How to beat a Texas electric company when your variable rate goes up too much

Attention Texas electricity customers with variable rates: If you expect to get walloped when the next bill arrives, Watchdog Nation has a strategy that may get that bill lowered.

As first reported in the Fort Worth Star-Telegram Dave Lieber Watchdog column, at the August 2011 meeting of the Texas Public Utility Commission, new Chairwoman Donna L. Nelson held a copy of this previous Watchdog Nation report on Dynowatt and spoke about the Arlington man whose power bill jumped to $1,111 in one month because of electricity rate spikes.

“I’m sure you saw the article in the Fort Worth Star-Telegram this morning about the gentleman who was with Dynowatt, and it was a variable rate plan,” she said. His rate jumped from 10.6 to 18.3 cents per kilowatt-hour, she explained.

(In the above photo, Texas PUC Chairwoman Donna L. Nelson holds up a Watchdog Nation report from the Fort Worth Star-Telegram and asks the enforcement division to look into it.)

“Under the new rules we adopted there were certain disclosures that had to take place on the bill, if you remember. And so this article calls into question whether those actually happened.

“I guess I would like enforcement staff to look into this and make sure that the disclosures that are supposed to be happening are happening.”

There it is! The key to getting a power bill lowered. It’s like that moment in school when the teacher tells students what will be on the test.

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This is a test that some Texas electricity companies will flunk. They may be confused about state requirements detailing how variable rate increases must be disclosed to customers on their bills. That confusion and a failure to comply works to customers’ advantage.

The Texas Retail Electric Scorecard, a widely circulated industry newsletter, reported Nelson’s remarks and outlined for electric companies a summary of the rules. But probably not in time for August bills to be corrected.

For example, certain sentences must appear in 12-point type on a bill. (That didn’t happen on the Dynowatt bill.) Here’s a sample: “Please review the historical price of this product available at (insert specific website address and toll-free telephone number).”

If a customer gets a bill with a price spike but without that sentence about the company website and telephone number, he or she should submit a copy of that bill to the PUC as part of a formal complaint. Regulators will check whether the company followed the rules. If not, the bill will be lowered.

See other requirements in the state rules at

 The Amigo Energy example

 Here’s what can happen to a company that doesn’t follow the rules.

In 2008, I interviewed then-Amigo Energy founder and CEO Javier Vega about why his company didn’t include rate information on the company’s “facts label” as required. I showed him that state rules weren’t followed when Amigo raised its rate from 16 to 24 cents for a Fort Worth customer.

He answered, “I’m going to scream for a second.” He put me on hold, consulted his staff, returned and said: “I apologize. We’ve been better at this.”

After that, Fulcrum Energy, the company that bought Vega out, reneged on its agreement to keep Vega as an officer in the company. Vega sued for wrongful termination. The trial was held in Houston in July.

Vega says that his 2008 comments to me were one of two reasons cited for his firing.

On Aug. 1, a Houston jury awarded Vega a judgment that, with lawyer fees, could reach $3 million.

Last week, Amigo/Fulcrum was sold to Just Energy, a Texas electricity provider based in Toronto.

Vega’s lawsuit illustrates what can happen behind the scenes at a Texas electric company when operators don’t buy enough electricity before a power spike. That can cause bills for variable-rate customers to jump.

According to Vega’s lawsuit, Fulcrum insisted on a get-tough strategy aimed at customers who owed the company money, even if the charges were incorrect. Vega alleged that Fulcrum co-founder Gerardo Manalac ordered collection letters sent to customers only days after the first bills arrived. He also refused a PUC directive that Amigo rerate the bills.

Manalac previously denied those allegations in an interview.

Eventually, the PUC cited Amigo for numerous violations: not sending bills, refusing to offer payment arrangements to shell-shocked customers, not giving proper notice before an increase and not responding to complaints.

Amigo/Fulcrum paid a $15,000 state fine. Now comes this jury verdict.

