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PUC Scolds TXU, Cautions Consumers 11/25

Texans Want Competition - in Football, Barbeque and Even Electricity 11/17

Collecting Unpaid Bills Troubles TXU Corp.10/29

New Transmission Plan May Add To Dallas-Fort Worth Electric Bills 10/21

Low-Income Face Widespread Electric Disconnections 10/6

Administrative Law Judges Issue Decision on El Paso Electric Fuel Case 9/26

Entergy Asking for Increase in Fuel Surcharge 9/24

Fuel Increase Request Approved By PUC 8/22

PUC Approves Moving Electric Market Closer to Competition 8/22

100,000 North Texas Customers Have Switched to Reliant since Deregulation 8/1

PUC Scolds TXU, Cautions Consumers

(November 25)  The Public Utilities Commission has criticized a marketing insert included with bills sent to 1.8 million TXU customers this month and cautioned customers to check independent sources for electricity pricing information before switching providers.

The TXU marketing letter stated, "Lower pricing for TXU Energy Customers Automatically." It said a new monthly price would cut electrical costs by 13 percent. The letter was sent as part of TXU's marketing campaign to retain customers now that its service territory has been opened to new providers.

TXU competitors and others criticized the letter as deceptive, saying that it did not mention that the prices would go up again in the spring.

The PUC also said that TXU's comparison of its so-called price to beat in North Texas with the regulated rates in other cities is irrelevant because competing providers can still offer lower prices.

PUC spokesman Terry Hadley said the agency is not taking action against TXU. But a PUC statement urged residents and businesses to consult its Web site, www.powertochoose.org, for rate and service information from TXU and rival providers before making their electricity choices.

TXU said that its electricity charge would drop from 10.1 cents per kilowatt-hour in November to 8.9 cents. That decline is not a rate reduction but an automatic switch from peak to non-peak rates that happens to TXU and other providers, several of which are offering rates lower than TXU's.

Source: Fort Worth Star-Telegram

Texans Want Competition - in Football, Barbeque and Even Electricity

(November 18) Texans are known nationally for their competitive spirit -- in football, barbeque and now, electricity. A new poll shows a majority of Texans believe electric competition is good. The study, conducted by the Center for Research and Public Policy (CRPP) for the Public Utility Commission of Texas (PUC), also shows strong awareness of electric choice.

Overall, 65 percent of residents favor electric competition. Nearly eight in ten residents (77 percent) know they have the power to choose the company that provides their electric service, a 15 percent increase over last year and a 46 percent gain since 2001.

The top three reasons cited for choosing a different electric provider are lower prices, better customer service and a desire for renewable energy. According to 66 percent of customers, the process of changing electric providers is easy.

"Texas customers know a competitive electric market brings potential savings, innovation and better customer service," said PUC Commissioner Paul Hudson. "Even customers who stay with their power company say choice is good for our state. The survey shows great progress in raising the awareness of customer choice."

The survey, conducted the last week of August 2003, randomly sampled 1,103 customers in 183 Texas counties where electric competition is available. The CRPP is a Connecticut-based national research firm specializing in public policy research and has conducted similar studies in seven other states with electric competition.

Jerry Lindsley, president of the CRPP, said, "Texas lawmakers and regulators took great care to learn from the experience of other deregulated states before moving forward, and the tracking study confirms that their homework really paid off."

Click here for the complete results of the 2003 Tracking Study.

Source: Press Release, www.powertochoose.org
 

Collecting Unpaid Bills Troubles TXU Corp.

(October 29) On Oct. 27, TXU Corp. said it will earn 10 cents more per share than it forecast earlier, despite nagging problems in collecting unpaid bills.

TXU Chairman Erle Nye told analysts at a conference in Florida that although TXU has been able to lower its ratio of bad debts to total billings this year to 1.3 percent from 1.8 percent, the figure is still more than double the historical average of 0.6 percent. "We had a period last year when we couldn't disconnect customers for nonpayment, and I'm afraid we may have taught them some bad habits," said Nye. "They'll have to be reintroduced to the real world."

