Customer Confusion Over Price is Some Texas Electricity Companies Business Model

Fixed rate product — A retail electric product with a term of at least three months for which the price (including recurring charges) for each billing period of the contract term is the same throughout the contract term, except that the price may vary from the disclosed amount solely to reflect actual changes in the Transmission and Distribution Utility (TDU) charges, changes to the Electric Reliability Council of Texas (ERCOT) or Texas Regional Entity administrative fees charged to loads or changes resulting from federal, state or local laws that impose new or modified fees or costs on a REP that are beyond the REP’s control.

According to TXU it is unclear whether the ERCOT System Administration Fee, TRE Fee, Public Utility Commission assessment, and Gross Receipts Tax Reimbursements are considered recurring charges that must be included in the total average price per kWh on a customer’s Electricity Facts Label and bills, or whether they may merely be identified to customers in the Electricity Facts Label or Terms of Service and then billed as line items on the bill and not included in the total average price/kWh. Currently Retail Electric Providers are treating these fees and assessments differently which is preventing customers from making an apples to apples price comparison.

The PUCT clarifies that any dispute between a customer and a Retail Electric Provider concerning the terms of a contract, any vagueness, obscurity, or ambiguity in the contract will be construed in favor of the electricity service customer.

The Electricity Facts Label for each electric service product shall be printable in no more than a two page format. The Electricity Facts Label, Terms of Service, and YRAC for any products offered for enrollment on a Texas electricity providers website shall be available for viewing or downloading.

According to the PUCT for a fixed rate product, the Electricity Facts Label shall provide the total average price for electric service reflecting all recurring charges, excluding state and local sales taxes, and reimbursement for the state miscellaneous gross receipts tax, to the customer.

I hate to even suggest it if it wasn’t true but some of the Texas electricity companies advertising out there really cannot be doing anything other than making a clever attempt at tricking customers into their rates. Our compare widget will show you the entire rate and make the shopping experience easy and quick.

Why would I say something like this? Just take a look at a handful of some of the electricity companies we wrote about and look at near 300 comments in some cases from disgruntled electricity service customers on some of them. A couple situations had more to do with confusion of what a customer thought a variable electricity rate is which cannot be blamed on some of these providers. Many of these situations involve customers who truly believed when signing up that they were on a fixed electricity rate only to be told in their electricity bill later that additional fluctuating charges have been added on.

  • Amigo Energy – Over 80 Comments (Problems associated with POLR customers not understanding to switch to a plan after moving to POLR)
  • Dynowatt Energy – Over 80 Comments (many of these are customer confusion over variable electricity prices)
  • Freedom Power – Over 40 comments (complaints and confusion by customers of disconnects and extra charges)
  • National Power – Over 330 comments (no longer selling in Texas after an attempt to raise customer fixed rates)
  • Riverway Power – Over 30 comments (no longer selling in Texas after an attempt to raise customer fixed rates)

This is a very confrontational topic and I will do my best to stay away from naming Texas electric company names but a few different scenarios of what I am talking about come to mind. Below I will give a summary of some of the confusing electricity price advertisements I have come across.