The message is clear. An electricity company that raises a variable rate has to follow the rules. It’s up to customers to make sure this happens.

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Are you tired of fighting the bank, the credit card company, the electric company and the phone company? They can be worse than scammers the way they treat customers. A popular book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, shows you how to fight back — and win! The book is available at as a hardcover, CD audio book, e-book and hey, what else do you need? The author is The Watchdog columnist for the Fort Worth Star-Telegram. Visit our store. Now revised and expanded, the book won two national book awards for social change. Twitter @DaveLieber.


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Playing The Gong Show with Government

Today we’re going to play the Watchdog version of The Gong Show.

As we first shared with readers in the August 2, 2009 Fort Worth Star-Telegram, we’re going to see what Texans think of the fine being proposed by the Public Utility Commission against Amigo Energy of Houston. Last summer, Amigo failed thousands of Texas families by not sending bills to some customers and billing others incorrectly at substantially higher rates than they expected.

The proposed fine: $15,000.

Chuck Barris and friend

Chuck Barris and friend

“Merely a slap on the hand,” said former Amigo customer Pam Kinkema of Fort Worth.

But before we bring out the gong, let’s share some data:

As I reported last month in the Fort Worth Star-Telegram recently, the PUC received 1,035 complaints against Amigo in the past year. Of those, 452 were found to violate state rules. Many stemmed from when Amigo took over variable-rate customers from defunct National Power.

We shared the backstage antics of Amigo during their 2008 breakdown in this earlier stunning report which first appeared in the Fort Worth Star-Telegram.

Why such a meager fine? The PUC declined to comment, as the case is pending. But in its settlement agreement, PUC legal staffers wrote that Amigo “instituted corrective action,” acted in “good faith” to follow the rules and “worked aggressively” to solve billing problems.

The PUC has proposed fining another company that had similar failures — Direct Energy of Houston — $200,000.

Time for our game. Here’s what former Amigo customers say about the fine. If they don’t like it, you’ll see the gong.

Kinkema: “The PUC doesn’t take this situation seriously. To allow a company to mistreat and misrepresent services for citizens is a crime. I personally think the problem is with the PUC.”


Clifton Hobbs of Saginaw: “The fine is a joke, just like the PUC. I bet employees at Amigo are laughing out loud at the fine. Can we fine the PUC? Where are our representatives?

“The message sent is that it is OK to treat people needing power any way you want. Don’t take their phone calls and keep overcharging them as much as possible, while threatening to ruin their credit. Guess what I was being charged? 28 cents per kilowatt hour.”


Janice Strickland of Burleson: “I got a bill from Amigo for 25 cents per kwh. My old rate was 11 cents. Of course, I could not get through by phone to Amigo, and when I did, I got hung up on.

“I think the fine prevents other companies from doing the same thing. The PUC is on the consumer’s side, and they are there to help.

No gong

electric-meterAnthony Carrolla of Arlington: “The fine is over the line in terms of generosity — especially since Amigo knowingly engaged in deceptive pricing practices, sent out collection notices within just a few days of delayed billing and, at least in my case, would not acknowledge that I was being billed incorrectly and threatened with disconnection.

“Essentially, Amigo ‘played’ everybody in this matter and received only a slight slap on the wrist for their malfeasance.”


Gary Hines of Fort Worth: “A ridiculously low fine. How does a fine paid to the PUC really help the people that were overcharged, misbilled and so on? It is just typical. The consumer gets screwed and the government collects more ‘taxes.’

“The PUC acted in a liaison capacity for me and communicated directly with Amigo to resolve my final bill in a very fair manner.”


Byron McClintock of Fort Worth: “The message this fine sends to Texans is that the state of Texas and our ‘representatives’ do not and will not stand up for their voting public.  . . .  If the state is going to levy fines against businesses, make it hurt their pocketbook as that business would do to the consumer.”