TXU and other electricity providers suspended their disconnects for non-payment last year during a period when the utilities' computer systems were having difficulty adjusting to the newly competitive statewide residential market. The Public Utilities Commission also revamped its rules regarding nonpaying customers, scrapping a plan to shift deadbeats to a "provider of last resort." "The provider of last resort plan was abandoned because it would end up raising rates even more for people who already were behind in their payments," said Terry Hadley of the PUC.

Nye said TXU will work more aggressively to collect unpaid balances but didn't give more details. TXU has never revealed hard and fast rules regarding its disconnect policy toward customers in arrears, other than to say it is a policy of last resort after carrying the customer for several billing periods.

Reliant Resources spokeswoman Pat Hammon said the Houston-based utility "has had similar experience" with higher bad debt loads since deregulation began early last year. He said that Reliant has been able to lower its bad debt levels this year, although the company did not release specific figures.

Low-income customers can use the Texas Public Utility Commission's Lite Up Texas program, providing a 10 percent discount for low-income families at or below 125 percent of the federal poverty level.

Nye said that TXU expects to report earnings per share for the third quarter of at least $1, up from the 90 cents per share it had forecast earlier. A year ago, TXU's third-quarter earnings per share was 73 cents on net income of $206 million.

The Dallas-based utility's earnings imploded during the fourth quarter of 2002 when it reported what eventually was booked as a $4.8 billion loss on its British operations. TXU had to cut its quarterly dividend to 12 1/2 cents from 60 cents. The losses and reduced dividend dropped TXU's stock from $40 per share at the end of September 2002 to slightly more than $10 per share a month later.

Since the fourth-quarter disaster, TXU has recovered its profitability, and company stock has risen to $22.99, where it closed Monday. Nye said that TXU is still about a year away from serious consideration of restoring the stock dividend to previous levels.

Nye said that TXU's net customer loss in its North Texas service territory, which includes the Metroplex, has been about 3 percent since the market was opened to competition at the beginning of 2002. He declined to give specific figures on customer switching.

Although TXU is vulnerable to price undercutting by other providers in its own territory, TXU has the same right to attract customers in Houston and other areas of Texas that are open to competition.

Source: Fort Worth Star-Telegram

New Transmission Plan May Add To Dallas-Fort Worth Electric Bills

(October 21)  Dallas-Fort worth residents would probably see a dramatic increase in their utility bills under a planned overhaul of the Texas electric market, lawyers and consumer groups warn.

The overhaul, which recently received approval from the Texas Public Utility Commission, would not go into effect for three years. The move would dramatically change the Texas wholesale electricity market. Homeowners and businesses would feel the crunch because companies such as TXU and Reliant could pass wholesale costs on to customers.

In the most basic terms, the overhaul will involve changes in how power grid operators oversee wholesale electricity transactions. Now, grid operators supervise transactions as they occur in four geographic areas of Texas. Under the proposed system, grid operators would oversee transactions in scores or perhaps hundreds of different spots.

The switch makes sense, supporters say, because it would allow the laws of supply and demand to resolve geographical power shortages more efficiently. For example, if power is in relatively short supply in an area -- because of a lack of transmission lines or power plants -- then some wholesale prices would increase. Companies would then look to take advantage of those high prices by building generating plants in that area. The new construction, in turn, would gradually lower prices and alleviate power shortages.

The problem with the plan, opponents say, is that the market responds to forces other than supply and demand. Clarence Johnson, an analyst with state Office of Public Utility Counsel, and other analysts specifically point to transmission bottlenecks. These occur when too much power gets shipped from one part of Texas to another. Left unchecked, large bottlenecks can overheat power lines and lead to blackouts. Under the new plan, the grid operator would assess surcharges on market players in the area where the bottlenecks occur.

But under the plan, the majority of such surcharges would probably go to the Fort Worth-Dallas area, where a recent Public Utility Commission study has found that bottlenecks are most severe.

Under the theory of the new market, the profit motive is expected to encourage construction of new power plants and transmission lines to allieviate the bottlenecks. But federal Environmental Protection Agency rules and intense commercial development tend to prevent such construction in the Metroplex, Johnson said.