    • One electricity provider had an electricity rate on the splash page where they advertise their rates about 3 cents cheaper than the cheapest 12 month fixed rate any Texas electricity company was offering. The rate was being advertised as a fixed rate as well. This was a residential electricity rate and since 90% of all residential electric companies in Texas bundle in all charges minus a monthly fixed base charge we would assume this was a bundled rate. We pulled up the facts label off their site which is supposed to break it down according to PUCT regulations where the rate is bundled together with all charges. The rate showed the same low price in the facts label but had some interesting legal jargon in the fine print that TDSP charges may need to be added in addition. We called this electricity provider because no where on the site could we find a total bundled residential electricity price. The provider after much questioning explained that additional TDSP charges would need to be added to the rate but they could not tell me what these are because they are variable and vary by customer. The lady was right. The TDSP charges are variable and in fact 90% of the TDSP charges are demand related. In other words if you are accustomed to turning on all the machines, lights, AC, and appliances in your house during peak times in the day than your demand charge could be much higher than a typical household. Your variable part of the rate could be 4 cents per kWh or more on top of the advertised fixed rate. Most Texas electricity providers fix the TDSP charges and bundle it into the rate so regardless of what your demand may be you pay the disclosed advertised price you saw and read in their advertisement. How is a Texas electricity provider able to fix the TDSP charges? Well, if you average what most residential customers use in energy it comes out to about 1,300 kWh a month. The demand is also easy to average out. Since residential electricity service providers deal in large volume they can average out the cost of TDSP charges and make them a fixed component of the rate. These electricity companies than bundle the TDSP charges into the advertised rate to give you an exact picture of what your residential electricity rate will look like. Again most electric companies will do this for residential customers and it has become an industry standard norm. Only a handful of energy companies do not use this practice and they seem to keep it a secret on their sites as you usually can only discover that additional TDSP charges will be added when reading the fine print of their contract or asking interrogating questions to the sales rep.
    • Another practice involves having a “fuel surcharge” clause in the fine details of the contract in that little tiny print on page 6 or something. Most customers will never ask or look to discover that their fixed rate they have “locked into” can change when fuel prices go up. The Texas electricity grid relies on natural gas to spin the turbines that create our Texas electric power. Natural gas is about 45% of the generation fuel we use to create electricity in Texas and Dallas and Houston are big recipients of this fuel source. Natural gas prices go up all the time and right now are near a low in the market. This low means that “what goes down must eventually come up” as the old commodities adage goes. We beg to differ that you are really “locking in” to anything considering fuel prices go up and down everyday. A fuel surcharge is one of the biggest jokes to put in a fixed electricity rate contract. If you are buying a variable wholesale price for your residential electricity service and want to take on the risk than a fuel surcharge is great. I personally am on an MCPE type of residential electricity rate that goes up and down based on market conditions. It is fine to sign up on one of these rates if you know that is what you have agreed to. The problem is that some Texas electricity companies literally have a business model that is based on assuming their customers have confusion already about price. These electric providers  know what they can and cannot get away with. By adding something in the details of the contract while leaving the splash page that hooks in customers void of any reference to the additional fuel surcharge they are deceiving their customers. Sometimes a reference might be made in microscopic print after an asterisks at the bottom of the page. One way or another the electricity provider operating in this manner doesn’t do enough to inform the customer about what electricity rate they are really agreeing to.
    • A recent comment by a visitor on our site gave some helpful information about an electricity company that according to him had a business model based on customer confusion over electricity price. We have taken out that Texas electricity providers name since we do not have any way of knowing if this is true but you can read for yourself someone who apparently has a little inside knowledge of some of these games that are played.

Dear A—- Customers-

1st thing 1st…A—- Energy is owned by a company called F—— Energy, a wholesale energy provider. They purchased a large power plant called Basque about a year ago that cost them about 600 million dollars. They are leveraged to the hilt and this cost has been passed on to the consumer through their retail provider A—- Energy controlled by F——.

A—-’s personnel is a patchwork of bufoons and people who don’t know how to deal with customers and are very green when it comes too being an REP. It was once said in a meeting by their pricing person that he wanted to quote, “Take advantage of people who do not know anything about price.” unquote. I notice he made good on his promise to J—– V—, the flamboyant CEO of A—-. I guess this is the reason that they have targeted the hispanic community with this exorbit price. How unfortunate.

Again, they have uneducated people at levels that they should not be at by any stretch of the imagination and they use tactics that are possibly in violation of PUCT rules and regulations. They have over two hundred BBC complaints against them and have had a expose by the Houston Chronicle informing the people of the many complaints. When V— was asked by the Reporter if he knew about the many complaints, V— totally lied to them about his knowledge of the complaints. He knew about all of them and doesn’t give a flying, well you know. I knew they were ignorant about their knowledge, I didn’t know they were that unethical.

So what is my point in writing about the bad Texas electricity companies out there? It is a pretty important topic as having electric providers out there tricking customers and doing illegal things is bad for everybody. It is bad for myself who is in this business trying to do something honest, it’s bad for ethically run electricity companies like the ones in the Texas electricity comparison chart above, and it could easily bring on more government regulation. With a possible government take over of the health care industry, GM, and who knows what other industries do we really want to turn into Canada? These rogue Texas electricity companies do get sued from time to time but they make a lot of money and have increased their profit margins through dishonest business practices. It is important to bring to light the dishonest practices of a handful of energy companies so that Texas electricity customers know that not all providers operate in this manner.

