Most Texas electricity companies charge extra fees on customer bills that have little to do with electricity. These companies slide through giant loopholes in state law that often shock customers when a monthly bill arrives.
For instance, an electric company serving North Texas customers pays Oncor Electric Delivery only $2.30 to disconnect a household from service and $2.70 to reconnect.
Yet Ambit Energy charges $15 to disconnect and $50 to reconnect — or $100 if a customer wants an immediate reconnection called “expedited.” Green Mountain Energy charges $45 to disconnect and $15 to reconnect. Texas Power charges $5 when it sends out a disconnection notice and $65 to reconnect.
Those are hefty profits for what essentially, in the age of smart meters, amounts to pushing a few buttons by Oncor. No longer must a service tech travel to a residence to turn electricity service on or off.
“These fees are money for nothing,” says Carol Biedrzycki, head of Texas ROSE (Ratepayers’ Organization to Save Energy). She’s the leading state critic of such costs, complaining that companies “have done absolutely nothing to earn” these fees.
Here’s another: The Watchdog constantly receives complaints from Texans who can’t understand why they are urged to conserve electricity, yet when they do, they get penalized.
According to a new survey by Texas ROSE shared with The Watchdog, 29 of 44 retailers charge $7 to $20 a month in penalties — called “minimum usage fees” — if a customer uses less than 1,000 (or in some cases 800) kilowatt-hours per month.
Some companies that have no minimum usage requirements, according to the survey, are Entrust Energy, Apollo Power & Light, First Choice, Green Mountain, New Leaf and Summer Energy.
Biedrzycki tells me that a few years ago only a few companies charged this penalty. When I asked one company why these charges are dumped on Texans who try to conserve, Will Huffman, director of customer experience for Ambit Energy, explained: “There’s a lot of risk that we have to undertake as retail providers to procure the power. If we buy too much or don’t buy enough, there’s always a risk associated. So you’re helping offset some of that risk.”
Public Utility Commission of Texas spokesman Terry Hadley calls the slew of extra fees “just another pebble in the pile.” He explains that “to whatever extent a provider has fees, they have to spell it out in contracts and their notifications” to customers.
These fees are allowed “in general,” he says. “It just emphasizes the importance of people understanding this. In the long term, do you want a provider that piles on these types of fees? That’s something a customer has to decide.”
Biedrzycki says, “These fees are a profit center. At a minimum they should be reporting how much they made on these fees. Airlines are deregulated, but we know how much they make on baggage fees.”
More than a decade after Texas deregulated electricity service, these fees are more than ever.
Green Mountain, for example, bills itself as “the only power company in Texas dedicated to clean energy.” But there’s a cost for that. A customer is forced to pay $5 for copies of billing records, $15 if a customer makes more than five payments in a single month, and $5.95 if a bill is paid with the help of a live agent.
That last is one of the more irritating fees. According to the Texas ROSE survey, some companies charge about $5 if payment is made with a live agent. One company doing this is called Compassion Energy. No kidding.
Here’s another unusual fee structure: Texpo Energy offers a rate of 13.2 cents per kwh for an average monthly use of 500 kwh, 10.6 cents for average monthly use of 1,000 kwh and 10.3 cents for average use of 2,000 kwh. But get this: If a customer doesn’t use the company’s AutoPay E-Plan — automatic payments from a bank account — the company tacks on an extra 5 cents per kwh. That means 10.3 cents per kwh jumps to more than 15 cents.
Ambit Energy states in its latest Terms of Service that those customers who pay with a credit or debit card are not eligible for a discounted rate. When I pointed out to company spokesman Huffman that a penalty for credit card payment in Texas is illegal and a penalty for a debit card payment becomes illegal on Sept. 1, he answered, “These fees have been discontinued.” (They are still listed on the company website.)
Note that The Watchdog isn’t pointing to various early termination fees enforced by most companies because a signed contract makes those fees clear. Neither am I noting the many fees charged for late payments, bounced checks and other collection fees, because when someone misses a bill, a penalty is expected.
Nor am I pointing out fees that are state-approved such as an Advanced Metering Charge and an Energy Efficiency Cost Recovery Factor. All companies are allowed to charge these fees. Some list them separately on bills; others don’t.
What’s important here is there’s no standardization for fees in either their presentation to customers or actual charges. It’s quite willy-nilly. Let the buyer beware.
The only way to figure out what the real costs are is to study each company’s Terms of Service and Electricity Facts Label, available on a company’s website and also on the state-run powertochoose.org website. It’s a shopper’s nightmare because customers often must wade through dense legal language to figure it out. In a few cases, fees are not even reported.
Customers must be thorough when asking questions before signing contracts. It’s easy to forget to ask the right question. Sometimes, customer service reps give wrong answers.
The only way to fix this problem is to beef up state law and rules so a standard set of fees applies across the board. That would make it easier for Texans to shop and understand what they’re actually paying for.
State law and PUC rules in the deregulated marketplace don’t go far enough, says Biedrzycki, who has been fighting this battle, mostly alone, for several years. There’s no reason for consumers to get zapped in so many jolting ways.
Follow Dave Lieber on Twitter at @Dave Lieber.
CONSUMER TIPS: Educate yourself
Know when your electricity contract expires.
Be prepared to sign up with a new company about a week before a contract’s expiration date.
Use the powertochoose.org website to shop. Then check a company’s own website to verify the accuracy of the terms offered.
Another website to check is texaselectricityratings.com.
Study both the Electricity Facts Label and the Terms of Service before signing a contract.
Ask questions of customer service reps on the phone before signing.
Make sure you understand the extra fees before committing.
Texas electricity companies profit from loopholes in state law fees
The electricity companies have been give the right to take advantage of the consumer with these fees and gimmicks by Rick Perry in the name of the free market. And they should continue to rip off the elderly, the poor, and the consumers because the elderly, poor, and the consumer are rolling over and taking it. Until they speak up at the ballot box they should shut up and quit whining.
The best thing for consumers would be to re-regulate the power industry. Since de-regulation our costs have not gone down but up. Competition doesn’t work to the benefit of the consumer,it benefits Wall Street,they compete the price up.
This is gop utopia, deregulate an industry so they can rip off the consumer.