In a sign of continuing challenges for Texas electricity consumers, a number of power retailers have been accused in high-profile cases of deceptive marketing and other abuses.
The complaints have led to unflattering news accounts and unwelcome regulatory scrutiny for at least three companies. Each operates in the state’s retail electricity market for residential customers. A fourth that does not serve residential customers directly also has been sued in federal court for questionable practices in the wholesale market.
The most recent case involves Direct Energy, which was named in a May 19th complaint at the Texas Public Utility Commission. Among the allegations: that Direct Energy made insufficient efforts to contact customers who faced disconnection, and that the company improperly sold controversial pre-paid plans to customers with critical health conditions.
Brought by the Austin-based Texas Ratepayers Organization to Save Energy, the complaint is based largely on whistle blower testimony from a former employee of a Direct Energy contractor. In an affidavit, the whistleblower said he handled calls from frustrated customers who complained they had their power cut for non-payment — but without required advance warning.
“On several different occasions when I asked a supervisor how to compensate customers for this error, I was told that the customer was probably lying about not receiving the messages,” wrote the former contract employee. “When I pointed out that the system had automatically notated a series of message delivery failures on the account, I was told that it was the customer’s own fault for failing to report the problem until it was too late. When I pointed out that the notated account showed records of multiple inbound customer calls attempting to resolve the problem, I was told that it was the customer”s fault for failing to provide an alternative avenue for successful message delivery.”
Direct Energy told the publisher of an industry newsletter that it “takes matters such as these very seriously” but that it would decline comment as it continues to review the filing.
You can see the allegations against Direct Energy here.
A number of unrelated complaints filed at the PUC involving a second company, Hino Electric, allege the company charged much higher prices under its “DollarSave” deal than it had reflected on the state’s powertochoose.com website.
Speaking with The McAllen Monitor newspaper, Hino CEO Alex Hinojosa Jr. agreed the listed Terms of Service were “ambiguous” but that it was not the company’s intent to mislead customers. He said that his company would refund disputed amounts to those who filed complaints — although not to every customer under its DollarSave deal — and that Hino had taken the disputed product off the market.
Quoted in the article about customer complaints, Hinojosa also said that “a lot of these people are just spoiled and they complain to get free electricity.
“It’s just a few bad apples,” he said. “Some people are very abusive. Everything is there online for them to read and agree to. If they don’t like it or are confused, there are hundreds of other offers.”
You can read the Monitor story here.
Earlier this month a third company, Proton Energy, agreed to pay a $400,000 penalty over accusations that it violated PUC rules on more than 1,000 separate occasions. The PUC staff alleged the company potentially posed “serious risks to the health, safety, and economic welfare of the public” and that its violations were among the most egregious that a retail electric company can commit.
As part of the settlement with the PUC, Proton owner Ramzan Ali agreed to separate himself from the company.
You can read more about the Proton complaints here.
Lawsuit against Electricity Wholesaler
Meanwhile in the state’s wholesale electricity market, a company that owns several generators around Texas has been accused in federal court for allegedly gaming the system.
The litigation contends that GDF Suez North America intentionally withheld electricity during times of tight supply “for reasons not explained by rational notions of supply and demand.” The company then “dumps its electricity at the artificially high price it created to make excessive, artificial profits,” the lawsuit alleges.
Raiden Commodities, one of the companies that brought the lawsuit, also filed a petition at the PUC calling for a regulatory fix.
Suez spokeswoman Julie Vitek, speaking to the Texas Tribune, declined to discuss specifics of the case or the PUC petition, but said that “we believe that all of our actions have been fully transparent and compliant with applicable regulations.”
You can read the Texas Tribune story here.
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.