It's precisely that problem that attorneys for the cities of Fort Worth and Dallas say would most harm local ratepayers. The probable result would be startling increases in electricity rates during times of high usage when bills are already high, according to Geoffrey Gay, an attorney representing the city of Fort Worth and other municipalities in utility cases.

Likewise, the new system would add to the bottom line of electric companies and operators of the Texas power grid. It could also ease bills for consumers in San Antonio and Austin and other areas where there is an abundance of local transmission lines and power plants.

Source: Fort Worth Star-Telegram

Low-Income Face Widespread Electric Disconnections

(October 7) Advocates for low-income families are accusing TXU Corp., the dominant local utility in the Dallas area, of being too quick to disconnect electricity for families that fall behind on their bills during tough times.

The Association of Community Organization for Reform Now, or ACORN, says some families were cut off for falling behind by less than $200 after paying their bills on time for years.

It can cost customers several hundred dollars in fees and deposits - plus paying off the old balance - to resume service, said Cledell Kemp, a senior staffer in the group's Dallas office. She accused the utility of gouging poor people.

TXU won't say how many customers it is disconnecting or whether the numbers are growing, claiming that releasing the figures could help rival power companies.

According to the state Public Utility Commission, the numbers are growing in Dallas and elsewhere around the state. TXU and other utilities backed off from disconnecting many customers last year because of problems with billing related to the state's switch to a deregulated electricity market last year. That grace period is now over, and customers are also seeing double-digit increases in their electricity bills because of higher prices for natural gas used in power plants.

Source: Abilene Reporter News

Administrative Law Judges Issue Decision on El Paso Electric Fuel Case

(September 26) El Paso Electric (EPE) has received a Proposal for Decision in its petition to reconcile fuel costs before the Public Utility Commission of Texas (PUCT) for the period January 1999 through December 2001. EPE incurred approximately $276 million in fuel and purchased power expenses for the Texas jurisdiction during this period.

The two Administrative Law Judges (ALJs) presiding over the case have recommended that (1) approximately $21 million of Texas jurisdictional purchased power expenses be characterized as "imputed capacity charges," and therefore disallowed; and (2) approximately $0.5 million in fees paid to Enron be disallowed because they are deemed to be labor and administrative costs, not recoverable as fuel. The ALJs have recommended that all other contested issues be resolved in favor of EPE.

The PUCT has scheduled an open meeting on October 23, 2003 to consider the Proposal for Decision. EPE announced it intends to contest the decision before the PUCT and, if necessary, through the appellate process. EPE said a decision upholding the recommendation of the ALJs could reduce EPE's reported income by approximately $13 million after taxes and before the consideration of any interest that would have to be paid on the balance. In addition, if the methodology proposed by the ALJs is adopted for the 1999-2001 period, EPE could be subject to similar disallowances for the reconciliation period beginning in January 2002.

Source: Press Release

Entergy Asking for Increase in Fuel Surcharge

(September 24)  Entergy Corp. is asking state regulators to approve a new fuel surcharge to begin in January that would cost a consumer of 1,000 kilowatt hours per month an extra $6.42 per month, bringing a bill for that much power to $91.42 from $89.74, an increase of $1.68.

That surcharge would reflect higher fuel costs totaling $87.3 million that Entergy said it incurred from Sept. 30, 2002, through Aug. 31.

Entergy's residential and small commercial customers pay a fuel surcharge of $4.74 and that surcharge is set to expire in December.

If the state Public Utility Commission approved the new surcharge, it would last for 12 months.

Utilities in Texas can recover extra cost from higher fuel prices and also must refund to consumers anything it collects when prices are lower. They are allowed to set what is called a fuel factor twice a year, in March and September. The fuel factor is an estimated price for which fuel, usually natural gas, trades.

Dan Lawton, attorney for Beaumont and other cities in Entergy’s service area in southeast Texas, is asking the state commission to decide whether Entergy can pass along the extra fuel costs in January to its remaining customers if many decide to participate in a pilot project to launch retail competition in Entergy's service area.