For a clear easy to understand apples to apples comparison of discount electricity rates in Texas please look at the top of this article for a comparison of several reputable electricity providers in Texas. All fees and charges are disclosed, there are no hidden fees or fuel surcharges, and several different fixed electricity rates are available. You can compare from cheapest to most expensive, pick a no deposit plan, green energy plan, Fast move in, or just go with a shorter term option. If you have questions after comparing electricity companies please give us a call at 1-800-971-4020 back to top ^

PUCT Answers Question on MCPE and POLR Electric Rates

The Public Utility Commission has responded to one of our blog subscribers with some very helpful information regarding rules and law changes that will help lower MCPE rates, POLR rates and hopefully prevent more electric companies from going under. ERCOT has also changed some rules to hopefully make congestion charges less which will reduce the market clearing price rate, specifically in Houston, and hopefully make Houston’s MCPE rates similar to the rates in other location in the state. Houston has the highest MCPE prices in the state.

Background on MCPE Electric Rates

For those not familiar with MCPE, it stands for Market Clearing Price for Energy. National Power, Riverway Power and others had a failed business model that relied on buying energy from the MCPE index which is a variable price and selling it as a fixed rate to their customers. When MCPE went up higher then they anticipated they went backwards on their energy investment and had to get out of the business quick, leaving their customers on a very high POLR rate.

You can read exactly what the Public Utility Commission of Texas has said below:

Mr. Hipp Thanks for your email. I’m sorry that this has happened to
you. Prior to the last couple of weeks, only six REPs had gone out of
business since the retail electricity market was deregulated in Jan
2002. Almost all of those REPs had a flawed business plan whereby they
were buying energy short term through the ERCOT balancing energy market
and then selling it long term to their customers. It seems as if
National Power may have been pursuing the same flawed business model.

With regard to financial stability for REPs, the PUC does have rules
regarding financial resources. We have tried to balance the desire of
the legislature to have robust retail competition (and a multitude of
REPs who can enter the market) versus only having a handful of large
“household name” REPs with larger balance sheets. Having said that, the
PUC will be opening up our rule regarding REP finances to determine if
it needs to be changed.

Our rules do require the “exiting REP” to notify the customer;
unfortunately National Power did not do that and we are considering an
enforcement action against them.

POLR has always been designed as a service that continues the flow of
electricity to your home in case your REP goes out of business. Because
the POLR provider unexpectedly receives a bunch of unplanned customers
almost overnight, the plan was designed to be priced based upon the
Marginal Clearing Price of Electricity in the ERCOT balancing energy
market. That price has been unreasonably high of late. We have asked all
the POLRs to price electricity to you at levels below what our rules
allow. We will also be opening up our POLR rule to see if it needs
adjustment.

As of last Friday, ERCOT changed some of it operational procedures which
we believe will allow transmission congestion to be resolved more
inexpensively. We will be closely monitoring the balancing energy
market this week to see if there is any improvement.

As we have asked of all others in your situation, please switch to
another REP or another product from the POLR as soon as possible.
Thanks again. Barry

National Power Company

Recent Blog Commentor Sheds New Light on National Power Company

A recent commentor to the blog as of September 2008 has made a claim that the people responsible for owning and operating NPC are the same people who own and operate “W Financial Services”. What gets interesting is after searching google for “W Financial Group” I found an article from the Securities and Exchange Commission that shows charges filed against, W Financial Group LLC or WFG for short, for defrauding 182 mostly elderly investors of their retirement savings totalling 17.9 million dollars. The charges go on to claim that WFG used those millions to purchase the majority stake in a Texas electric company. The blog commentor made the connection that both National Power Company and WFG were located at the same address. This seems to be a legitimate connection showing that National Power Company is one and the same company that defrauded 182 investors through the company, W Financial Group. You can read the SEC Charges here filed April 2008: W Financial Group LLC Charges by SEC

National Power Company

National Power company back in February 2008 was offering a 12 month electric rate plan at 11 cents\kwh for a 12 month fixed rate. This electric rate looked fantastic when comparing it to the other Texas electric providers. The rate included all pole and wires charges and had no monthly customer charge. In most cases they do not appear to require a credit check or deposit if you accept auto e-bill pay. What this means is the electric company will automatically deduct the amount owed on your Texas electric bill from a credit card or bank account. National Power also offered a variable 1 month electric rate at 10.5 cents kWh. The rate goes up after the first month and the previous two months regarding the variable electric rate are not disclosed.