Deanne Graham of Grand Prairie: “The commission needs to come out strong with these fines, not a little slap on the wrist. Honestly, $15,000 to them is like a penny to me. Last summer, they ripped me off good. I paid a thousand dollars for about 45 days of power use. It should have been less than half of that. I and other customers will pay that fine. They never will even feel it.”


Pat Carew of Colleyville: “I am happy the PUC has taken action, but the fine is a mere pittance of what it should be. If you multiplied the number of customers hurt by $300 to $500 each, the fine would be staggering.”


Margaret Bruce of Arlington: “My affiliation with Amigo Energy was the worst provider/customer service experience I ever had…. I couldn’t get out of the contract fast enough. In view of what I went through with them, I consider the PUC fine a little slap on the hand. The PUC should have acted much sooner to protect me and imposed a big fine to send a message to energy companies. Energy companies that mistreat their customers need to be shut down, required to refund money to their current and former customers and receive a hefty fine.”


And finally, here’s what Amigo says.

CEO Jesson Bradshaw: “The commission appropriately recognizes that we understand what happened and we’ve taken corrective action for that. And that weighs heavily into how that whole process came down.”



Dave Lieber gives wonderful tips about how to fight electricity companies and other utilities in his new book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong — the 2009 winner of The Next Generation Indie Book Award for Social Change.

Do electricity regulators really regulate?

Watchdog Nation had a theory: Some electricity companies, despite Photo courtesy of centralillinoisproud.comhorrendous customer service, are getting away with it. But is the theory true?

Based on the hundreds of letters we receive each year at the Fort Worth Star-Telegram from people complaining about their electricity bills, we wondered what happened to the thousands of complaints about electricity companies that go to the Public Utility Commission of Texas each year.

Do the companies get penalized?

As The Watchdog columnist for the Fort Worth Star-Telegram, I conducted a study. Using the open-records law, we requested the total complaints from customers of three companies that had severe difficulties in the past two years – Amigo Energy, TXU Energy and Direct Energy. We studied the number of complaints, the number that were investigated and what action was taken against any offenders.

The findings are described in detail in Sunday’s Fort Worth Star-Telegram (7/12/09) here. And you can have the reprint of our Guide to Shopping for Electric Rates – requested already by thousands of people.

In summary, the best way to counter an electric company (or any company for that matter) that harms you is to complain, complain and complain. By forcing up complaint numbers, the trend lines show a problem, thereby making the regulators more likely to take strong action.

By the way, colleague Jack Z. Smith tells a much-needed story about how the elderly, especially, can shop for lower rates here.

Behind the scenes at a troubled Texas electric company

How rare to see what goes on behind the scenes at a Texas electric company.

Watchdog Nation Staff is pleased to see that a smart blogger recognized this fact: On the behind-the-scenes nastiness, as alleged in a lawsuit, involving troubled Amigo Energy, the blogger notes that “the Star Telegram was the only media source” to report this.

Because the live link to Lieber’s column won’t last forever, here is what the founder of Watchdog Nation had to report:

There was the chief executive officer of Merrill Lynch who bought the $35,000 toilet for his office. Then we learned about the peanut butter company CEO who the Food and Drug Administration says knowingly shipped products tainted with salmonella.

The latest? The CEO at a Texas electricity provider who is accused of ignoring state regulators and trying to overcharge customers to save the company.

And who makes these allegations? None other than the company’s previous CEO, who says he was fired when he tried to blow the whistle.

Javier Vega, the former CEO and founder of Amigo Energy of Houston, filed a wrongful-termination lawsuit against Amigo’s current owner, Fulcrum Power, in Harris County district court in November.

His lawsuit is more than an employment dispute.

It says, “The case also involves the greed and corruption of certain individuals and legal entities that led to blatant and knowingly illegal efforts to collect improper rates from Texas retail electricity consumers.”

In a brief interview, Amigo’s current CEO said the allegations are false.

