comments, which the group said, "illustrates the extent of the practice of inappropriately using the TOS as a letter of authorization to release a customer's information to collection agencies and other third parties."

TLSC & AARP further alleged that, "Some REPs use the TOS to require a customer to begin the dispute resolution process with the REP and/or establish the use of binding arbitration as the final remedy for unresolvable disputes."

TLSC & AARP alleged that such a requirement is contrary to Substantive Rule §25.485 (c) which provides, "nothing in this subsection is intended to prevent a customer other than a residential or small commercial customer to file an informal or formal complaint with the commission if dissatisfied with the results of the alternative dispute resolution."

Texas Legal Services Center (TLSC) and AARP Texas urged the PUC to, "[e]stablish a process for review of TOS documents for compliance and take enforcement action against noncompliant REPs."

"We recommend the Commission review each TOS and work with each REP to bring the TOS into compliance and assess penalties for noncompliance," the groups said

TLSC & AARP further urged the PUC to require REPs to submit an affidavit swearing to the compliance of the TOS with all applicable laws.

TLSC & AARP proposed language to add a rule provision to "clarify" that the Terms of Service (TOS) cannot be used as a vehicle for waiving statutory provisions or Commission rules.

TLSC & AARP's comments were filed in a previously reported rulemaking in which parties have already filed comments in response to a strawman, and in which most positions have already been staked out. As such, we will not belabor our prior reporting on these issues, but see our previous stories linked below for background:

• 7/29: Texas PUC To Consider Whether To Ban All Index Products, And All Products With Ancillary Service Pass-Throughs, For Residential And Small Commercial Customers

• 7/7: Texas REPs Oppose Changing Definition Of Fixed Rate To Include Ancillary Service Charges

Of note, however, is that, in TLSC & AARP's latest comments, the groups said that POLR service should be a "long-term option."

TLSC & AARP said, "The POLR service should be a reasonable, even long-term option for customers and its rate should reflect the rates offered in the competitive market. The POLR rate should not be punitive or designed primarily to provide temporary service in the event of financial default by a REP. Rather, it should be a standard, reasonable fixed rate product for those who choose it. In particular, we would like to see POLR as a viable option for customers subject to a switch-hold and customers on prepaid service."

TLSC & AARP also said that, "The Commission should extend the prohibition on selling wholesale indexed products to residential and small commercial customers to all indexed products and all products that pass though [sic] ancillary service charges."

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