"Any customer that elects to be in the deregulation pilot project will avoid paying the surcharge," Lawton said. "Such a proposal is not equitable. The Legislature did not pass the deregulation bill to shift costs to other customers."

Source: The Beaumont Enterprise

Fuel Increase Request Approved By PUC

(August 22) On Aug. 21, the Public Utility Commission (PUC) of Texas approved TXU Energy's request to raise the company's electric prices for North Texas residential and small business customers.

The rate increase, which will be implemented immediately, will raise an average monthly residential electric bill of a customer using 1,000 kilowatt hours by 3.7 percent or $3.61 per month, and is the result of higher market prices for natural gas. With the increase, TXU continues to have the lowest Price to Beat rates in the state.

The Texas Electric Choice Act allows incumbent retail electric providers to change the Price to Beat two times per year when natural gas or purchased power prices increase or decrease beyond a threshold level.

Natural gas is a key component in generating electricity and as gas prices rise, the price of electricity also increases. The PUC's approval reflects the higher market prices.

Source: TXU Energy

PUC Approves Moving Electric Market Closer to Competition

(August 22) The Public Utility Commission voted unanimously to approve market protocols that would move Southeast Texas's retail electric market closer to competition sometime in late 2004. In addition to the PUC, representatives of TXU and Reliant also signed on to the protocols, said Jack Blakley, a vice president of regulatory affairs for Entergy Corp.'s Texas operations.

Officials with Entergy Corp. the current monopoly electric provider, and a spokesman for the PUC said last week's blackout in the northeast United States did not seem to influence Wednesday's discussion or final vote. Some have blamed the blackout on deregulation because it led to less regulatory oversight, particularly of transmission lines and procedures.

In 1999, the Texas Legislature passed and then-Gov. George Bush signed into law Senate Bill 7 authorizing the PUC to transform traditional monopoly markets served by investor-owned electric utilities into competitive markets where utilities compete for sales.

Among the legislation's major problems in bringing retail competition to Southeast Texas are connections. Houston and Dallas, the areas in between them and their resident electric utilities, TXU Energy in Dallas and Reliant Energy in Houston, exist entirely within Texas. They were the focus of the law and its chief beneficiaries.

Entergy, which also was included in SB7, has customers in Southeast Texas, as well as Louisiana, Arkansas and Mississippi. It connects not to the other Texas utilities but into a utility grid serving the southern United States. That grid is not under Texas control, but under federal control and influenced by regulators in other states. That delayed deregulation in Southeast Texas.

Blakley said Wednesday that in the next 30 days Entergy will file the protocols with the Federal Energy Regulatory Commission. The protocols determine most market procedures some prices for transmission fees and other ancillary charges. Entergy will seek expedited approval from FERC and hope for approval in six to nine months, he said.

Entergy has been pushing for deregulation for several years in part because PUC mandates to maintain a state of readiness for deregulation have caused Entergy to spend more than $100 million to date.

Source: The Beaumont Enterprise

100,000 North Texas Customers Have Switched to Reliant since Deregulation

(August 1) Reliant Energy, in its first breakdown of customer figures since deregulation began, announced on July 30 that it has signed on more than 100,000 residential electricity customers in North Texas who switched from incumbent TXU Corp.

Until now, most of the larger electricity competitors challenging TXU have declined to disclose specific numbers about customer switching trends, citing competitive reasons.

The release shows that Reliant has picked up about 40 percent of the customers who have switched from Dallas-based TXU, based on aggregate data released by the Public Utility Commission. It's considered to be the biggest competitive provider in the Dallas area, though the PUC does not release information on specific firms.

Reliant says it made the announcement about reaching the six-figure milestone to show that customers are continuing to switch.

Reliant serves as the incumbent provider -- with semi-regulated rates -- for Houston-area customers, and operates as a fully competitive company in North Texas and other parts of the state. It has 1.7 million residential and business customers across Texas compared with TXU's 2.7 million.

As TXU customers face the prospect of record electricity bills as early as next month, competitive providers have been pushing hard to persuade customers to switch providers.

Source: The Dallas Morning News

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