“We vehemently deny all of Mr. Vega’s claims,” Gerardo “G.P.” Manalac told me. “We intend to let the litigation go its course.”

He added: “Amigo, like any other retail electric provider, had a very difficult year. But we turned the corner on that and are back on track.”

He said his company is cooperating with an investigation by the Texas Public Utility Commission into allegations of overcharging.

The lawsuit offers a peek at the turmoil behind the scenes at Amigo last year, when hundreds of customers complained that they were overcharged. Many said the company refused to answer their complaints and sent a collection agency after them, sometimes within days of the first bill’s arrival.

The PUC reprimanded the company for violating state rules, but it has yet to levy fines or other penalties.

According to Vega’s lawsuit, the problems stemmed from his decision in 2007 to sell his company to Fulcrum Power of Houston, which was a wholesale electricity provider for Amigo. Vega stayed on as CEO.

The first year went smoothly, the lawsuit says. But last June, Manalac, Fulcrum’s co-founder, took day-to-day operations away from Vega, who kept the CEO title in name only.

Manalac, though, did not buy electricity at lower prices for future use to hedge against price jumps, the lawsuit contends, something that Vega handled when he ran the company. Vega claims that he repeatedly warned Manalac to stop selling fixed-rate contracts to customers because the company hadn’t bought enough electricity at lower prices to make a profit. If prices jumped, he warned, the company could find itself in severe trouble.

Prices did jump, and the company lost $15 million by “gross mismanagement in a mere five months” last year, Vega contends in the suit.

To make up for the loss, the suit says, the company turned to “aggressive price increase methods” aimed at former customers of National Power, which closed in May. Amigo bought National Power’s variable-rate customers, who suddenly found themselves paying higher prices with a new provider.

According to state rules, an electricity provider may not raise rates by more than 10 percent in one month unless a customer is properly notified. Rates for former National Power customers in Dallas went up to 16 cents per kilowatt-hour, and Houston-area customers were stunned to see their rates jump to 20 cents. That increase was handled with proper notification, the suit alleges.

A few weeks later, Amigo again raised the rates for former National Power customers, this time as high as the 24- to 25-cent range. There was no proper notice, and the increase was more than the allowed 10 percent, according to the suit.

Customers were also wrongly billed at the higher rate for a period before the rate took effect, the suit charges. When some customers received several months’ worth of bills at once, they were stunned by the higher rates and called to complain. But they couldn’t reach anyone at Amigo. More than 700 customers complained to the PUC, which launched an investigation. In September, the PUC ordered the company to “rerate” hundreds of customers – lower their bills to the proper amount.

The PUC also cited Amigo for numerous violations – not sending bills to customers, refusing to offer payment arrangements to shellshocked customers, not giving proper notice before an increase and not responding to customer complaints.

The suit contends that Fulcrum cut Amigo’s customer service staff, leaving angry customers with phone waits “in excess of one hour for tens of thousands of Amigo Energy customers.” There was also a backlog of 10,000 unanswered customer e-mails.

PUC staffers were coming down hard on Amigo because of the many complaints. One PUC official, the lawsuit says, asked an Amigo executive whether the company wanted “to continue to be in this business.”

Manalac insisted on a get-tough strategy aimed at customers who owed money, even if the charges were incorrect, the suit says.

He ordered that collection letters be sent to customers only days after their first bills arrived. And he refused the PUC’s directive that Amigo go back and rerate the bills, court papers say.

Manalac sent an e-mail, papers say, urging bill collectors to “to pester these people” to pay. In another e-mail, he wrote, “Allow them no negotiation the first or second round (and then we can go from there).”

Vega talked about quitting, but before he could, the suit says, Fulcrum executives told him he was fired for spreading harmful information about the company.

Vega’s lawyer did not return phone calls. Fulcrum’s lawyer declined to comment.

It may not be a good time for some chief executives, but it can be an even worse time for customers.