Notice Regarding NPC’s Fixed and Variable Electric Rates

We have since learned that National Power Company has been raising their fixed electric rates on their customers after a few months of being on what the customer thought was the lowest fixed electric rate going. This has caused a fury of disgruntled National Power customers calling and emailing the Attorney General of Texas and the Public Utility Commission of Texas to investigate what appears to be a clear case of Bait and Switch from the Deceptive Trade Practices Act.

An article on Dallas News referenced a high profile customer of NPC, Steve Wolens, (Former Texas legislator who wrote the electricity deregulation laws, which allowed electric market participants to set their own rates) who was quoted as saying,

Give me a break, this is not a material change

As of May 2008 they show a 12 month fixed rate on the Power To Choose website at 14.7 cents a kilowatt hour.

Special Deal for National Power Company Customers

If you are a National Power customer and have had your fixed electric rate raised on you we have a special discount with a good solid electric provider in Texas by the name of Startex Power. Startex electric company has never reneged on an energy agreement and has a very straightforward fixed rate plan. The discount code is built into the link giving you a cheaper rate then what they normally advertise. Startex properly hedges their energy with their large capital base insuring they will never need to pass on a market price spike to the customer. Smaller electric companies like National Power Company, Riverway Power, and a few others pass these “fuel factor” price spikes on to the customer. Sign up on Startex Energy’s fixed discount rate plan here: Sign up Now! If you would like to speak with someone before signing up please call one of our Texas energy consultants who would be happy to answer your questions.

Feel free to call us at 1-800-971-4020 with any questions.

Update on National Power Company:

Someone called me today (May 9 2008) that locked in on the 12 month fixed electric rate with National Power Company back in February 2008 and said he received a letter in the mail saying that his rate of 11 cents a kilowatt hour would no longer be honored but he would now have to pay 15 cents a kwh if he wanted to stay with them. He was promised a 12 month fixed electric rate but this electric provider adjusted it on him and their reason was that the rate plan was a “plan” and not a “contract”. Anyone considering switching to National Power Company should be warned that they do not always honor their fixed electric rate contracts according to this customer. Supporting documentation and evidence have been reported to The Attorney General of Texas, Gregg Abbot and the Public Utility Commission of Texas.

I tried calling them today (Monday May 12th 2008) and their phone support would not answer. I have not been able to get through all day long. They should have to pay me an early termination penalty for cancelling my contract! I am filing a complaint with the BBB and the Attorney General of Texas. This is a clear case of “Bait and Switch” from the Deceptive Trade Practices Act. -April

Update as of May 16 2008

The Public Utility Commission has somehow convinced National Power Company to honor their fixed electric rates with their customers. Way to go guys. You rallied together on the internet and your large voice was heard by those who needed to here. It was pretty amazing to see just how quickly things turned in the consumers favor. This is how it should be. A new Texas electric company has recently filed for bankruptcy because of not hedging their energy correctly in the face of high electric prices and fuel costs. Prebuy Electric Company is now bankrupt which could be the fate of both National Power and Riverway Power if they are not able to swallow the additional energy costs they did not plan ahead for. As of June 4 2008 another electric provider called Etricity has gone out of business as well for not being able to meet their financial obligations to ERCOT. All of Etricity’s customers who paid a $300 deposit will never see it again and will have to go shopping for rates during some of the highest prices the Texas energy market has ever seen.

Comparable Electric Rate To National Power Electric Company

A low cost alternative electric rate offer to National Power Company would be with Startex Power Promo Rate  For a 12 month fixed electric rate we recommend Startex Energy as your low cost option. Click here to learn more.

