PUCT's Anderson Suggests AEP Branding of REP Contravenes PURA Prohibition on Joint REP-TDU Marketing

The Public Utility Commission of Texas this morning deferred final action on the application of AEP Texas Commercial & Industrial Retail Limited Partnership for an amended retail electric provider certificate to serve customers under 1 MW, after Commissioner Kenneth Anderson said he believes that the proposed operations of the REP would contravene statutory prohibitions on the joint marketing among affiliated REPs and transmission and distribution utilities.

A proposal for decision, which would allow AEP Texas Commercial & Industrial Retail Limited Partnership to serve customers under 1 MW using its certificated name and the trade name AEP Retail Energy, was first reported in Matters.

"The substantially uncontroverted evidence in the record ... shows that AEP Retail Energy proposes to use the name, including the AEP trade and service marks, which I believe violates PURA 39.157(d)(6) and our Substantive Rules which prohibit joint marketing arrangements between a regulated TDU and an affiliated REP," Anderson said.

PURA 39.157(d)(6) requires the PUCT adopt and enforce rules to ensure that, "a utility does not conduct joint advertising or promotional activities with a competitive affiliate in a manner that favors the competitive affiliate."

"My view is that the use [by] a REP, of a common service mark and trademark that's also used by a TDU in ERCOT, constitutes that joint marketing," Anderson said.

"This alone is grounds for denying the application," Anderson said.

Anderson also expressed concern with a contemplated link to AEP Retail Energy appearing on the same website used by the TDUs.

Staff had addressed this issue in its initial brief. Staff noted that AEP Retail Energy's witness indicated that a drawback to the REP not being allowed to use the AEP name would be the inability of the REP to utilize the existing AEP website. In its brief, Staff said that it believes that the use of the website in the manner described by AEP Retail Energy's witness would violate the PURA § 39.157(d)(6) prohibition against conducting joint advertising or promotional activities in a manner that favors the competitive affiliate, "because use of a website is a promotional activity and AEP Retail Energy would be using the same website as the AEP TDUs - something no other REP would be allowed to do."

"Any linkage from a TDU webpage, or even a parent's webpage, to a REP and a TDU that is more than just the pure fact that this is an affiliated company would also likely constitute joint marketing," Anderson said.

By denying the application on the prohibited joint marketing grounds, Anderson noted that this would not require the Commission to make a determination whether the certificated name AEP Texas Commercial & Industrial Retail Limited Partnership or trade name AEP Retail Energy are misleading or deceptive.

While Anderson said that he struggled with determining the appropriate standard to determine whether a REP's name is deceptive or misleading, he reached the conclusion that the standard should be the standard proposed by Staff in the case, which considers the context of the retail market and the manner in which the name is going to be used. While reaching this conclusion, as noted above, Anderson would not decide this issue in the instant docket, given the alternative grounds for denial.

Chairman Donna Nelson asked to defer a decision on the case until the next open meeting to consider Anderson's joint marketing conclusion, which she had not considered.

Nelson said that she also struggled with the case, but had been inclined to uphold the proposal for decision, which would grant AEP Retail Energy's requested amendment to serve customers under 1 MW under the sought names, though Nelson said that she might have modified the standard on which the proposal for decision reaches its ultimate conclusion, without changing the ultimate conclusion itself.

Nelson, in particular, noted the prior presence in the market of a TDU and affiliated REP which shared a corporate name.