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Texas PUC Opens Investigation That Could Implicate Thousands Of Customers Being Denied Ability To Choose Their Retail Electric Provider

Staff Warns Of Business Model That May Be Taking Root

November 3, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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The Texas Public Utility Commission opened a formal investigation of Texas Excel Property Management Corporation (Texas Excel) for possible violations of PURA and Commission rules, arising from allegations from the PUC's Division of Compliance and Enforcement (DICE), which had sought such an investigation to examine potential violations related to the denial of tenants' rights to choose a retail electric provider in areas of the state in which retail customer choice has been introduced, as well as the unauthorized resale of electricity

During today's open meeting, Barksdale English, the Division Director of Compliance and Enforcement for the PUC, noted the broader implications from the instant case: "It's also serving a little bit as a notice to the public at large that there seems to be a business model that might be taking root in the state where property management companies that are leasing out either single family homes or apartment units that are separately metered are requiring their tenants to use the retail electric provider that the property management company selects for them."

In the instant case, Staff had alleged that, "As part of a separate investigation, DICE staff received information from TXU Energy regarding eight different apartment complexes operated by Texas Excel that appear to require tenants of individually metered apartments to maintain electric service in the complex's name. Under an agreement with the property owner, TXU Energy bills the property owner for service using a continuous services agreement. Continuous services agreements are intended to cover the provision of electric service to rental units that are vacant. However, according to information provided by TXU Energy, Texas Excel has contracts with TXU Energy for each of its eight apartment complexes in which every unit appears to be covered through a continuous services agreement, irrespective of whether the unit is vacant or not. Through this arrangement, even if the unit is occupied, either Texas Excel or the apartment complex is considered the customer. If Texas Excel passes the cost of electric service through to its tenant, who is the end use customer, then it is not only interfering with tenants' rights to choose a provider; it is also illegally acting as a retail electric provider."

Staff had alleged that, for approximately a year, Texas Excel Property Management had not had any substantive conversation with Staff in response to Staff's RFIs. During today's open meeting, Staff reported that, in a response to Staff's petition (filed last week) for a formal investigation to be opened, Texas Excel has provided some information to Staff, but Staff alleged that such information is incomplete

As Staff had not received responses to its RFIs, Staff said that it had been yet unable to assess whether Texas Excel is acting in accordance with the law.

Staff alleged that, "If Texas Excel is taking title to electricity and then, in turn, selling that electricity to its tenants, Texas Excel is interfering with its tenants' right to customer choice."

Staff said that all buyers of retail electric service are entitled to their choice of a retail electric provider and to have that choice honored, citing PURA § 17.004(a)(2).

Further, Staff said that PURA § 39.107(c) provides that, "tenants of leased or rented property that is separately metered shall have the right to choose a retail electric provider, ... and the owner of the property must grant reasonable and nondiscriminatory access to transmission and distribution utilities, retail electric providers, electric cooperatives, and municipally owned utilities for metering purposes."

"Interfering with customer choice has broad implications. Not only does it violate one the core principles of the restructured electric utility industry in Texas, but it also denies these tenants with access to the Commission's robust customer protection rules because the tenants are not recognized as the retail electric provider's customer of record ... As a result, end use consumers are not properly informed, do not know their rights, and do not even have the authority to work with the [retail electric] provider if any issues with service arise." Staff said

"One of the primary concerns is the tenants' electricity could be disconnected without proper notice as provided under 16 TAC § 25.483(a)," Staff said

"Staff has reason to believe that tenants in Texas Excel' s eight apartment complexes do not have the option to choose a retail electric provider. If Texas Excel charges each tenant separately for electricity, then Texas Excel is operating in violation of the law and must be held accountable," Staff alleged

Staff further alleged that, "Texas Excel's provision of electric service to its tenants may violate PURA § 39.352(a), which states that, '[a]fter the date of customer choice, a person may not provide retail electric service in this state unless the person is certified by the Commission as a retail electric provider.' Such resale would also constitute a violation of 16 TAC § 25.107(a)(1), which requires that a person obtain a certificate before purchasing, taking title to, or reselling electricity in order to provide retail electric service, as Texas Excel is not registered as a retail electric provider."

"The violations of which Texas Excel is suspected are serious and could impact thousands of Texas consumers," Staff said

English reported that Staff is currently engaged in three other investigations of similar matters, and noted that, in such cases, the entities have been responsive to Staff

Docket 54225


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