PUC adopts customer protection rules relating to HB 1822

The Public Utility Commission adopted rules Friday for the implementation of House Bill 1822, a consumer protection bill from the 2009 legislative session. Sponsored by state Rep. Burt Solomons, HB 1822 calls for establishing definitions of terms commonly used on utility bills. It also requires that retail electric providers (REPs) print on bills the end date of multi-month contracts.

This second requirement emerged as a contentious flash point during negotiations at the PUC. Some retail electric providers expressed discomfort with the specific end-date requirement, arguing instead for the option to print on bills a more general description of the contract end date. PUC staff and consumer groups argued that HB 1822 included a specific mandate requiring that REPs print the exact termination date, and that using a less specific description only would add to customer confusion.

The three PUC commissioners on Friday agreed to give REPs the option of either printing a specific termination date, or of using a more general description of the end date. However, those REPs opting for the broader description also face a new requirement that they waive early termination penalties for up to 60 days before a contract expires, as opposed to the 14 days currently in rules.

The PUC also appeared to agree with some consumer recommendations relating to the use of common billing terms. REPs had requested flexibility to choose between different terms such as "surcharge," "fee" or "factor" to describe the same billing element. REPs also wanted the option of using either "base charge" or "customer charge" to describe the same element.

Consumer groups argued that the PUC should settle on a single term for each billing element -- and that all REPs should then be required to stick to the uniform term. The rules adopted Friday generally follow that recommendation.

The PUC set an April 1 implementation date for the new rules.

-- R.A. Dyer

Penalizing customers for exercising their power to choose?

One of the few pro-electric consumer bills to emerge from the 2009 Legislative session was House Bill 1822, by state Rep. Burt Solomons. The legislation called for the establishment of common terms on utility bills and also included an important requirement that retail electric providers always print on bills the end date of multi-month contracts. This second requirement (it was part of an amendment by state Sen. Wendy Davis of Fort Worth) was to meant to reduce consumer headaches when it comes to the length of term contracts and the assessment of early termination penalties.

The Public Utility Commission is now considering how best to implement HB 1822 and has taken up recommendations from several parties. Some retail electric providers have expressed discomfort with the specific end-date provision of HB 1822, arguing instead for permission to print a more general description of the termination date. Consumer groups have argued that this would contradict the clear, black-letter language of HB 1822. PUC staff members also have argued against this REP recommendation.

A second important point of discussion involves penalties for early termination of contracts. PUC staff has argued (and consumer groups agree) that once customers receive notification that their fixed-rate contracts are about to expire, that those customers should not also be dinged with early termination penalties if they switch providers. This would address an inconsistentcy in timing requirements in PUC rules. That is, under current rules, REPs must send out notices of contract expiration 30-60 days in advance, but can still charge early termination penalties up until 14 days before the end of a contract.

That means that under current rules, REPs can punish fixed-rate customers who, upon receiving notice that their contract is about to expire, immediately sign up with a competitor. Conversely REPs can waive early termination penalties for those customers who, upon receiving notification that their contract is about expire, agree instead to lock in another long-term deal with the original REP.

Either way, this increases customer “stickiness” in the Texas electricity market. Consumer groups believe this disconnect between the timing of contract expiration notices and the timing of penalties reduces the ability of customers to exercise their power to choose, thereby lessening the downward pressure on prices that can come from competitive forces.

The PUC is expected to take up rules for HB 1822 during a meeting on Friday.

-- R.A. Dyer