AEP Retail Energy Attributes Knowledge of Market Role to "Descriptive" Name

Survey respondents' ability to correctly identify AEP Retail Energy's role as a REP in the ERCOT market reflects the "descriptive" nature of its name, and does not indicate that the name provides AEP Retail Energy with a competitive advantage, AEP Texas Commercial & Industrial Retail Limited Partnership said in response to a Request for Information filed by Direct Energy in AEP Texas Commercial & Industrial Retail Limited Partnership's application for a REP certificate amendment (39509).

As first reported by Matters, AEP Texas Commercial & Industrial Retail Limited Partnership (which also trades as AEP Retail Energy) is seeking an amendment to its REP certificate to serve customers under 1 MW in ERCOT. The PUCT is currently reviewing, among other things, whether the use of the AEP trade name in the mass market would be consistent with PURA and the Substantive Rules.

In initial testimony, AEP Texas Commercial & Industrial Retail Limited Partnership filed results of a survey addressing customer familiarity with various REP names and knowledge of roles various companies play in the market (see 11/11). Based on those survey results, Direct Energy submitted the following RFI to AEP Texas Commercial & Industrial Retail Limited Partnership:

"Please reconcile [AEP Retail's witness] Mr. Guild's statement on page 10 of his testimony that the name AEP Retail Energy 'does not confer a competitive advantage' with the survey result demonstrating that at least 52% of survey respondents identify that the company AEP Retail Energy exists before such company has spent any money to advertise its existence and the survey result demonstrating that as many as 10% of the customers served by AEP Texas believe there is a service benefit to purchasing retail electric power from AEP Retail Energy while being served by the AEP TDU when no such benefit is legally permissible."

AEP Texas Commercial & Industrial Retail Limited Partnership offered the following response:

"The question wrongly suggests that 52% of respondents identified AEP Retail Energy as being an existing REP. But the survey never asked whether or not AEP Retail Energy exists; it only asks what role particular companies fulfilled in the market. The fact that some respondents correctly identified AEP Retail Energy's intended role does not reflect on whether they considered the present existence of the company."

While the survey did not ask respondents whether AEP Retail Energy "exists," it did ask their familiarity with several companies, including AEP Retail Energy.

And 52% of respondents in the combined AEP Texas Central and AEP Texas North service areas said that they were either "very familiar" (36%) or "familiar" (16%) with AEP Retail Energy. In others words, more than half of customers state that they are already familiar with AEP Retail Energy despite AEP Retail Energy not having been active in the mass market yet.

However, in its response to the RFI, AEP Retail Energy appears to interpret the 52% cited in the Direct Energy RFI as referring to a different question, under which 52% of respondents identified AEP Retail Energy as a retail electric provider, when asked that company's role in the market.

In this case, AEP Texas Commercial & Industrial Retail Limited Partnership said that, "the identification of AEP Retail Energy as a REP simply demonstrates the descriptive nature of the name."

"It does not indicate the respondents' likelihood to choose it as their REP," AEP Texas Commercial & Industrial Retail Limited Partnership continued.

"Moreover the fact that 10% of respondents expected a service benefit to purchasing retail electric power from AEP Retail Energy if they live in an AEP TDU's service territory is not significant. First, in a study with a± 7% error variance, a 10% response merits little weight. Second, a 10% response does not mean that all, or even a substantial portion, of the 10% of customers is more likely to sign up with AEP Retail Energy in an actual purchase situation. People making a long term purchase commitment are likely to investigate what the realities of the market place are before entering into a contract," AEP Texas Commercial & Industrial Retail Limited Partnership added.

Further addressing the fact that survey respondents already identify AEP Retail Energy as a REP, AEP Texas Commercial & Industrial Retail Limited Partnership said that, "People respond to the information they have. In this case, the only information they have is the name AEP Retail Energy. And the name - especially the phrase 'Retail Energy'- is descriptive."