Texas

Restructuring Overview  |  Public Benefits  |  Restructuring Resources  |  Consumer Protection  |  News and Analysis

Legislation Passed
Electric Y Gas N

1999, SB7; Initial Restructuring Bill

Electric
Overview

• 1999-2001: Texas enacted a retail competition law to provide consumer choice for most residents by 2002. Only the utilities participating in the pilot project were scheduled to be deregulated on that date. These are TXU Electric (ONCOR), Reliant HL&P (CPI), Entergy Gulf States, Central Power & Light, West Texas Utilities, and Texas New Mexico Power Company.
• Under the Texas deregulation law, the utilities must sell electricity at a regulated price until 2007 or until 40 percent of residential customers change to different competitive electric suppliers. The law requires the PUC to set the "price-to-beat" rates, designed to offer discounts to customers who stay with their utility but still allowing competing suppliers to offer competitive rates. The PUC set price-to-beat rates for the individual utility territories in December 2001, representing rate discounts of between 3% and 17%. Under the rate process established by the PUC, the PTB can be adjusted for fuel costs.
• 2001: The pilot program for Texas electric choice was delayed for several months beyond its June 2001 startup schedule because of computer programs. This delay allowed little time to "experiment" with retail competition prior to the statewide startup date of January 2002. Of particular concern was the lack of experience issuing large numbers of residential and small commercial customer bills after customers switch (or are switched) to competitive suppliers.
• 2002:Under the original Texas restructuring plan, residential customers dropped by their past provider due to payment problems or if their provider discontinued service in their area would be transferred into a higher-cost "provider of last resort." After protests by consumer and low-income advocates, the PUC dropped the POLR provision in August 2002, except as a temporary measure for customers of electric suppliers who drop out of the market.
• August 2002: The PUC approved rate increases of between 5% and 10% for Texas utilities, essentially negating most of the rate discounts from deregulation.
• September 2002: The PUC recommended penalizing the bankrupt New Power Company, a competitive electric supplier and Enron subsidiary, about $3.9 million for errors and improper information on thousands of electric bills.
• June 2003: The PUC extends the date for retail competition for Southwestern Electric Power Company (SWEPCO) until 2007. About 167,000 residential customers are served by SWEPCO in Northeast Texas.

Choice Status

• Access to competitive suppliers began on January 1, 2002 for many Texas electric customers, basically in the area served by TXU Electric (Oncor), which distributors electricity to the Dallas-Fort Worth area and north Texas, Reliant Energy/HL&P (CPI) in and around Houston, and Texas-New Mexico Power in west Texas. Implementation of the deregulation law has been delayed in parts of southeastern and southwestern Texas because competition appears unlikely in these areas. Legislation enacted in 2001 excludes the Texas Panhandle from choice until 2007.
• As of May 2003, 461,337 of the 4,931,087 residential electric customers eligible for choice (about 9.4%) had switched to competitive electric suppliers.

Natural Gas
Overview

• Although there are no unbundling programs for residential and small-volume commercial customers, several communities in Texas have acted to provide their residents with gas cost advantages. Texas is somewhat unique in that the Railroad Commission of Texas (RRC) has jurisdiction over intrastate transportation city gate sales for resale and retail rates outside of city limits, but individual communities and municipalities regulate retail natural gas service within their boundaries. As a result, some communities are forming innovative arrangements with their natural gas providers.

Choice education
Texas Electric Choice
1-866-797-4839
www.powertochoose.org/
This state website explains electric restructuring in Texas, along with consumer protections and what sort of charges will be included on electric bills. The site also lists electric suppliers serving residential customers and offers links to their sites.

The Electric Reliability Council of Texas, Inc.
www.ercot.com/
ERCOT is one of ten regional reliability councils in North America. Its members include retail consumers, investor and municipally owned electric utilities, rural electric co-ops, river authorities, independent generators, power marketers, and retail electric providers. Its website provides basic information on restructuring in Texas.

Texas Legal Services
www.tlsc.org/index.html
The TLS website features a community education section, which includes a well-written explanation of electric restructuring in the state.

Texas Ratepayers Organization To Save Energy
512-472-5233
www.texasrose.org
TexasROSE is a public interest group dedicated to providing straightforward information, representation before the Public Utility Commission of Texas, advocacy for low-income consumers, and education and training. Its website features an in-depth discussion of the possible effects of deregulation on residential energy consumers.

Suppliers
www.powertochoose.org/yourchoice/compareoffers.asp

Public Benefits

Legislation passed in May 2001 in Texas sets funding levels and priorities for a system benefits charge fee (SBCF) authorized in earlier restructuring legislation. Collection of the fee began in January 2002, with first-year funding at $144.6 million, with $97 million allocated for a low-income discount, $7 million for low-income targeted energy efficiency, $12 million for customer education and $27 million for schools that lost tax revenue as a result of restructuring. For 2003, the fund will increase to $161 million, with $135 million going to the discount and $10 million to energy efficiency. The restructuring legislation also requires utilities to administer general energy efficiency programs to achieve savings equivalent to 10% of annual load growth by 2004. The Texas Public Utility Commission will establish procedures for these programs. (Click here for details on the state’s low-income energy and general residential energy programs.)

