Electricity-Related Complaints Continue Downward Trend In Post-Deregulation Texas Market

ERCOTOver the last fiscal year Texans filed 4,835 electricity-related inquiries or complaints according to the Texas Coalition for Affordable Power. This represents a significant drop from the previous post-deregulation low set last year, where the Public Utility Commission registered 6,973 inquiries or complaints. Data from the PUC shows a drop across nine different categories of complaints, with only one category seeing an increase. The data from this year confirms the on-going trend of higher responsiveness and customer satisfaction in Texas’s deregulated retail energy market.

A Continuing Trend Based On Increased Customer Satisfaction

The almost 31% drop in electricity-related inquiries and complaints registered between 2015 and 2016 is the second largest drop so far recorded. Two of the main factors influencing this trend are lower energy prices and a growing familiarity with the conditions and providers of the deregulated market. Also, two major sources of complaints, Sharyland Utility and the installation of advanced meters, are no longer the source of as much dissatisfaction among customers.

The PUC registered a fall in almost every category of electricity-related complaints over the 2015 fiscal year. This falling rate of complaints includes a number of major categories of complaints, such as provision of service complaints, meter complaints and complaints related to switch-holds, the blocking of electric service for residences.

The data for 2015 suggests that customer satisfaction continues to see significant improvements across the state of Texas. The last three fiscal years in particular are registering increasing levels of customer satisfaction. While the data still shows a higher number of inquiries and complaints than pre-deregulation levels, the strong and on-going trend suggests that levels may soon approach their pre-deregulation lows.

See Also: Electricity Sales Continue Multiyear Decline

 

Texas PUC Agrees To Electricity Fee Rate Hike

Electricity Demand OutlookThe Texas Public Utility Commission has agreed to a rate hike that will affect almost every electricity user in the state.  The rate increase comes in the form of an increase in the “System Administration Fee” collected by ERCOT.  ERCOT is the entity responsible for maintaining the state’s electricity grid.

The fee isn’t charged directly to consumers.  Rather, it is assessed on every kilowatt of electricity purchased from the wholesale electricity market in the state.  Retail electric companies such as TXU, Reliant and Cirro, purchase power from the wholesale market and resell that electricity to end users in the retail market.  Any increase in the wholesale cost of electricity will ultimately be pass through to consumers.

While the Texas electricity market is the largest deregulated market in the country, parts of it are still subject to public oversite.  The PUC must approve fee increases requested by ERCOT.  The system administration fee will be going up 19.4%; taking it from 46.5 cents per megawatt to 55.5 cents per megawatt.

Although the actual impact on Texas electricity rates will be small, consumer groups are still less than thrilled to see rate increases of any kind.   The Texas Coalition for Affordable Power points out that because the fee is based on usage, an increase in the rate along with an increase in the state’s power consumption will result in a net gain in revenue for ERCOT of more than 50% in less than 10 years.

The justification given for the rate increase was the need to finance new technology, comply will new (federal) regulations, and keep pace with inflation.   ERCOT says it hopes to hold the fee steady at least through 2020.

The 3 member panel in charge of the PUC warned ERCOT against getting too comfortable with large rate increases.

“I don’t want to see double digit increases in the future,” said Commissioner Kenneth Anderson.  “This is a one-time deal.”

The increase will go into effect in 2016.

See Also: Capacity Crisis In Texas Electricity May Be Overblown

 

 

Texas Power Consumer Complaints On The Rise, Reports TCAP

A recent analysis by the consumer advocacy group Texas Coalition for Affordable Power (TCAP) shows that consumer complaints filed with the state’s Public Utility Commission (PUC) have risen again in 2014, after four years of decline.

In 2002, Texas became a “Power To Choose” state, and deregulation of the electric utility sector began. Following its commencement, consumer complaints spiked, going from an annual total of more than 2,000 in 2001 to 8,500 the following year, and 17,250 in the first full year of deregulation. In 2009, the total number of complaints was still nearly 16,000, but a decline began that bottomed out at 7,129 in 2013, a considerable drop from the post-deregulation spike but still a 300% increase over pre-deregulation totals. In 2014, the figure has risen to 7,608.

The downward trend for complaints in the prior few years could be attributed to customers’ becoming more familiar with navigating the different available plans and the process of switching providers to get the best fit, thereby cutting down on dissatisfaction. It could also simply be because low prices for natural gas kept electricity rates correspondingly low, and people are less likely to complain if they don’t feel they are paying too much. JD Power and Associates, a company that rates customer satisfaction, issued a report last year showing that customer satisfaction with power providers was at an all-time high since deregulation, and that customers in deregulated areas of Texas were more satisfied than customers in areas of the state that were not yet deregulated. It’s easy to reason that opening up the field to retail competition would tend to encourage good customer service, lest people flock to another provider.

So what explains the uptick in complaints, for the first time in four years? One culprit, single-handedly responsible for 7.5% of complaints, is “switch-holds”, a controversial practice instituted in 2010 that froze customers’ ability to switch to another power company until they settled outstanding bills owed to their current provider. Also, 11% of the complaints filed have been about meters. This figure may correlate to the rollout of new digital “smart meters”, as complaints tend to surge when new rules or equipment are introduced, according to a PUC spokesman. Other possible factors, according to industry representatives, may be the growing population of Texas and the ease of filing complaints online, but TCAP still notes that complaints are considerably higher now than before deregulation and notes that the situation is still “worth monitoring”, as it seems customers are still showing frustration with the market.

