Texas Retail Provider Tells PUC It Should "Clarify" That Recent Legislation Requires Advance Monthly Notice To Customer Of Default Renewal Price

September 1, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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In comments to the Texas PUC in a customer protection rulemaking implementing various recent legislation, Evolve Retail Energy LLC d/b/a Octopus Energy said that the PUC should "clarify" proposed §25.475(e)(3)(A) to require a REP to provide, on a monthly basis, "clear notice of the price applicable to a default renewal product before that product goes into effect for a customer each month."

See background on the proceeding here

"The Commission should clarify §25.475(e)(3)(A) to require a REP to provide on a monthly basis clear notice of the price applicable to a default renewal product before that product goes into effect for a customer each month. A monthly notice should be required to ensure that customers clearly understand the price for energy they will be charged the following month if they fail to act. For customers who have been lulled into a set-it-and-forget-it mind set with their electricity service, the monthly reminders about their upcoming expenses will encourage them to make an affirmative choice for the best product to meet their needs. This would impose very little cost on retailers yet would provide large value to consumers through complete and frequent transparency," Octopus said

Octopus said that, as proposed, §25.475(e)(3)(A) does not require a REP to provide the customer any notice of the product price even though it may vary monthly.

While the Commission's proposed revisions to §25.475 reflect the timing of the notice that a REP must provide pursuant to Utilities Code §39.112 as enacted by HB 16, Octopus said that the proposed revisions, "fall short of requiring a REP to provide a customer adequate information regarding the impact of that termination, especially the impact that a customer may experience if the customer does not act in response to the notice."

"To provide additional clarity to customers, Octopus Energy recommends that the Commission's rules require the REP to provide notice of the actual price the customer will pay if they default to the renewal product unless they are on a daily or hourly index product which could not reasonably be forecasted," Octopus Energy said

"A customer should not have to calculate the price based on terms provided by the REP as proposed by §25.475(e)(3)(A). Rather, the REP should provide notice of the actual price that the customer will pay not later than 24 to 72 hours before the rate will become applicable to the customer's consumption," Octopus Energy said

"And since the default renewal product may have a different price from month to month, the REP should provide this notice of the price for continued service before the start of each subsequent month," Octopus Energy said

"This clear, transparent approach will ensure that customers are not caught off guard by unexpected price changes under the default renewal product. This would impose very little cost on retailers yet would provide large value to consumers through complete and frequent transparency," Octopus Energy said

Octopus specifically proposed rule language stating that, "Not less than 24 hours prior to when a customer will become liable for charges pursuant to a default renewal product, the REP must provide the customer notice of the price that will apply to the customer's renewal product for the upcoming month. If the price changes from one month to the next the updated price for the next month's service also should be provided at least 24 hours prior to the time when the new price will become effective."

"This notification should apply not only prospectively, but also to customers who previously transitioned to a default month to month product from a fixed rate contract," Octopus said

"During the Legislative Session, legislators expressed concern that customers can be surprised by a rate change when their fixed rate contract expires and they are switched to a variable rate plan as a default service. This concern is not unfounded, as reflected in the Commission's statistics showing that billing issues are the primary customer complaint. Ensuring that a customer receives clear notice regarding the termination of a fixed rate product and the charges that the customer will pay in the event they do not select another retail product is critical to helping customers avoid enrollment in a default renewal product with higher rates than they might expect," Octopus said

"Many other retailers have talked about a business model that provides for a low price during the contract just so that customers forget about their electricity rate and then charge significant variable rates after the period ends. These business models are not in the consumers' best interest and can easily be avoided by requiring all variable rates to be clearly and frequently communicated to customers prior to the start of each new month, effectively meaning that customers on a variable rate plan should get at least 12 notifications each year clearly communicating their monthly prices. This transparency will prompt price discovery and shopping in the market, lowering the cost for all customers," Octopus said

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