National Power Company Detailed Review

National Power over the last several months has been shown to have some of the very lowest Texas electric rates in comparison to the other energy providers when comparing on the state power to choose website. We were initially impressed by their low rates and even wrote about their energy rate (free advertising to National Power) stating what a great low rate they had in comparison to the other retail electric providers. Since this time we have received call after call with people stating they cannot get through to their customer service desk when calling, others state that the company just hangs up on them when they call. Why is the company as of May 2008 being so unresponsive? National Power has been changing their fixed electric rate contracts when commodities like natural gas go up unlike many other providers who properly hedge their energy and offer a truly fixed electric rate that will not change the entire term of the fixed plan.

A couple of low cost providers that have never pulled a stunt like this are Startex Power and Green Mountain Energy. Both companies are highly ethical companies with accurate billing, good customer service and low rates. Startex has a good online discounted 12 month fixed rate provided you sign up online and Startex has some good longer term and shorter term fixed rate options as well.

Several Fake Positive Comments

It appears National Power has responded to their customers complaints in positive comments left as truly satisfied customers from their office ip address. It appears no real customer was available to leave a positive comment so they made up their own. Read below to find the positive comments coming from their company ip address. They seem to be acting like genuine satisfied customers. Pretty funny stuff!

Company: NATIONAL POWER COMPANY, INC.
Website:
Service Area: Entire Texas
Customer Type:
Track No: EL050015
Type: Corporation Status: Active
Note:

National Power Company Mailing Address

Primary: Company / Physical
NATIONAL POWER COMPANY, INC.
616 FM 1960 ROAD WEST
SUITE 700
HOUSTON, TX 77090
Main: 281-377-7570
Alt: —
Fax: 281-377-0913
Email: RMackert1@aol.com

National Power Company Physical Address

NATIONAL POWER COMPANY, INC.
616 FM 1960 RD. WEST
SUITE 700
HOUSTON, TX 77090
Main: 281-377-7570
Alt: 832-630-6495
Fax: 713-715-6953
Email: rhunter@nationalpowerco.com; jfrazier@nationalpowerco.com; lwilliams@nationalpowerco.com; jtorres@nationalpowerco.com

National Power Company SB Fund Contact

NATIONAL POWER COMPANY, INC.
616 FM 1960 RD WEST
SUITE 700
HOUSTON, TX 77090
Main: 281-377-7570
Alt: —
Fax: 281-377-0045
Email: JFRAZIER@NATIONALPOWERCO.COM

National Power Co. SB Fund Address

National Power Company, Inc.
616 FM 1960 Rd West
Suite 700
Houston, TX 77090
Main: —
Alt: —
Fax: —
Email:

National Power Company / Physical Address

NATIONAL POWER COMPANY, INC.
616 FM 1960 RD. WEST
SUITE 700
HOUSTON, TX 77090
Main: 281-377-7570
Alt: —
Fax: 713-715-6953
Email: rhunter@nationalpowerco.com; jfrazier@nationalpowerco.com; lwilliams@nationalpowerco.com; jtorres@nationalpowerco.com

Associated Names for National Power Co

NATIONALPOWERCOMPANY.COM

NPC POWER MARKETER

Identification Numbers : Including REP Certificate Number for National Power Co.

——————————————————————————–

Certificate: 10106
Type: REP
Date: 04/08/2005
Note:
Filings: Certification

30813
Type: DOCKET
Date: 03/02/2005
Note: Application for REP Certificate
Filings: New

Update

National Power is now out of business as reported by the Electric Relaibility Council on May 26 2008. If you are a customer with this electric provider you will be automatically switched to the provider of last resort by the Texas government. The POLR rate is a much higher rate and you must begin shopping for more affordable electric rates or risk paying a much higher energy rate then you may have ever anticipated on having to do. National Power’s scheme of locking in their customers on the lowest rate in the market and then trying to raise it just didn’t work out for them did it? Several other electric companies in Texas have had to raise their electric rates or go out of business as of late. Riverway Power, Pre-Buy Electric, Etricity, Hwy 3, and Dynowatt are just a few of these Texas electric providers that customers have complained about on this site. Each of these companies have since received several complaints filed by their customers to the PUCT of Texas.

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