See Also: Texas Electricity Providers Perform Well In Survey

 

 

Complaints In Texas Electricity Market Drop Again

For the fourth consecutive year, Texans are complaining less about their electricity providers.  This is according to findings published by Texas Coalition for Affordable Power.

There are number of factors that could be contributing to this steady decline in complaints.

Texans are becoming more and more familiar with how to compare electricity rates and shop for a better deal.   The also understand the terms of the plans better after years of deregulation in Texas.  This familiarity with how to shop and the process of switching providers leads to better experiences for consumers and, consequently, fewer complaints.

Electricity rates in Texas have been considerably lower over the past few years.  This is due largely to a sustained dip in natural gas prices.  Most electricity in Texas is produced from natural gas.  This leads to a strong price correlation between the two.    Consumers who feel they are paying too much are more likely to complain.

Complaints are now at their lowest level since deregulation began in the Texas electricity market.  The first full year of deregulation saw a total of 17,250 complaints to the PUC.  In fiscal year 2013 that number stood at 7,129.  As the market matures and consumers and market players get more familiar with the process, complaints continue to decline.

This follows another recent report that confirms that Texans are more satisfied than ever with deregulated electricity.   The report by JD Power and Associates showed that Texans in deregulated areas of the state showed a higher level of satisfaction than those who lived in areas of the state that have not yet been opened to retail competition.

To file a complaint with the Texas PUC, follow this link: http://www.puc.texas.gov/consumer/complaint/Complaint.aspx

Texas Gets a New PUC Commissioner

The Public Utility Commission is once again fully staffed following Texas Governor Rick Perry’s appointment of Brandy Marty, a former Perry staffer, to fill a vacant seat.  The three-member panel has been shorthanded since the resignation of Rolando Pablos in March of this year.

Marty has a law degree from St. Mary’s University in San Antonio and a bachelor’s degree from the University of Texas in Austin.   She has worked in the Governor’s Office since 2007 and in March of 2013 she was named a Perry’s Chief of Staff.  Interestingly, this was on the same day as Pablos’ resignation from the PUC.

Marty comes in at a critical time for the Texas electricity market.  As the state struggles to find ways to address looming power shortages, the PUC has some critical decisions to make about the structure and polices of the Texas market going forward.

One of the most critical issues on the table is the proposal to convert Texas from a demand only model to a capacity market.  Under a capacity market, producers would be paid simply for building out additional capacity and having it available for use by the grid.  Under the current structure, producers are paid only when the electricity they produce is used.   Donna Nelson, the Chair of the Commission seems to open to the idea of a Capacity Market.  Marty could be the swing vote in favor or against a capacity market.

The PUC has recently taken other steps in the effort to incentivize new production of energy capacity in the state.  This includes a substantial increase in the state’s cap on the wholesale price of electricity that producers are able to charge during times of peak demand.

See Also: Texas Electricity Rates Going Up – Again
See Also: Will Texas Switch To A Capacity Market For Electricity?

 

Texas Electricity Rate Increase – How Much Will Your Bill Go Up?

No, Texas, your electricity bills are not going to triple despite what you may have seen in a number of recent headlines.  That’s the good news.  The bad news is that it seems unavoidable that your electricity rates will go up some. 

The misleading headlines of late have been alluding to the PUC plan to raise (triple) the cap on wholesale rates from the current $3,000 per megawatt hour to $4,500 in the summer of 2012 and to $9,000 per megawatt hour by 2015. This wholesale rate cap is not the rate paid directly by consumers.  If it were, the average electricity bill in Texas would be a few thousand dollars a month.

As the name implies, the wholesale rate cap is the legal maximum rate that electricity producers can charge for electricity in the real-time wholesale market for electricity in Texas.  The cap is only reached under rare circumstances where there is either a huge spike in the demand for electricity, a supply disruption, or both.  The wholesale price cap is only reached a tiny fraction of the time.  That’s a fortunate thing because this rate is many times more than what consumers typically pay for electricity in Texas. For example: the cheapest electricity rates in Houston are around 8 cents per kwh.  That equates to $80 per megawatt.

Texas electricity officials hope the increased price cap will incentivize producers to build new power plants to help fill the need in Texas for more power.   Lack of incentive is a serious problem for the Texas power grid.  Deregulated electricity in Texas means the state relies on private investment to ensure that power plants are built.  Like any other free market, producers produce their product (in this case electricity) in hopes of reselling it at a profit to consumers.

But recent market conditions have spooked would-be electricity producers.  The large drop in natural gas prices in recent years has squeezed the margins out of the electricity production business.  Private capital that might otherwise have been used to build new power plants is being put to use in other ventures that promise higher returns, lower risk, or both.

This leaves operators of the Texas grid in a difficult situation.  The Texas economy continues to stubbornly grow.  This creates more and more demand on the grid.  However, at the current rate of investment supply is not going to keep up.

So what does all this mean?  Are my rates going up?

Unfortunately, it’s almost a certainty that retail electric rates will go up; though they won’t triple.  One study put the potential consumer impact of a raise in the wholesale rate cap at about $15 per month once the cap goes to $4,500 this summer and $40 per month once the cap hits $9,000 in 2015.

So what can I do to keep from seeing my bills go up?

One thing consumers can do is conserve during peak hours for electricity demand.  These are the times when capacity shortages are felt and wholesale prices spike.  The other thing you can do is make sure you have compared rates and that you are on the cheapest electricity plan available.  With dozens of electric providers in Texas rates can sometimes vary dramatically from one company to another.