Aggregation - buying coops

• An aggregator is an entity that helps create an electricity-buying group. An aggregator may be able to get lower prices or other benefits for the group and its members by buying power in bulk. Electricity buying groups may consist of existing organizations, or new groups formed just to buy electricity for their members. Aggregators may not sell or take title to electricity. Retail electric providers are not aggregators.
• As the competitive market evolves, aggregators may be able to secure other services, such as energy management services and energy use analysis. Aggregators must be registered with the PUC.
  

State Restructuring Resources

Utility Regulatory Commission

Electric
Public Utility Commission
512-936-7000
www.puc.state.tx.us/

Natural Gas
Railroad Commission of Texas
512-463-7288
www.rrc.state.tx.us

Consumer advocate
Attorney General of Texas
1-800-252-8011
www.oag.state.tx.us

Office of Public Utility Counsel
1-888-782-8477
www.opc.state.tx.us/

Grassroots groups
Texas Ratepayers Organization To Save Energy
512-472-5233
www.texasrose.org/
TexasROSE is a public interest group dedicated to providing straightforward information, representation before the Public Utility Commission of Texas, advocacy for low-income consumers, and education and training.

ACORN
214-823-4580
www.acorn.org
ACORN, the Association of Community Organizations for Reform Now, is the nation's largest community organization of low- and moderate-income families. Energy is among its priorities. The group is monitoring the effects of utility restructuring in Texas on low-income households.

Consumer Protection

Disconnection Policy

• Residential customers cannot be disconnected during extreme weather emergencies -- if the previous day’s temperature was 32° F or below or if a heat advisory has been in effect for any of the two preceding days -- or if a serious illness exists in the household.
• Residential service cannot be disconnected for nonpayment if the utility receives notification that an energy assistance provider intends to forward payment to continue service.
• Service cannot be disconnected on holidays or weekends, or on the day immediately preceding holidays or weekends, unless utility personnel are available on those days to take payment and reconnect service.
• A disconnection notice cannot be issued before the first day after the bill is due, to enable the utility to determine whether the payment was received by the due date. The disconnection notice must be a separate mailing or hand-delivered with a stated date of disconnection with the words "disconnection notice" or similar language prominently displayed.
• The disconnection cannot be less than ten days after the notice is issued.

Deferred payments

• Customers that need assistance paying their bill by the due date, or are ill and unable to pay their bill may be able to make some alternate payment arrangement, establish deferred payment plan, or possibly secure payment assistance.

Customer service

• All retail electric suppliers must provide:

1. The Electricity Facts Label: An Electricity Facts Label gives pricing information, contract terms, sources of power generation, and emission levels to help customers make an "apples-to-apples" comparison of supplier offers.
2. Non-English language materials: All electric suppliers must make all of their literature available in the languages spoken in the cities they choose to market their electric service.
3. A "Terms of Service" disclosure: This disclosure informs customers of a supplier's contract terms and conditions. This outlines the specifics of the customer contract.
4. A "Your Rights as a Customer" disclosure: This information informs customers of their standard customer protections as mandated by the PUC.

Deposits/fees

• An initial deposit may not be required from an existing customer unless the customer was late paying a bill more than once during the last 12 months of service or had service disconnected for nonpayment. The total of all deposits cannot exceed an amount equivalent to one-sixth of the estimated annual billing.

Right to cancel

• Customers may cancel, without penalty, up to three business days after signing a contract.

Billing and collections

• Most customers will receive only one bill from their electricity provider. Customers of cooperatives and municipal utilities which have elected to participate in customer choice will have the option of receiving two bills, one from the competitive supplier, and one from the cooperative or municipal utility, or they may receive only one bill from the cooperative or municipal utility.

Supplier licensing

• Retail electric providers must shows evidence of the financial and technical resources to provide continuous and reliable electric service, as well as the managerial and technical ability to meet customer contracts. Large suppliers (serving more than 300 mW) must have at least 5% of that in residential users.

Slamming and Cramming

• Slamming is switching electric service without the customer’s permission. Cramming is adding charges to an electric bill for optional services without customer consent. Both of these practices are illegal and punishable by fines from the PUC.

Telemarketing

• The PSC must establish and operate a database of customers who object to receiving telephone solicitations; it is a violation of law to solicit customers on that list.

Dispute resolution

• All retail electric providers must promptly investigate complaints. All customers have the right to register complaints with the PUC, which is empowered to resolve conflicts and complaints.

Discrimination/redlining

• Electric providers may not deny service or require a prepayment for service based on customers' race, creed, color, sex, level of income or economically distressed geographic area or because they qualify for energy payment assistance.

Advertising/marketing/trade practices

• Customers have a right to be protected from unfair, misleading, or deceptive practices.
• All advertising and marketing materials, other than print or radio, that make claims about price, cost competitiveness, or environmental quality have to include an electricity facts label, or include a statement which gives a number to call and a website (if available) where the customer can obtain information which will allow him to compare the supplier’s offer with other offers.
• Television or radio advertisements making claims about price, cost competitiveness, or environmental quality must also include a statement which gives a number to call and a website (if available) where the customer can obtain information which will allow him to compare the supplier’s offer with other offers. Customers who contact the supplier through this information will be sent a terms of service document, which includes the electricity facts label.

Privacy

• Distribution utilities are required to include customer name, address, and usage information on a list of eligible customers given to competitive suppliers. Distribution utilities will provide their customers with information on how to remove their name from this list.
• No retail electric provider can release any customer-specific information without customer permission.