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

May 2008 Dallas, Fort Worth | North Texas | East Texas Residential Electric Rates

Comparing Electric Rates in Dallas Tx, Fort Worth, North Texas, and much of East Texas.

For those living in the Dallas, Fort Worth, surrounding metroplex, as well as East Texas you will find current May 2008 electric rates in the chart below. Texas electric rates are very volatile and so these rates could be lower or higher as the month of May approaches its end. Each Texas electric provider below has their company linked so you can click on the company to learn more or sign up.

If you would like to see what Texas electric rates have done in the past feel free to browse past electric rates. Historical Texas Residential Electric Rates

Disclaimer regarding Riverway Power Co.

A disclaimer needs to be made about Riverway Power Electric Company. Riverway Power cancelled their Texas electric power customers fixed electric rate contracts around the middle of April and were unable to be reached from their India outsourced call center for awhile due to large call volume associated with the breaking of their fixed energy contracts. This issue was reported to Electricity Bid by several of their prior customers. Because of this it is important to know that they just started business in Texas recently and have already renegged on their residential energy contracts. In our estimation we cannot recommend them at this time due to a less then satisfactory record with Texas consumers.

If you would prefer to call Electricity Bid and speak to an energy consultant on the phone please call 1-800-971-4020

A Fixed Electric Rate is Not Always Locked In

Who are These Energy Providers?

With over 60 different retail electric providers in Texas operating in the state, for the time being you find yourself with a mix of electric companies that many people have never heard of before. Some of these energy providers have not been heard of before because of coming from out of state. An out of state Texas electric provider might be very capable of handling your commercial business or residential homes Texas power needs but the name just has never made it to your state until they came in and began operation. Consider Green Mountain Energy as a good example of an electric company most people have never heard of before. Prior to deregulation there were a few companies like TXU Energy and Centerpoint Energy but other then that most people had no clue of who the energy companies were in other states nor did they have a reason to care. I would guess that quite a few people now have heard of Green Mountain Energy even though they were not even operating in Texas prior to Texas deregulating the retail electricity market.

Prior to Deregulation There Were Many New Companies

Spark Energy is another company that no one had heard of prior to Texas deregulating but they have made a pretty good name for themselves in certain cities. Texas Power is another electric company that has quickly gained ground in name brand recognition in the state of Texas. A common element among these electric companies is a long history in the energy business. Spark Energy’s ownership has always had a very strong past in the natural gas related industry. Spark’s ability to hedge their energy correctly allows them to confidently price products for commercial and residential consumers without worrying that they will at one time have to break the contracts and raise the rates on their customers. Having experience trading commodities and hedging energy by buying natural gas futures contracts is a needed skill in the Texas electricity market. There are several companies that came into Texas with little skill and knowledge about how to properly run a Retail electric company. Because of limited experience or just bad management some of these companies have gone bankrupt or just raised there promised fixed priced electric contracts on their customers. Tara Energy, TriEagle, Texas Commercial Energy, and Riverway Power are a few companies we are aware of that have broken their electric agreements with their customers and raised rates on them despite the fact that they signed a binding agreement for a fixed electric rate.

More About, Tara Energy

Tara Energy has been involved in litigation with multiple electric customers of theirs regarding the hike in their fixed electric rate price. Most of these complaints filed with the PUCT have been settled out of court according to documents on file with the PUCT. The litigation with Tara Energy and their customers generally would go on for 6 months to 1 year before some type of settlement arrangements were made. There is a confidentiality agreement worked out with Tara and the electric customers that settled with them so we were not able to determine what type of settlement was offered to their customers who fought them in court. If you would like to read a sampling of a few of the multiple litigations that were waged against Tara Energy you can read it here: Tara Energy. Here is another from a furniture store against Tara Energy which was also settled for some undisclosed amount. Tara Energy verses Edelstein Better Furniture

Why Do Providers Cancel Their Energy Agreements?

The reason a few electric providers in Texas have renegged on their commercial or residential electric contracts has to do with plain and simple bad business. Best practices for the energy market were not used most likely in the buying and hedging of their energy. Some companies may not have hedged their bought energy at all. When the market went against them they were upside down on a large block of energy as they were in reality just betting on the market just the same as me or you were to buy a stock and hope it goes up.

Recently a new upstart electric company in Texas has broken the energy agreement for their fixed electric rate with their Texas residential electric customers. We have received several comments and phone calls from people that were told they would have to accept a higher Texas Power rate or go shopping for a new provider. It doesn’t do an energy customer any good if they go to lock into a fixed electric rate if the company is only going to break the agreement if the market does not go their intended way. Riverway Power Electric Company is a recent example of an energy company breaking their customers fixed rate energy agreements. We had an overflow of people call in around mid April saying they were not able to get a hold of Riverway Power. Riverway Power was not answering their phone calls as they probably had way to many callers calling to protest the hike in the rate they had thought was locked in all year. For those considering using Riverway Power with their supposed guaranteed lowest electric rate price we would like you to consider their track record. They are new to Texas and it didn’t take them log to break customer contracts. Below we have included their most recent description of their rate and their prices in the 5 different TDSP zones in Texas.

Riverway Power Electric Rates

Riverway Power Rates

What Texas Electric Provider Do You Recommend

If you need a low cost electric provider we recommend Startex Power. They are a large discount electric provider offering low cost residential and commercial energy to Texas homes and businesses. You will find a promotional link to their electric rate at the top left of this page. The rate offered from our site is the cheapest rate they offer. If you call them on the phone the rate will be a little higher.

Pearland Tx Electric Company

Residential Pearland Electric Rates and Companies

If you need to compare the cheapest available Pearland electricity rates and providers then you can use the below comparison chart that offers the cheapest available offers below. Simply click on the “Select Plan” box to pick the plan you want to compare and then click on “Get Rates”. Once you are ready just click on “continue” to confirm the Pearland electric rate you want to sign up for.

For commercial quotes click here

Who is the Best Pearland Electric Company?

Shopping for electric rates in Pearland Texas actually isn’t as hard as it first seems. Yes, there are about 40 different retail electric providers in Pearland and about 300 different types of electric plans offered by these Texas Power providers but by using our searchable database you can narrow down who has the best electric rate for your city in no time. A question Electricity Bid often gets asked is in regards to which Pearland and Houston Electric Company is considered the best. This isn’t an easy question because there are many brand new companies that have come into existence in the last year. These new electric providers in Texas are faced with the prospect that many before them have come into Texas only to leave unprofitable. You have to be pretty smart to run a successful Texas retail electric provider. An energy companies billing system, customer service, and back office need to be running smooth or they could begin misbilling their customers. When misbillings occur customers begin to call the customer service desk at that energy company. If the customer service desk is at a Bangalore India call center you may find yourself being given information regarding misbilling that doesn’t help you very much. If the back office and billing issues do not get succesfully handled this can cause the beginning to the ultimate demise of a beginning electric company. Another issue often faced by new Texas energy providers in Pearland Tx and the surrounding Houston Metro area is risk management policies in place with the energy providers trading desks. If the electric company buys their energy and hedges it in a risky way they may become unprofitable after taking into account the cost of running the overall REP. Many energy providers have come in and signed many cheaply priced electric contracts only to close shop when they were not able to make a profit. This scenario leaves all their customers needing to look for another Texas energy provider at potentially higher prices depending on where the market is at.

Feel free to call one of our energy consultants at 1-800-971-4020

Looking Out For Additional Fees in Texas Electric Rates

Finding the best electric company in Pearland Tx requires that you consider whether the company has the potential to be a fly by night company and how cheap their electric rate is. Another consideration is whether they are advertising a cheap price but have additional fees elsewhere in the contract. For the most part the only other additional fees in a residential electric contract would be a monthly customer service charge. Monthly customer service charges can be anywhere from $4.95 – $15.00. You can divide your average kWh you use for the month into the fee and add it to the rate to see what the average electric rate would look like. If you use 1000 kWh a month you can divide $4.95 by 1000. This gives you .00495 as the average additional amount per kWh. If a company is quoting you 11 cents kWh for a fixed rate you could add in the charge like this: .110 + .00495 = .11495 cents kWh. Basically $4.95 would add an additional 1/2 cent to your rate if you only use 1,000 kWh a month. If the fee is $10.00 a month it would raise the advertised rate another cent. Don’t be fooled by the monthly service charges. Calculate it out to see how much it could raise the advertised Texas energy rate.

Is the Cheapest Energy Price Always the Best Choice?

Finding the cheapest commercial or residential electric rate in Pearland Tx is definitely the goal for most consumers and what we recommend. A close 2nd to obtaining the cheapest electric rate is choosing a company that will be in business for awhile. Nobody knows just how long a new Texas electric provider will be around but knowing how long they have been in business gives you somewhere to start. Some new electric providers in Texas recently opening up for business in Pearland Tx are, Mega Power, Riverway Power, Trickster Energy (name withheld by legal), and Affordable Energy. Ambit Energy and Ignite Energy are multi-level marketing energy companies in Texas that market to friends and family. These energy MLM companies come with their own source of problems that come with being a multi-level marketing pyramid operation. Riverway Power outsources their customer service desk in Bangalore India. The other new companies listed are too new to know much about.

Below Is A March 2008 Residential Electric Rate Chart

Here is a chart showing you residential Pearland Tx electric rates from cheapest to highest. Remember that with variable electric rates they follow the market after the first month. Startex Power has the best rate right now and we recommend it as they do a good job with staying in line with market conditions. Startex Power also advertises the last two months of what their month to month rate has been at so they are not hiding anything about this energy rate.

If you need updated electric rates for the Pearland and Houston area you can visit our Texas Historical Electric Rates section.

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